FILED PURSUANT TO RULE 424(b)(5)
                                                      REGISTRATION NO. 333-71348
PROSPECTUS SUPPLEMENT
(To the Prospectus dated December 13, 2001)
--------------------------------------------------------------------------------

$250,000,000

[NEWFIELD LOGO]

NEWFIELD EXPLORATION COMPANY

8 3/8% Senior Subordinated Notes due 2012
--------------------------------------------------------------------------------

COMPANY
+  We are an independent oil and gas company engaged in the exploration,
   development and acquisition of crude oil and natural gas properties.

+  Our areas of operation include the Gulf of Mexico, the U.S. onshore Gulf
   Coast, the Anadarko and Permian Basins, offshore northwest Australia and the
   Bohai Bay, offshore China.

+  We recently agreed to acquire EEX Corporation.

NOTES
+  We are offering $250,000,000 aggregate principal amount of our 8 3/8% senior
   subordinated notes due August 15, 2012.

+  We will pay interest on the notes semi-annually in arrears on February 15 and
   August 15 of each year, beginning February 15, 2003.

+  We may redeem some or all of the notes at any time on or after August 15,
   2007 at the redemption prices set forth in this prospectus supplement, plus
   accrued and unpaid interest. Prior to that time, we may redeem all of the
   notes at a make-whole redemption price. In addition, we may redeem up to 35%
   of the notes prior to August 15, 2005 with the net cash proceeds from certain
   equity offerings.

+  The notes will be subject to special mandatory redemption if we do not
   acquire EEX.

+  The notes will be unsecured and subordinated to our senior and secured
   obligations and senior to any subordinated indebtedness.

+  We do not plan to list the notes on any securities exchange.

BEFORE BUYING ANY NOTES, YOU SHOULD READ THE DISCUSSION OF MATERIAL RISKS OF
INVESTING IN OUR NOTES BEGINNING ON PAGE S-13 OF THIS PROSPECTUS SUPPLEMENT AND
PAGE 3 OF THE ACCOMPANYING PROSPECTUS.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE SECURITIES OR DETERMINED IF THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS ARE TRUTHFUL OR COMPLETE.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.



                                                              PER NOTE                   TOTAL
--------------------------------------------------------------------------------------------------
                                                                                
Price to public                                               99.168%                 $247,920,000
--------------------------------------------------------------------------------------------------
Underwriting discount                                          2.250%                   $5,625,000
--------------------------------------------------------------------------------------------------
Proceeds to Newfield (before expenses)                        96.918%                 $242,295,000
--------------------------------------------------------------------------------------------------


The notes will be ready for delivery in book-entry form only through The
Depository Trust Company on or about August 13, 2002.
                          Joint Book-Running Managers

UBS Warburg                                                             JPMorgan
                             ---------------------
Wachovia Securities
                     BNY Capital Markets, Inc.
                                        Credit Lyonnais Securities
                                                      Fleet Securities, Inc.
           The date of this prospectus supplement is August 8, 2002.

TABLE OF CONTENTS
--------------------------------------------------------------------------------



                                                  PAGE
                                                  ----
                                               
                PROSPECTUS SUPPLEMENT
Oil and gas terms used in this prospectus
  supplement....................................   S-2
Prospectus supplement summary...................   S-3
Risk factors....................................  S-13
Use of proceeds.................................  S-16
Ratios of earnings to fixed charges.............  S-16
Capitalization of Newfield......................  S-17
Newfield selected financial and other data......  S-18
EEX selected financial data.....................  S-22
Unaudited pro forma combined condensed financial
  information...................................  S-25
Difference in estimates of EEX proved
  reserves......................................  S-34
Description of existing indebtedness............  S-35
Description of the notes........................  S-38
Underwriting....................................  S-84
Legal matters...................................  S-86
Experts.........................................  S-86




                                                  PAGE
                                                  -----
                                               
                      PROSPECTUS
About This Prospectus...........................    1
Where You Can Find More Information.............    1
Forward-Looking Statements......................    2
About Our Company...............................    3
Risk Factors....................................    3
Use of Proceeds.................................    9
Ratios of Earnings to Fixed Charges.............    9
Description of Debt Securities..................    9
Description of Common Stock and Preferred
  Stock.........................................   23
Description of Depositary Shares................   28
Description of Securities Warrants..............   30
Description of Stock Purchase Contracts and
  Stock Purchase Units..........................   32
Plan of Distribution............................   32
Legal Matters...................................   33
Experts.........................................   33


--------------------------------------------------------------------------------

YOU SHOULD RELY ONLY ON THE INFORMATION INCORPORATED BY REFERENCE OR PROVIDED IN
THIS PROSPECTUS SUPPLEMENT OR IN THE ACCOMPANYING PROSPECTUS. WE HAVE NOT, AND
THE UNDERWRITERS HAVE NOT, AUTHORIZED ANYONE ELSE TO PROVIDE YOU WITH DIFFERENT
INFORMATION. IF ANYONE PROVIDES YOU WITH DIFFERENT OR INCONSISTENT INFORMATION,
YOU SHOULD NOT RELY ON IT. WE ARE NOT, AND THE UNDERWRITERS ARE NOT, MAKING AN
OFFER TO SELL THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER IS NOT
PERMITTED. YOU SHOULD NOT ASSUME THAT THE INFORMATION INCORPORATED BY REFERENCE
OR PROVIDED IN THIS PROSPECTUS SUPPLEMENT OR IN THE ACCOMPANYING PROSPECTUS IS
ACCURATE AS OF ANY DATE OTHER THAN THE DATE OF THOSE DOCUMENTS. OUR BUSINESS,
FINANCIAL CONDITION, RESULTS OF OPERATIONS AND PROSPECTS MAY HAVE CHANGED SINCE
THAT DATE.
--------------------------------------------------------------------------------

Oil and gas terms used in this prospectus supplement:


                                                                 
when describing natural gas:                      Mcf               =     thousand cubic feet
                                                  MMcf              =     million cubic feet
                                                  Bcf               =     billion cubic feet

when describing oil:                              Bbl               =     barrel
                                                  MBbls             =     thousand barrels
                                                  MMBbls            =     million barrels
when describing natural gas and oil together:     1 barrel of oil   =     6 Mcf of gas equivalent
                                                  Mcfe              =     thousand cubic feet equivalent
                                                  MMcfe             =     million cubic feet equivalent
                                                  MMcfe/d           =     million cubic feet equivalent per day
                                                  Bcfe              =     billion cubic feet equivalent


present value = The estimated value of future gross revenues (estimated in
accordance with the requirements of the SEC) to be generated from the production
of proved reserves, net of estimated production and future development costs,
using prices and costs in effect as of the date indicated, discounted using an
annual discount rate of 10%.

proved developed reserves = Proved reserves that can be expected to be recovered
from existing wells with existing equipment and operating methods.

proved reserves = The estimated quantities of oil and gas that geological and
engineering data demonstrate with reasonable certainty to be recoverable from
known reservoirs under existing economic and operating conditions.

proved undeveloped reserves = Proved reserves that are expected to be recovered
from new wells on undrilled acreage or from existing wells where a relatively
major expenditure is required.

--------------------------------------------------------------------------------
                                                                            S- 2


Prospectus supplement summary

This document is in two parts. The first part is the prospectus supplement which
describes our business and the specific terms of this offering. The second part
is the prospectus which gives more general information, some of which may not
apply to this offering. If information varies between this prospectus supplement
and the accompanying prospectus, you should rely on the information in this
prospectus supplement. You should carefully read the entire prospectus
supplement, the accompanying prospectus and the other documents incorporated by
reference to understand fully the terms of the notes, as well as the other
considerations that are important to you in making your investment decision. You
should pay special attention to "Risk factors" beginning on page S-13 of this
prospectus supplement and to "Risk factors" beginning on page 3 of the
accompanying prospectus to determine whether an investment in the notes is
appropriate for you. For purposes of this prospectus supplement and the
accompanying prospectus, unless the context otherwise indicates, references to
"us," "we," "our" or "Newfield" are to Newfield Exploration Company and its
subsidiaries. Unless otherwise noted, capitalized terms used in this prospectus
supplement have the same meanings as used in the accompanying prospectus.

ABOUT NEWFIELD

We are an independent oil and gas company engaged in the exploration,
development and acquisition of crude oil and natural gas properties. Our company
was founded in 1989 and we acquired our first property in 1990. Our initial
focus area was the Gulf of Mexico. In the mid-1990s, we began to expand our
operations to other select areas. Our areas of operation now also include the
U.S. onshore Gulf Coast, the Anadarko and Permian Basins, offshore northwest
Australia and the Bohai Bay, offshore China.

At year-end 2001, we had proved reserves of 936.4 Bcfe. Of those reserves,

+  77% were natural gas;

+  93% were proved developed;

+  58% were located in the Gulf of Mexico;

+  39% were located onshore in the U.S.; and

+  3% were located offshore Australia.

Our strategy is based on the following elements:

+  growing reserves through the drilling of a balanced portfolio;

+  balancing exploration with the acquisition and exploitation of proved
   properties;

+  focusing on select geographic areas;

+  controlling operations and costs;

+  using 3-D seismic data and other advanced technologies; and

+  attracting and retaining a high quality work-force through equity ownership
   and other performance-based incentives.

                                                                            S- 3


ACQUISITION OF EEX

On May 29, 2002, we announced our agreement to acquire EEX Corporation, an oil
and gas exploration and production company with activities focused in Texas,
Louisiana and the Gulf of Mexico. The transaction is valued at approximately
$650 million, including the assumption of approximately $400 million of debt. We
will issue approximately 7.1 million shares of our common stock in the
transaction, or approximately 12.4% of our outstanding common stock on a fully
diluted basis following the closing of the transaction.

The assets and operations of EEX are complementary to ours. EEX's onshore
properties are located in our core South Texas focus area, and the acquisition
will make us one of the largest independent producers in this area. The
acquisition will also provide us with an increased balance between our onshore
and offshore assets. In addition, EEX's acreage position and interests in
undeveloped discoveries in the Gulf of Mexico will further our efforts to
establish operations in the deepwater. We expect to reduce EEX's current general
and administrative expense by as much as 50%.

On a pro forma basis giving effect to the acquisition of EEX and this offering:

+  our revenues would have been approximately $906.9 million and $188.6 million
   for the year ended December 31, 2001 and the three months ended March 31,
   2002, respectively;

+  our EBITDA would have been approximately $705.7 million and $131.9 million
   for the year ended December 31, 2001 and the three months ended March 31,
   2002, respectively;

+  our Adjusted EBITDA would have been approximately $683.6 million and $138.1
   million for the year ended December 31, 2001 and the three months ended March
   31, 2002, respectively (we define Adjusted EBITDA as EBITDA plus non cash
   general and administrative expense and commodity derivative income (expense)
   associated with SFAS 133);

+  our ratio of Adjusted EBITDA to total interest expense would have been
   approximately 9.8x and 8.3x for the year ended December 31, 2001 and the
   three months ended March 31, 2002, respectively; and

+  our debt, exclusive of $143.8 million of convertible trust preferred
   securities, as a percentage of book capitalization would have been
   approximately 43% as of March 31, 2002.

We will finance the repayment of EEX debt that will become due at the time of
the acquisition, other EEX obligations and transaction costs with the net
proceeds from this offering and borrowings under our existing revolving credit
facility. Immediately following the completion of the acquisition, we expect to
have approximately $90 million of remaining borrowing capacity under our credit
facility and money market lines of credit. A description of our credit facility
is included under "Description of existing indebtedness -- Revolving Credit
Facility and Money Market Lines." At the time we agreed to acquire EEX, we
obtained a commitment for a $325 million senior secured bridge facility. Upon
completion of this offering, we will terminate this commitment.

The merger is subject to the approval of EEX's common shareholders and other
conditions. All of EEX's preferred shareholders have signed an irrevocable proxy
to vote their shares in favor of the merger. We expect the transaction to close
in late September 2002.

S- 4


The following table details the complementary nature of the assets and the
significance of this acquisition to us.



                                                NEWFIELD AS OF            EEX AS OF
                                             DECEMBER 31, 2001    DECEMBER 31, 2001      COMBINED
-------------------------------------------------------------------------------------------------
                                                                                
Proved reserves (Bcfe):....................                936                  320(1)     1,256
  % Natural gas............................                 77%                  96%          82%
  % Proved developed.......................                 93%                  85%          91%
Net production (MMcfe/d):
  Gulf of Mexico...........................                327                   --          327
  Onshore U.S. ............................                147                  127          274
  International............................                 24                   --           24
                                             -----------------    -----------------      -------
          Total net production.............                498                  127          625
          % Production natural gas.........                 78%                  95%          82%
Gross acreage position:
  Gulf of Mexico
     Developed.............................            601,611               17,280      618,891
     Undeveloped...........................            148,712              364,007      512,719
     Shelf lease blocks....................                190                   36          226
     Deepwater lease blocks................                 --                   68           68
  U.S. Gulf Coast
     Developed.............................             57,229              114,748      171,977
     Undeveloped...........................             39,023              245,354      284,377
     Fee minerals..........................                 --               63,487       63,487
  Mid-Continent
     Developed.............................            145,141               12,123      157,264
     Undeveloped...........................            294,731                8,800      303,531
     Fee minerals..........................             69,970                   --       69,970


------------
(1)  Represents our estimate of EEX proved reserves as of December 31, 2001. Our
     estimate reflects the disposition of EEX's international operations in the
     second quarter of 2002. Our estimate differs significantly from that of EEX
     as set forth in "EEX selected financial data" in this prospectus
     supplement. EEX disagrees with our estimates of EEX's proved reserves and
     believes that no adjustment is required with respect to its reported
     estimates of such reserves at December 31, 2001. See "Difference in
     estimates of EEX proved reserves."

RESULTS FOR THE THREE MONTHS ENDED JUNE 30, 2002

On July 22, 2002, we announced our results for the second quarter of 2002.
Revenues were $161.6 million, compared to revenues of $200.7 million for the
second quarter of 2001. Total production for the second quarter of 2002
increased 4% to 47.5 Bcfe from 45.8 Bcfe for the second quarter of 2001. Net
income for the second quarter of 2002 was $20.1 million, or $16.3 million after
the effect of a non-cash charge. In the second quarter of 2001, net income was
$53.0 million, or $56.7 million after the effect of a non-cash gain. EBITDA and
Adjusted EBITDA for the second quarter of 2002 were $110.6 million and $117.3
million, respectively, compared to $165.3 million and $160.3 million,
respectively, for the second quarter of 2001.

                                                                            S- 5


OUR EXECUTIVE OFFICES

Our company was incorporated in Delaware in 1988. The address of our principal
executive offices is 363 N. Sam Houston Parkway E., Suite 2020, Houston, Texas
77060, and our telephone number is (281) 847-6000. We maintain a web site on the
Internet at http://www.newfld.com. Information contained on our website is not a
part of this prospectus supplement or the accompanying prospectus.

S- 6


The Offering

Issuer..............................     Newfield Exploration Company.

Securities offered..................     $250,000,000 principal amount of 8 3/8%
                                         Senior Subordinated Notes due 2012.

Maturity Date.......................     August 15, 2012.

Interest Payment Dates..............     February 15 and August 15 of each year,
                                         beginning on February 15, 2003.

Ranking.............................     The notes will be our unsecured senior
                                         subordinated debt. The notes will rank
                                         junior in right of payment to all of
                                         our present and future Senior
                                         Indebtedness (as defined in this
                                         prospectus supplement) and will rank
                                         senior to all of our future
                                         indebtedness that is expressly
                                         subordinated to the notes. The notes
                                         will effectively rank junior to the
                                         obligations of our subsidiaries.

                                         As of March 31, 2002, after giving
                                         effect to the adjustments described
                                         under "Capitalization of Newfield,"
                                         including this offering and the
                                         application of the net proceeds of this
                                         offering, we would have had
                                         approximately $474.2 million of Senior
                                         Indebtedness outstanding and our
                                         subsidiaries would have had an
                                         additional approximately $226.0 million
                                         of liabilities (excluding intercompany
                                         liabilities and deferred revenue).

Subsidiary Guarantees...............     The notes initially will not be
                                         guaranteed by any of our subsidiaries.
                                         However, the indenture governing the
                                         notes provides that if any of our
                                         subsidiaries guarantees any of our
                                         indebtedness at any time in the future,
                                         then we will cause the notes to be
                                         guaranteed by such subsidiary on a
                                         senior subordinated basis.

Optional Redemption.................     The notes may be redeemed at any time
                                         on or after August 15, 2007, at our
                                         option, in whole or in part, at the
                                         prices listed under "Description of the
                                         notes--Optional Redemption." Prior to
                                         that date, the notes may be redeemed at
                                         our option, in whole but not in part,
                                         at a make-whole price described under
                                         "Description of the notes--Optional
                                         Redemption." Before August 15, 2005, we
                                         may redeem up to 35% of the original
                                         principal amount of the notes with the
                                         net cash proceeds of certain sales of
                                         our common stock at 108.375% of the
                                         principal amount, plus accrued and
                                         unpaid interest to the date of
                                         redemption.

Special Mandatory Redemption........     Pending their use to finance the
                                         acquisition of EEX, the net proceeds of
                                         the notes (before expenses) will

                                                                            S- 7


                                         be placed in an escrow account to fund
                                         the special redemption described below.
                                         Pursuant to an escrow agreement with
                                         Wachovia Bank, National Association, as
                                         escrow agent, if the acquisition of EEX
                                         is not closed on or prior to December
                                         31, 2002 or the merger agreement
                                         relating to the acquisition of EEX is
                                         terminated or abandoned earlier, the
                                         funds in the escrow account, together
                                         with additional funds we will provide,
                                         will be used to redeem all of the notes
                                         at a redemption price equal to 101% of
                                         their principal amount, plus accrued
                                         and unpaid interest to the date of
                                         redemption. The funds in the escrow
                                         account will be released to us to repay
                                         outstanding indebtedness of EEX upon
                                         receipt by the escrow agent of an
                                         officers' certificate that states that
                                         all necessary conditions to the closing
                                         of the acquisition of EEX have been
                                         satisfied or waived. See "Description
                                         of the notes--Escrow of Proceeds;
                                         Special Mandatory Redemption."

Change of Control...................     If a change of control occurs prior to
                                         maturity, you may require us to
                                         purchase all or part of your notes at a
                                         purchase price equal to 101% of their
                                         principal amount, plus accrued and
                                         unpaid interest to the date of
                                         redemption.

Certain Covenants...................     The indenture governing the notes will
                                         limit our ability and the ability of
                                         our restricted subsidiaries to, among
                                         other things:

                                         +  incur additional debt;

                                         +  make restricted payments;

                                         +  pay dividends on or redeem our
                                            capital stock;

                                         +  make certain investments;

                                         +  create liens;

                                         +  make certain dispositions of assets;

                                         +  engage in transactions with
                                            affiliates; and

                                         +  engage in mergers, consolidations
                                            and certain sales of assets.

                                         As to our restricted subsidiaries, the
                                         indenture governing the notes also will
                                         limit their ability to enter into or
                                         become subject to arrangements that
                                         would restrict or limit their ability
                                         to:

                                         +  pay dividends or make other
                                            distributions to us or other
                                            restricted subsidiaries;

                                         +  make loans or advances to us; and

                                         +  transfer any assets to us.

S- 8


                                         These covenants are subject to
                                         important exceptions and
                                         qualifications, as described under
                                         "Description of the notes--Certain
                                         Covenants."

                                         If the notes are assigned an investment
                                         grade rating from Moody's and Standard
                                         & Poor's, many of these covenants will
                                         be suspended.

Use of Proceeds.....................     The net proceeds from this offering of
                                         approximately $241.8 million will be
                                         used to repay the EEX debt that will
                                         become due at the closing of the EEX
                                         acquisition and to pay a portion of the
                                         transaction costs of the acquisition.
                                         See "Use of proceeds."

Governing law.......................     New York.

Global notes........................     The notes will be represented by one or
                                         more global notes registered in the
                                         name of the nominee of The Depository
                                         Trust Company, or DTC. Beneficial
                                         interests in the global notes
                                         representing the notes will be shown
                                         on, and transfers thereof will be
                                         effected only through, records
                                         maintained by DTC and its direct and
                                         indirect participants. Except as
                                         described in the accompanying
                                         prospectus, notes in definitive form
                                         will not be issued.

Risk factors........................     See the discussion under the heading
                                         "Risk factors" in this prospectus
                                         supplement and the accompanying
                                         prospectus for a description of factors
                                         you should carefully consider before
                                         deciding to invest in the notes.

                                                                            S- 9


Summary unaudited pro forma combined condensed financial and reserve information

The following summary unaudited pro forma combined condensed financial
information combines the historical consolidated balance sheets and income
statements of Newfield and EEX and gives effect to the issuance of the notes and
the acquisition of EEX using the purchase method of accounting.

The summary unaudited pro forma combined condensed financial information is
based on the following assumptions and adjustments:

+  EEX's income statement for the year ended December 31, 2001 has been adjusted
   to reflect the disposition and discontinuance of its international
   operations, as if these transactions had occurred on January 1, 2001;

+  the income statement data assume that the issuance of the notes and the
   acquisition were effective on January 1, 2001;

+  the balance sheet data assume that the issuance of the notes and the
   acquisition were effective on March 31, 2002;

+  the balance sheet and income statement data reflect our use of the net
   proceeds from the issuance of the notes to repay the EEX debt that will
   become due at the closing of the acquisition and to pay a portion of the
   transaction costs of the acquisition; and

+  the historical financial statements of EEX have been adjusted to conform to
   our accounting policies.

The historical income statement information for the year ended December 31, 2001
is derived from the audited financial statements of Newfield and EEX. The
historical income statement information for the three-month period ended March
31, 2002 and the historical balance sheet information as of March 31, 2002 are
derived from the unaudited financial statements of Newfield and EEX. We have
provided all the historical information set forth herein regarding us and our
subsidiaries and the assumptions and adjustments for the pro forma information,
and EEX has provided all the historical information set forth herein regarding
EEX and its subsidiaries.

The summary unaudited pro forma combined condensed financial information is
presented for illustrative purposes only. The financial results may have been
different if the companies had always been combined or if the other transactions
had occurred as of the dates indicated above, nor do they purport to indicate
the future results that we will experience. Further, the summary unaudited pro
forma combined condensed financial information does not reflect the effect of
restructuring charges that will be incurred to fully integrate and operate the
combined organization more efficiently or anticipated synergies resulting from
the acquisition. The restructuring activities to integrate the companies may
result in head count reduction, asset rationalization and other activities.
Because the plans for these activities have not yet been finalized, we are
unable to reasonably quantify the cost for such activities.

S- 10

The following information should be read together with "Unaudited pro forma
combined condensed financial information" and the historical financial
statements and related notes of Newfield and EEX incorporated by reference into
this prospectus supplement and the accompanying prospectus.



                                                                                 THREE
                                                                  YEAR          MONTHS
                                                                 ENDED           ENDED
                                                              DECEMBER 31,     MARCH 31,
INCOME STATEMENT DATA:                                            2001           2002
----------------------------------------------------------------------------------------
                                                                    (in thousands)
                                                                         
Revenues....................................................      $906,929     $188,550
Operating expenses:
  Operating.................................................       136,548       31,423
  Production and other taxes................................        32,254        5,267
  Depreciation, depletion and amortization..................       361,655       90,473
  Ceiling test write-down...................................       106,011           --
  Impairment of long-lived assets...........................        82,286           --
  General and administrative................................        62,467       16,728
Other income (expenses):
  Interest and other income (expense).......................        30,046       (3,272)
  Gross interest expense....................................       (69,701)     (16,725)
  Capitalized interest......................................        14,863        3,603
                                                              ------------     --------
       Net interest expense.................................       (54,838)     (13,122)
  Dividends on convertible preferred securities of Newfield
     Financial Trust I......................................        (9,344)      (2,336)
                                                              ------------     --------
Income before income taxes, discontinued operations,
  extraordinary items and cumulative effect of change in
  accounting principles.....................................        91,572       25,929
                                                              ------------     --------
Income tax provision........................................        32,686        9,296
                                                              ------------     --------
Income before discontinued operations, extraordinary items,
  cumulative effect of change in accounting principles and
  preferred stock dividends.................................       $58,886      $16,633
                                                              ============     ========




                                                                                    THREE
                                                                   YEAR            MONTHS
                                                                  ENDED             ENDED
                                                               DECEMBER 31,       MARCH 31,
OTHER DATA:                                                        2001             2002
--------------------------------------------------------------------------------------------
                                                              (in thousands, except ratios)
                                                                           
EBITDA(1)...................................................       $705,706        $131,860
Adjusted EBITDA(1)..........................................       $683,636        $138,083
Ratio of Adjusted EBITDA to total interest expense..........            9.8x            8.3x




                                                                            AS OF MARCH 31,
BALANCE SHEET DATA:                                                               2002
--------------------------------------------------------------------------------------------
                                                                            (in thousands)
                                                                         
Oil and gas properties, net...............................................      $1,976,856
Total assets..............................................................       2,253,396
Long-term debt............................................................         808,254
Stockholders' equity......................................................         946,347


---------------

(1) EBITDA represents net income plus income taxes, interest expense (including
    dividends on preferred securities), depreciation, depletion and amortization
    expense (including ceiling test writedown and asset impairment). Adjusted
    EBITDA represents EBITDA plus non cash general and administrative expense
    and commodity derivative income (expense) associated with SFAS 133. EBITDA
    and Adjusted EBITDA are not presented as indicators of our operating
    performance, as indicators of cash available for discretionary spending or
    as measures of liquidity. EBITDA and Adjusted EBITDA may not be comparable
    to other similarly titled measures of other companies. We follow the full
    cost method of accounting.

                                                                           S- 11


The following table sets forth pro forma summary information with respect to
Newfield's and EEX's combined proved oil and gas reserves as of December 31,
2001. The following information reflects our estimates of EEX proved reserves as
of December 31, 2001. Our estimates also reflect the disposition of EEX's
international operations in the second quarter of 2002. Our estimates differ
significantly from those of EEX as set forth in "EEX selected financial data" in
this prospectus supplement. EEX disagrees with our estimates of EEX's proved
reserves and believes that no adjustment is required with respect to its
reported estimates of such reserves at December 31, 2001. See "Difference in
estimates of EEX proved reserves."



                                                                     AS OF
                                                              DECEMBER 31,
RESERVE DATA:                                                         2001
--------------------------------------------------------------------------
                                                           
Proved:
  Oil and condensate (MBbls)................................        38,371
  Gas (MMcf)................................................     1,026,153
  Total (MMcfe).............................................     1,256,379
Proved developed:
  Oil and condensate (MBbls)................................        36,405
  Gas (MMcf)................................................       922,869
  Total (MMcfe).............................................     1,141,299


S- 12


--------------------------------------------------------------------------------

Risk factors

You should consider carefully the risk factors discussed below and in "Risk
factors" beginning on page 3 of the accompanying prospectus, as well as all
other information in this prospectus supplement and the accompanying prospectus
before you decide to purchase the notes. Investing in the notes is speculative
and involves significant risk. Any of the risks described in this prospectus
supplement or the accompanying prospectus could impair our business, financial
condition and operating results, could cause the trading price of the notes to
decline or could result in a partial or total loss of your investment.

RISKS ASSOCIATED WITH THE NOTES

Set forth below, and under the caption "Risk Factors--Risks Associated With Our
Debt Securities" in the accompanying prospectus, are discussions of the material
risks associated with an investment in the notes.

YOUR RIGHT TO RECEIVE PAYMENTS ON THE NOTES IS JUNIOR TO OUR EXISTING SENIOR
INDEBTEDNESS AND IS EFFECTIVELY JUNIOR TO THE OBLIGATIONS OF OUR SUBSIDIARIES.

The indebtedness evidenced by the notes will be senior subordinated obligations
of Newfield. The payment of the principal of, premium, if any, on and interest
on the notes is subordinate in right of payment to the prior payment in full of
all senior indebtedness of Newfield, including borrowings under our bank credit
facility.

All of our international and U.S. mid-continent properties are owned and
operated by our subsidiaries, and EEX will become our subsidiary upon the
consummation of the EEX acquisition. Distributions or advances from our
subsidiaries are a source of funds to meet our debt service obligations.
Contractual provisions or laws, as well as our subsidiaries' financial condition
and operating requirements, may limit our ability to obtain cash from our
subsidiaries that we require to pay our debt service obligations, including
payments on the notes. You will have a junior position to the claims of
creditors, including trade creditors and tort claimants, of our subsidiaries
that do not guarantee the notes and to all secured or senior creditors of our
subsidiaries, whether or not they guarantee the notes, with respect to the
assets securing the claims of those secured creditors and generally with respect
to senior creditors. Initially, none of our subsidiaries will guarantee the
notes.

On a pro forma basis at March 31, 2002 after giving effect to the EEX
acquisition, this offering and the amendment to our credit facility discussed in
"Description of existing indebtedness," we had approximately $474.2 million in
senior indebtedness outstanding (excluding indebtedness of our subsidiaries) and
approximately $90 million available under our credit facility and money market
lines of credit. The $90 million of availability assumes that our lenders will
agree that our borrowing base will be reduced by 30% of the aggregate principal
amount of the notes issued in this offering. If our lenders require that our
borrowing base be reduced by a higher percentage, then our availability under
our credit facility will be reduced. A description of our credit facility is
included under "Description of existing indebtedness -- Revolving Credit
Facility and Money Market Lines." Any future borrowings under our bank credit
facility will also constitute senior indebtedness. In addition, on a pro forma
basis at March 31, 2002 after giving effect to the EEX acquisition, this
offering and the amendment to our credit facility, our subsidiaries had
approximately $226.0 million of indebtedness (including $100.8 million of EEX
secured notes) and other obligations, excluding intercompany liabilities and
deferred revenues.

--------------------------------------------------------------------------------
                                                                           S- 13

RISK FACTORS
--------------------------------------------------------------------------------

IF WE EXPERIENCE A CHANGE OF CONTROL, WE MAY BE UNABLE TO REPURCHASE THE NOTES
AS REQUIRED UNDER THE INDENTURE.

In the event of a change of control, you will have the right to require us,
subject to various conditions, to repurchase the notes. We may not have
sufficient financial resources to pay the repurchase price for the notes, or we
may be prohibited from doing so under our credit facility or other debt
agreements. In addition, before we can purchase any notes, we may be required
to:

+  repay our bank debt or other debt that ranks senior to the notes; or

+  obtain a consent from lenders of senior debt to repurchase the notes.

If a change of control occurs and we are prohibited from repurchasing the notes,
our failure to do so would cause us to default under the indenture, which in
turn is likely to be a default under our credit facility, our outstanding senior
notes due 2007 and 2011 and any future debt. Any other default under our credit
facility or other debt would also likely prohibit us from repurchasing the
notes.

FEDERAL AND STATE STATUTES ALLOW COURTS, UNDER SPECIFIC CIRCUMSTANCES, TO VOID
SUBSIDIARY GUARANTEES.

The indenture governing the notes does not require any subsidiary to guarantee
the notes unless that subsidiary guarantees other indebtedness of ours as
described under "Description of the notes." Initially, there will be no
subsidiary guarantors. Various fraudulent conveyance laws have been enacted for
the protection of creditors, and a court may use these laws to subordinate or
avoid any subsidiary guarantee that may be delivered in the future. A court
could avoid or subordinate a subsidiary guarantee in favor of that subsidiary
guarantor's other creditors if the court found that either:

+  the guarantee was incurred with the intent to hinder, delay or defraud any
   present or future creditor or the subsidiary guarantor contemplated
   insolvency with a design to favor one or more creditors to the exclusion in
   whole or in part of others; or

+  the subsidiary guarantor did not receive fair consideration or reasonably
   equivalent value for issuing its subsidiary guarantee;

and, in either case, the subsidiary guarantor, at the time it issued the
subsidiary guarantee:

+  was insolvent or rendered insolvent by reason of the issuance of the
   subsidiary guarantee;

+  was engaged or about to engage in a business or transaction for which its
   remaining assets constituted unreasonably small capital; or

+  intended to incur, or believed that it would incur, debts beyond its ability
   to pay such debts as they matured.

Among other things, a legal challenge of the subsidiary guarantee on fraudulent
conveyance grounds may focus on the benefits, if any, realized by the subsidiary
guarantor as a result of our issuance of the notes or the delivery of the
subsidiary guarantee. To the extent the subsidiary guarantee was avoided as a
fraudulent conveyance or held unenforceable for any other reason, you would
cease to have any claim against that subsidiary guarantor and would be solely a
creditor of us and of any subsidiary guarantors whose subsidiary guarantees were
not avoided or held unenforceable. In that event, your claims against the issuer
of an invalid subsidiary guarantee would be subject to the prior payment of all
liabilities of that subsidiary guarantor.

--------------------------------------------------------------------------------
S- 14

RISK FACTORS
--------------------------------------------------------------------------------

RISKS ASSOCIATED WITH OUR OPERATIONS

Set forth below, and under the caption "Risk Factors--Risks Associated with our
Operations" in the accompanying prospectus are discussions of the material risks
associated with our business.

EXPLORATION IN DEEPWATER INVOLVES GREATER OPERATING AND FINANCIAL RISKS THAN
EXPLORATION OF SHALLOWER DEPTHS. THESE RISKS COULD RESULT IN SUBSTANTIAL LOSSES.

In 2001, we developed a strategy to expand our operations to the deepwater of
the Gulf of Mexico. In addition, through our acquisition of EEX we will acquire
oil and gas properties located in the deepwater of the Gulf of Mexico. Deepwater
drilling and operations require the application of recently developed
technologies and involve a higher risk of mechanical failure. We will likely
experience significantly higher drilling costs for any deepwater wells we may
drill. In addition, much of the deepwater play lacks the physical and oilfield
service infrastructure present in shallower waters. As a result, development of
a deepwater discovery may be a lengthy process and require substantial capital
investment, resulting in significant financial and operating risks.

In addition, as we carry out our drilling program in deepwater, it is likely
that we will not initially serve as operator of the wells. As a result, we may
have limited ability to exercise influence over operations for these properties
or their associated costs. Our dependence on the operator and other working
interest owners for these deepwater projects and our limited ability to
influence operations and associated costs could prevent the realization of our
targeted returns on capital in drilling or acquisition activities in the
deepwater of the Gulf of Mexico. The success and timing of drilling and
exploitation activities on properties operated by others therefore depend upon a
number of factors that will be largely outside of our control, including:

+  the timing and amount of capital expenditures;

+  the availability of suitable offshore drilling rigs, drilling equipment,
   support vessels, production and transportation infrastructure and qualified
   operating personnel;

+  the operator's expertise and financial resources;

+  approval of other participants in drilling wells; and

+  selection of technology.

RISK ASSOCIATED WITH THE ACQUISITION OF EEX

WE MAY FACE DIFFICULTIES IN INTEGRATING EEX'S BUSINESS INTO OUR BUSINESS.

In integrating EEX's business into ours, we may encounter difficulties that
could adversely affect our financial position, such as difficulties in combining
operations, retention and integration of key management personnel and other
important employees of EEX, the potential disruption of operations and the
incurrence of substantial transaction costs and other expenses to accomplish the
merger. We cannot assure you that the integration of EEX's business will be
accomplished in an efficient and effective manner, if at all.

--------------------------------------------------------------------------------
                                                                           S- 15

--------------------------------------------------------------------------------

Use of proceeds

The net proceeds from the offering, after deducting underwriting discounts and
estimated offering expenses, will be approximately $241.8 million. Following the
consummation of the acquisition of EEX, we intend to use the net proceeds from
the sale of the notes to repay outstanding indebtedness of EEX that will become
due at the closing of the acquisition, which bears interest at a weighted
average annual rate of 5.9% as of August 2, 2002 and matures on March 31, 2003.
At June 30, 2002, EEX had approximately $221.0 million of outstanding
indebtedness that would become due at the closing of the acquisition. We intend
to use the remaining net proceeds to pay a portion of the transaction costs of
the acquisition.

Pending this use, the net proceeds (before expenses) will be placed in an escrow
account to fund, if necessary, the special mandatory redemption of the notes and
will be invested in cash or cash equivalents. For more information about the
escrow account, please read "Description of the notes--Escrow of Proceeds;
Special Mandatory Redemption" in this prospectus supplement.

Ratios of earnings to fixed charges

We have calculated our ratios of earnings to fixed charges as follows:



                                                  PRO FORMA FOR THIS OFFERING
                                                    AND THE EEX ACQUISITION
                                   THREE MONTHS                  THREE MONTHS
                                          ENDED     YEAR ENDED          ENDED
    YEAR ENDED DECEMBER 31,           MARCH 31,   DECEMBER 31,      MARCH 31,
1997   1998   1999   2000   2001           2002           2001           2002
-----------------------------------------------------------------------------
                                            
 9.5x    (1)   3.7x  8.9x   5.7x            3.4x           1.9x           2.1x


------------
(1)  We had a loss for the year ended December 31, 1998 for purposes of
     computing these ratios. Earnings for such year were insufficient to cover
     fixed charges by approximately $88.4 million.

For purposes of computing the consolidated ratios of earnings to fixed charges,
earnings consist of income before income taxes plus fixed charges (excluding
capitalized interest), and fixed charges consist of interest expense, dividends
on our convertible trust preferred securities and the estimated interest
component of rent expense.

--------------------------------------------------------------------------------
S- 16

--------------------------------------------------------------------------------

Capitalization of Newfield

The following table shows our unaudited capitalization at March 31, 2002:

+  on a historical basis; and

+  on a pro forma basis to reflect the issuance of the notes, the acquisition of
   EEX and our application of the net proceeds from the sale of the notes.

You should read the table together with our financial statements and other
information included in the documents incorporated by reference in this
prospectus supplement and the accompanying prospectus.



                                                                   AS OF MARCH 31, 2002
                                                                           PRO FORMA FOR THIS
                                                                             OFFERING AND THE
                                                              HISTORICAL      EEX ACQUISITION
---------------------------------------------------------------------------------------------
                                                                      (in thousands)
                                                                     
Debt(1):
  Credit facility and money market lines....................    $111,000             $174,600
  7.45% Senior Notes due 2007...............................     124,754              124,754
  7 5/8% Senior Notes due 2011..............................     174,888              174,888
  8 3/8% Senior Subordinated Notes due 2012.................          --              247,920
  EEX secured notes due 2009................................          --              100,764
                                                              ----------   ------------------
     Total debt.............................................     410,642              822,926
Company-obligated mandatorily redeemable convertible
  preferred securities of Newfield Financial Trust I........     143,750              143,750
Stockholders' equity:
  Preferred stock ($0.01 par value; 5,000,000 shares
     authorized; no shares issued)..........................          --                   --
  Common stock ($0.01 par value; 100,000,000 shares
     authorized; 45,215,537 issued and outstanding at March
     31, 2002)..............................................         451                  522
  Additional paid-in capital................................     370,544              628,544
  Treasury stock (at cost 867,936 shares)...................     (26,012)             (26,012)
  Unearned compensation.....................................      (8,176)              (8,176)
  Accumulated other comprehensive loss......................     (27,273)             (27,273)
  Retained earnings.........................................     378,742              378,742
                                                              ----------   ------------------
     Total stockholders' equity.............................     688,276              946,347
                                                              ----------   ------------------
     Total capitalization...................................  $1,242,668           $1,913,023
                                                              ==========   ==================


------------
(1)  Please read "Description of existing indebtedness" in this prospectus
     supplement for additional information regarding our existing indebtedness.

--------------------------------------------------------------------------------
                                                                           S- 17


--------------------------------------------------------------------------------

Newfield selected financial and other data

The following selected historical financial data as of and for the five years
ended December 31, 2001 have been derived from our audited consolidated
financial statements. The summary historical financial data as of March 31, 2002
and for the three months ended March 31, 2002 and 2001 are derived from our
unaudited consolidated financial statements. The unaudited consolidated
financial statements include all adjustments which we consider necessary for a
fair presentation of the financial position and results of operations for those
periods. You should not expect the results for any prior or interim periods to
be indicative of the results that may be achieved in any future periods. You
should read the following information together with our historical financial
statements and related notes and with "Management's Discussion and Analysis of
Financial Condition and Results of Operations" included in our Annual Report on
Form 10-K for the year ended December 31, 2001 and in our Quarterly Report on
Form 10-Q for the three months ended March 31, 2002, which are incorporated by
reference into this prospectus supplement and the accompanying prospectus.



                                                                                THREE MONTHS ENDED
                                       YEAR ENDED DECEMBER 31,                       MARCH 31,
                             1997       1998       1999       2000       2001       2001       2002
---------------------------------------------------------------------------------------------------
                                               (in thousands, except ratios)
                                                                      
INCOME STATEMENT DATA:
Oil and gas revenues...  $201,755   $199,474   $287,889   $526,642   $749,405   $209,326   $148,039
                         --------   --------   --------   --------   --------   --------   --------
Operating expenses:
  Lease operating......    24,308     35,345     45,561     65,372    102,922     20,824     23,053
  Production and other
    taxes..............        --         --      2,215     10,288     17,523      7,118      3,410
  Transportation.......     2,356      3,789      5,922      5,984      5,569      1,262      1,331
  Depreciation,
    depletion and
    amortization.......    94,000    123,147    152,644    191,182    282,567     61,146     71,207
  Ceiling test
    writedown..........     4,254    104,955         --        503    106,011         --         --
  General and
   administrative(1)...    12,270     12,070     16,404     32,084     43,955     11,285     12,345
                         --------   --------   --------   --------   --------   --------   --------
Total operating
  expenses.............   137,188    279,306    222,746    305,413    558,547    101,635    111,346
                         --------   --------   --------   --------   --------   --------   --------
Income (loss) from
  operations...........    64,567    (79,832)    65,143    221,229    190,858    107,691     36,693
Other expense, net.....    (2,146)    (8,544)    (9,572)    (7,196)   (14,975)    (5,039)    (3,255)
Dividends on
  convertible preferred
  securities of
  Newfield Financial
  Trust I..............        --         --     (3,556)    (9,344)    (9,344)    (2,336)    (2,336)
Unrealized commodity
  derivative income
  (expense)............        --         --         --         --     24,821     (1,558)    (5,645)
                         --------   --------   --------   --------   --------   --------   --------
Income (loss) before
  income taxes.........    62,421    (88,376)    52,015    204,689    191,360     98,758     25,457
Income tax provision
  (benefit)............    21,818    (30,677)    18,811     69,980     67,612     35,613      9,131
                         --------   --------   --------   --------   --------   --------   --------
Income (loss) before
  cumulative effect of
  change in accounting
  principle............   $40,603   $(57,699)   $33,204   $134,709   $123,748    $63,145    $16,326
Cumulative effect of
  change in accounting
  principle(2)(3)......        --         --         --     (2,360)    (4,794)    (4,794)        --
                         --------   --------   --------   --------   --------   --------   --------
Net income (loss)......   $40,603   $(57,699)   $33,204   $132,349   $118,954    $58,351    $16,326
                         ========   ========   ========   ========   ========   ========   ========


--------------------------------------------------------------------------------
S- 18

NEWFIELD SELECTED FINANCIAL AND OTHER DATA
--------------------------------------------------------------------------------



                                                                                THREE MONTHS ENDED
                                       YEAR ENDED DECEMBER 31,                       MARCH 31,
                             1997       1998       1999       2000       2001       2001       2002
---------------------------------------------------------------------------------------------------
                                               (in thousands, except ratios)
                                                                      
OTHER DATA:
Capital expenditures...  $253,159   $310,772   $209,799   $379,166   $855,395   $432,691    $80,576
Net cash provided by
  operating activities
  before changes in
  operating assets and
  liabilities..........   161,852    141,948    205,553    383,524    526,761    140,968     96,660
Net cash provided by
  operating
  activities...........   160,338    146,575    184,903    316,444    502,372    201,531     98,649
Net cash used in
  investing
  activities...........  (242,962)  (318,991)  (210,817)  (355,547)  (765,822)  (373,047)   (85,315)
Net cash provided by
  (used in) financing
  activities...........    77,551    164,291     67,758     15,933    273,127    215,834    (14,822)
EBITDA(4)..............   163,943    149,234    219,403    415,038    608,250    167,892    104,071
Adjusted EBITDA(4).....   165,120    151,456    221,402    418,085    586,180    170,045    110,294
Ratio of earnings to
  fixed charges(5).....       9.5x        --        3.7x       8.9x       5.7x      11.1x       3.4x
Ratio of Adjusted
  EBITDA to interest
  expense..............      24.5x      10.9x      16.3x      28.5x      21.0x      24.4x      15.3x
Ratio of total debt to
  Adjusted EBITDA......       0.8x       1.4x       0.6x       0.3x       0.7x       N/A        N/A




                                                                                                AS OF
                                                    AS OF DECEMBER 31,                      MARCH 31,
                                      1997      1998      1999         2000         2001         2002
-----------------------------------------------------------------------------------------------------
                                                            (in thousands)
                                                                         
BALANCE SHEET DATA:
Working capital surplus
  (deficit).....................      $372   $(8,806)  $35,202      $38,497      $65,573      $22,176
Oil and gas properties, net.....   483,823   578,002   644,434      832,907    1,408,579    1,417,755
Total assets....................   553,621   629,311   781,561    1,023,250    1,663,371    1,608,022
Long-term debt..................   129,623   208,650   124,679      133,711      428,631      410,642
Convertible preferred
  securities....................        --        --   143,750      143,750      143,750      143,750
Stockholders' equity............   292,048   323,948   375,018      519,455      709,978      688,276


------------

(1)  General and administrative expense includes non-cash stock compensation
     charges of $1.2 million, $2.2 million, $2.0 million, $3.0 million and $2.8
     million for 1997, 1998, 1999, 2000 and 2001, respectively, and $0.6 million
     for each of the three month periods ended March 31, 2001 and 2002.

(2)  We adopted SEC Staff Accounting Bulletin (SAB) No. 101, "Revenue
     Recognition in Financial Statements," effective January 1, 2000. The
     adoption of SAB No. 101 requires us to report crude oil inventory
     associated with our Australian offshore operations at the lower of cost or
     market, which was a change from our historical policy of recording such
     inventory at market value on the balance sheet date, net of estimated costs
     to sell. The cumulative effect of the change from the acquisition date of
     our Australian operations in July 1999 through December 31, 1999 is a
     reduction in net income of $2.36 million, or $0.05 per diluted share, and
     is shown as the cumulative effect of change in accounting principle on the
     consolidated statement of income for the year ended December 31, 2000. The
     pro forma effect had SAB No. 101 been applied retroactively to 1999 would
     have reduced net income by $2.36 million, or $0.06 per diluted share. SAB
     No. 101 would not have effected periods prior to the acquisition of our
     Australian operations in July 1999.

(3)  We adopted Statement of Financial Accounting Standards (SFAS) No. 133,
     "Accounting for Derivative Instruments and Hedging Activities" on January
     1, 2001. SFAS No. 133 requires us to record all derivative instruments as
     either assets or liabilities on the balance sheet and measure those
     instruments at fair value. For all periods prior to January 1, 2001, we
     accounted for commodity price hedging instruments in accordance with SFAS
     No. 80, "Accounting for Futures Contracts." The cumulative effect of the
     adoption is a reduction in net income of $4.8 million, or $0.10 per diluted
     share, and is shown

--------------------------------------------------------------------------------
                                                                           S- 19

NEWFIELD SELECTED FINANCIAL AND OTHER DATA
--------------------------------------------------------------------------------

     as the cumulative effect of a change in accounting principle on the
     consolidated statement of income for the year ended December 31, 2001 and
     the three months ended March 31, 2001.

(4)  EBITDA represents net income plus income taxes, interest expense (including
     dividends on preferred securities), depreciation, depletion and
     amortization expense (including ceiling test writedown and asset
     impairment). Adjusted EBITDA represents EBITDA plus non cash general and
     administrative expense and commodity derivative income (expense) associated
     with SFAS 133. EBITDA and Adjusted EBITDA are not presented as indicators
     of our operating performance, as indicators of cash available for
     discretionary spending or as measures of liquidity. EBITDA and Adjusted
     EBITDA may not be comparable to other similarly titled measures of other
     companies. We follow the full cost method of accounting.

(5)  For purposes of determining the ratio of earnings to fixed charges,
     earnings are defined as income before income taxes plus fixed charges
     excluding capitalized interest. Fixed charges consist of interest expense,
     dividends on our convertible trust preferred securities and the estimated
     interest component of rent expense. We had a loss for the year ended
     December 31, 1998 for purposes of computing these ratios. Earnings for such
     year were insufficient to cover fixed charges by approximately $88.4
     million.

The following table presents information about our oil and gas operations.



                                                                                    THREE MONTHS ENDED
                                          YEAR ENDED DECEMBER 31,                        MARCH 31,
                               1997        1998        1999       2000       2001       2001       2002
-------------------------------------------------------------------------------------------------------
                                                                          
PRODUCTION:(1)
  Oil and condensate
    (MBbls).............    3,424.0     3,643.4     4,353.6    5,763.7    6,998.1    1,480.6    1,647.3
  Gas (Bcf).............       53.5        66.6        87.4      105.4      133.2       30.8       33.9
  Total production
    (Bcfe)..............       74.0        88.5       113.5      140.0      175.2       39.6       43.8
AVERAGE REALIZED
  PRICES:(2)
  Oil and condensate
    (per Bbl)...........     $19.08      $12.75      $18.15     $25.29     $24.00     $24.95     $22.03
  Gas (per Mcf).........      $2.51       $2.25       $2.32      $3.56      $4.32      $5.56      $3.26
AVERAGE COSTS (PER
  MCFE):
  Lease operating.......      $0.33       $0.40       $0.40      $0.47      $0.59      $0.53      $0.53
  Depreciation,
    depletion and
    amortization........      $1.27       $1.39       $1.35      $1.37      $1.61      $1.54      $1.63
  General and
    administrative,
    net.................      $0.15       $0.11       $0.13      $0.21      $0.24      $0.27      $0.27


------------

(1)  Excludes Australian volumes produced but not sold.

(2)  For purposes of this table, average realized prices for natural gas and oil
     and condensate are presented net of all applicable transportation expenses,
     which reduced the realized price of natural gas by $0.03, $0.04, $0.05,
     $0.04 and $0.03 for the years ended 1997, 1998, 1999, 2000 and 2001,
     respectively, and by $0.03 for each of the three month periods ended March
     31, 2001 and 2002. The realized price of oil and condensate is reduced by
     $0.27, $0.34, $0.32, $0.27 and $0.24 for the years ended 1997, 1998, 1999,
     2000 and 2001, respectively, and by $0.24 and $0.23 for the three months
     ended March 31, 2001 and 2002, respectively. Average realized prices
     include the effect of hedges.

--------------------------------------------------------------------------------
S- 20

NEWFIELD SELECTED FINANCIAL AND OTHER DATA
--------------------------------------------------------------------------------

The following table presents information regarding our estimated proved oil and
gas reserves and the present value of those reserves. All information in this
prospectus supplement relating to oil and gas reserves and the present value of
those reserves is based upon estimates prepared by us and is net to our
interest.



                                                            AS OF DECEMBER 31,
                                                1997     1998     1999       2000       2001
--------------------------------------------------------------------------------------------
                                                                     
Proved reserves:
  Oil and condensate (MMBbls)...............    16.3     15.2     25.8       27.9       36.3
  Gas (Bcf).................................   337.5    422.3    440.2      519.7      718.3
  Total (Bcfe)..............................   435.3    513.3    594.8      687.3      936.4
Standardized measure of estimated future
  after-tax net cash flows before 10% annual
  discount (in millions)....................  $629.9   $559.3   $913.3   $3,494.3   $1,324.4
Present value of future after-tax net cash
  flows (in millions).......................  $502.9   $451.2   $732.5   $2,670.3     $971.5


--------------------------------------------------------------------------------
                                                                           S- 21


--------------------------------------------------------------------------------

EEX selected financial data

The following selected historical financial and reserve data as of and for the
five years ended December 31, 2001 has been derived from EEX's audited
consolidated financial statements giving effect to the adoption of SFAS No. 144
("Accounting for the Impairment or Disposal of Long-Lived Assets") as of January
1, 2002, resulting in the reclassification for the disposal of EEX's Indonesian
operations during 2002. The selected historical financial data as of March 31,
2002 and for the three months ended March 31, 2001 and 2002 are derived from
EEX's unaudited consolidated financial statements. The unaudited consolidated
financial statements include all adjustments which EEX considers necessary for a
fair presentation of the financial position and results of operations for those
periods. You should not expect the results for any prior or interim periods to
be indicative of the results that may be achieved in any future periods. You
should read the following information together with EEX's historical financial
statements as of December 31, 1999, 2000 and 2001 and for the each of the three
years then ended and related notes thereto and as of March 31, 2002 and for the
three month periods ended March 31, 2001 and 2002 and related notes thereto,
which are incorporated by reference into this prospectus supplement and the
accompanying prospectus.



                                                                                  THREE MONTHS ENDED
                                       YEAR ENDED DECEMBER 31,                         MARCH 31,
                             1997       1998       1999       2000        2001        2001        2002
------------------------------------------------------------------------------------------------------
                                                        (in thousands)
                                                                        
INCOME STATEMENT DATA:
Revenues..............   $314,213   $189,782   $122,773   $208,454    $157,524     $45,600     $40,511
                        ---------   --------   --------   --------   ---------   ---------   ---------
Costs and expenses:
  Production and
    operating.........     59,341     46,566     31,284     32,517      28,057       6,817       7,039
  Exploration.........     70,021     38,854     82,579     32,126      48,116      19,711       5,724
  Taxes, other than
    income............     17,356     11,017      4,744     10,906      14,731       5,545       1,857
  Depreciation,
    depletion and
    amortization......    144,485     92,630     58,830     66,661      49,294      11,440      12,130
  Impairment of long-
    lived assets......    260,112     10,439     26,424        200     111,030          --          --
  General,
    administrative and
    other.............     55,604     24,057     28,354     19,528      18,738       3,313       4,383
  (Gain) loss on sales
    of property, plant
    and equipment.....    (52,917)    (9,085)   (15,483)     7,230     (12,263)        302         (17)
                        ---------   --------   --------   --------   ---------   ---------   ---------
        Total costs
           and
           expenses...    554,002    214,478    216,732    169,168     257,703      47,128      31,116
                        ---------   --------   --------   --------   ---------   ---------   ---------
Operating income
  (loss) from
  continuing
  operations..........   (239,789)   (24,696)   (93,959)    39,286    (100,179)     (1,528)      9,395
                        ---------   --------   --------   --------   ---------   ---------   ---------
Other expense, net....    (29,793)   (18,544)   (11,538)   (32,304)    (28,504)     (7,414)     (5,605)
                        ---------   --------   --------   --------   ---------   ---------   ---------
Income (loss) from
  continuing
  operations before
  income taxes........   (269,582)   (43,240)  (105,497)     6,982    (128,683)     (8,942)      3,790
Income taxes
  (benefit)...........    (58,945)    (4,997)     6,891      1,586      20,118          --          --
                        ---------   --------   --------   --------   ---------   ---------   ---------


--------------------------------------------------------------------------------
S- 22

EEX SELECTED FINANCIAL DATA
--------------------------------------------------------------------------------



                                                                                  THREE MONTHS ENDED
                                       YEAR ENDED DECEMBER 31,                         MARCH 31,
                             1997       1998       1999       2000        2001        2001        2002
------------------------------------------------------------------------------------------------------
                                                        (in thousands)
                                                                        
Income (loss) from
  continuing
  operations..........   (210,637)   (38,243)  (112,388)     5,396    (148,801)     (8,942)      3,790
Minority interest
  third party.........      4,925      6,532         50      1,950          --          --          --
Income (loss) from
  discontinued
  operations, net of
  income taxes........       (541)     3,849     24,641       (500)       (773)      4,693       2,701
Extraordinary
  item--debt
  extinguishments
  gain, net of tax....         --         --         --         --      (3,593)         --          --
                        ---------   --------   --------   --------   ---------   ---------   ---------
Net income (loss).....   (216,103)   (40,926)   (87,797)     2,946    (145,981)     (4,249)      6,491
Preferred stock
  dividends...........         --         --     12,117     13,364      14,465       3,510       3,799
                        ---------   --------   --------   --------   ---------   ---------   ---------
Net income (loss)
  applicable to common
  shareholders........  $(216,103)  $(40,926)  $(99,914)  $(10,418)  $(160,446)    $(7,759)     $2,692
                        =========   ========   ========   ========   =========   =========   =========
CASH FLOW DATA:
Net cash provided by
  (used in) operating
  activities before
  changes in operating
  assets and
  liabilities.........   $137,676    $69,503    $27,925    $77,600     $38,509     $(5,561)    $16,360
Net cash provided by
  operating
  activities..........    186,779     25,573     54,475     58,251      28,178       2,929       6,490
Net cash provided by
  (used in) investing
  activities..........    (44,816)   173,427   (329,666)  (100,744)    (88,131)    (44,805)    (12,353)
Net cash provided by
  (used in) financing
  activities..........   (130,377)  (138,417)   247,176     34,895     148,234      35,072     (21,053)


--------------------------------------------------------------------------------
                                                                           S- 23

EEX SELECTED FINANCIAL DATA
--------------------------------------------------------------------------------



                                                 AS OF DECEMBER 31,                      AS OF MARCH 31,
                                    1997       1998       1999        2000        2001              2002
--------------------------------------------------------------------------------------------------------
                                                   (in thousands)
                                                                       
BALANCE SHEET DATA:
Working capital surplus
  (deficit)..................   $(58,805)   $10,766   $(30,870)     $3,465   $(189,755)     $(231,294)
Oil and gas properties and
  other, net(1)..............    690,837    395,611    630,085     604,060     519,548        522,560
Total assets.................    807,789    565,070    780,784     764,068     750,118        686,992
CAPITAL STRUCTURE:
Short-term borrowings........     $5,000        $--        $--         $--         $--            $--
Capital lease obligations....    241,735    233,318    222,444     205,634          --             --
Secured notes payable........         --         --         --          --     114,343        100,764
Bank revolving credit
  agreement..................     25,000         --         --      75,000     325,000(2)      325,000(2)
Gas sales obligation.........         --         --    105,000      83,490      59,937         52,463
Minority interest in
  preferred securities of
  subsidiary.................    100,000         --         --          --          --             --
Minority interest third
  party......................         --         --      3,050       5,000       5,000          5,000
Shareholders' equity.........    274,663    234,300    294,863     289,601     180,788        155,332
                               ---------   --------   --------   ---------   ---------      ---------
        Total................   $646,398   $467,618   $625,357    $658,725    $685,068       $638,559
                               =========   ========   ========   =========   =========      =========
PROVED RESERVE DATA:(3)
Natural gas (Bcf)............      460.2      203.6      362.8       382.6       395.0            N/A
Oil, condensate and natural
  gas liquids (MMBbls).......       23.8       26.2       17.5        25.1        14.6            N/A
        Total (Bcfe).........      603.2      360.5      468.1       533.3       482.3            N/A
Standardized measure of
  discounted future net cash
  flows (in millions)........     $619.1     $275.9     $436.3    $1,283.3      $389.2            N/A


------------

(1)  Oil and gas properties and other, net are shown net of assets held for
     sale.

(2)  Represents borrowings under EEX's old credit facility which would have
     matured in June 2002. EEX entered into a new credit facility on May 29,
     2002.

(3)  Newfield's estimates of EEX's proved reserves at December 31, 2001 are set
     forth in "Unaudited Pro Forma Combined Supplementary Oil and Gas
     Disclosures" in this prospectus supplement. Newfield's estimates differ
     significantly from those of EEX as set forth above. Such pro forma
     disclosures also reflect the disposition of EEX's international operations
     in the second quarter of 2002. EEX disagrees with Newfield's estimates of
     EEX's proved reserves and believes that no adjustment is required with
     respect to its reported estimates of such reserves at December 31, 2001.
     See "Difference in estimates of EEX proved reserves."

--------------------------------------------------------------------------------
S- 24


--------------------------------------------------------------------------------

Unaudited pro forma combined condensed financial information

The following unaudited pro forma combined condensed financial information
combines the historical consolidated balance sheets and income statements of
Newfield and EEX and gives effect to the issuance of the notes and the
acquisition of EEX using the purchase method of accounting.

The unaudited pro forma combined condensed financial information is based on the
following assumptions and adjustments:

+  EEX's income statement for the year ended December 31, 2001 has been adjusted
   to reflect the disposition and discontinuance of its international
   operations, as if these transactions had occurred on January 1, 2001;

+  the income statement data assume that the issuance of the notes and the
   acquisition were effective on January 1, 2001;

+  the balance sheet data assume that the issuance of the notes and the
   acquisition were effective on March 31, 2002;

+  the balance sheet and income statement data reflect our use of the net
   proceeds from the issuance of the notes to repay the EEX debt that will
   become due at the closing of the acquisition and to pay a portion of the
   transaction costs of the acquisition; and

+  the historical financial statements of EEX have been adjusted to conform to
   our accounting policies.

The historical income statement information for the year ended December 31, 2001
is derived from the audited financial statements of EEX and Newfield. The
historical income statement information for the three-month period ended March
31, 2002 and the historical balance sheet information as of March 31, 2002 are
derived from the unaudited financial statements of EEX and Newfield. We have
provided all the historical information set forth herein regarding us and our
subsidiaries and the assumptions and adjustments for the pro forma information,
and EEX has provided all the historical information set forth herein regarding
EEX and its subsidiaries.

The unaudited pro forma combined condensed financial information is presented
for illustrative purposes only. The financial results may have been different if
the companies had always been combined or if the other transactions had occurred
as of the dates indicated above, nor do they purport to indicate the future
results that we will experience. Further, the unaudited pro forma combined
condensed financial information does not reflect the effect of restructuring
charges that will be incurred to fully integrate and operate the combined
organization more efficiently or anticipated synergies resulting from the
acquisition. The restructuring activities to integrate the companies may result
in head count reduction, asset rationalization and other activities. Because the
plans for these activities have not yet been finalized, we are unable to
reasonably quantify the cost for such activities.

The following information should be read together with the historical financial
statements and related notes of EEX and Newfield incorporated by reference into
this prospectus supplement and the accompanying prospectus.

--------------------------------------------------------------------------------
                                                                           S- 25

UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION
--------------------------------------------------------------------------------

UNAUDITED PRO FORMA COMBINED CONDENSED INCOME STATEMENT



                                                               THREE MONTHS ENDED MARCH 31, 2002
                                                     HISTORICAL    HISTORICAL      PRO FORMA      PRO FORMA
                                                       NEWFIELD           EEX    ADJUSTMENTS       COMBINED
-----------------------------------------------------------------------------------------------------------
                                                             (in thousands, except per share data)
                                                                                      
REVENUES...........................................   $148,039      $40,511                        $188,550
                                                      --------      -------                       ---------
OPERATING EXPENSES:
  Operating........................................     24,384        7,039                          31,423
  Exploration......................................         --        5,724           (5,724)(A)         --
  Production and other taxes.......................      3,410        1,857                           5,267
  Depreciation, depletion and amortization.........     71,207       12,130          (12,130)(B)     90,473
                                                                                      19,266(C)
  General and administrative.......................     12,345        4,383                          16,728
  Gain on sales of property, plant and equipment...         --          (17)              17(E)          --
                                                      --------      -------      -----------      ---------
         Total operating expenses..................    111,346       31,116            1,429        143,891
                                                      --------      -------      -----------      ---------
Income (loss) from operations......................     36,693        9,395           (1,429)        44,659
                                                      --------      -------      -----------      ---------
Other income (expenses):
Interest and other income (expense)................     (3,829)         557                          (3,272)
Interest expense...................................     (5,071)      (6,162)             139(F)     (13,122)
                                                                                       1,473(G)
                                                                                       1,923(H)
                                                                                      (5,424)(H)
Dividends on convertible preferred securities of
  Newfield Financial Trust I.......................     (2,336)          --                          (2,336)
                                                      --------      -------      -----------      ---------
         Total other income (expenses).............    (11,236)      (5,605)          (1,889)       (18,730)
                                                      --------      -------      -----------      ---------
Income before income taxes, discontinued
  operations, extraordinary items and cumulative
  effect of change in accounting principles........     25,457        3,790           (3,318)        25,929
                                                      --------      -------      -----------      ---------
Income tax provision...............................      9,131           --              165(I)       9,296
                                                      --------      -------      -----------      ---------
Income (loss) before discontinued operations,
  extraordinary items, cumulative effect of change
  in accounting principles and preferred stock
  dividends........................................    $16,326       $3,790          $(3,483)       $16,633
                                                      ========      =======      ===========      =========
Per share data:
  Basic earnings per share.........................      $0.37        $0.09                           $0.32
                                                      ========      =======                       =========
  Diluted earnings per share.......................      $0.37        $0.09                           $0.32
                                                      ========      =======                       =========
  Weighted average number of shares outstanding for
    basic earnings per share.......................     44,212       41,860          (41,860)(J)     51,312
                                                      ========      =======                       =========
                                                                                       7,100(J)
  Weighted average number of shares outstanding for
    diluted earnings per share.....................     48,745       41,860          (41,860)(J)     51,922
                                                      ========      =======                       =========
                                                                                       7,100(J)
                                                                                      (3,923)(K)


--------------------------------------------------------------------------------
S- 26

UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION
--------------------------------------------------------------------------------

UNAUDITED PRO FORMA COMBINED CONDENSED INCOME STATEMENT



                                                                    YEAR ENDED DECEMBER 31, 2001
                                                         HISTORICAL   HISTORICAL     PRO FORMA     PRO FORMA
                                                           NEWFIELD          EEX   ADJUSTMENTS      COMBINED
------------------------------------------------------------------------------------------------------------
                                                                (in thousands, except per share data)
                                                                                       
REVENUES...............................................   $749,405     $157,524                    $906,929
                                                          --------    ---------                    --------
OPERATING EXPENSES:
  Operating............................................    108,491       28,057                     136,548
  Exploration..........................................         --       48,116        (48,116)(A)       --
  Production and other taxes...........................     17,523       14,731                      32,254
  Depreciation, depletion and amortization.............    282,567       49,294        (49,294)(B)  361,655
                                                                                        79,088(C)
  Ceiling test write-down..............................    106,011                                  106,011
  Impairment of long-lived assets......................         --      111,030        (28,744)(D)   82,286
  General and administrative...........................     43,955       18,738           (226)(Z)   62,467
  Gain on sales of property, plant and equipment.......         --      (12,263)        12,263(E)        --
                                                          --------    ---------    -----------     --------
         Total operating expenses......................    558,547      257,703        (35,029)     781,221
                                                          --------    ---------    -----------     --------
Income (loss) from operations..........................    190,858     (100,179)        35,029      125,708
                                                          --------    ---------    -----------     --------
OTHER INCOME (EXPENSES):
Interest and other income (expense)....................     28,814        1,232                      30,046
Interest expense.......................................    (18,968)     (29,736)           627(F)   (54,838)
                                                                                         5,972(G)
                                                                                         8,955(H)
                                                                                       (21,688)(H)
Dividends on convertible preferred securities of
  Newfield Financial Trust I...........................     (9,344)          --                      (9,344)
                                                          --------    ---------    -----------     --------
         Total other income (expenses).................        502      (28,504)        (6,134)     (34,136)
                                                          --------    ---------    -----------     --------
Income (loss) before income taxes, discontinued
  operations, extraordinary items and cumulative effect
  of change in accounting principles...................    191,360     (128,683)        28,895       91,572
                                                          --------    ---------    -----------     --------
Income tax provision...................................     67,612       20,118        (55,044)(I)   32,686
                                                          --------    ---------    -----------     --------
Income (loss) before discontinued operations,
  extraordinary items, cumulative effect of change in
  accounting principles and preferred stock
  dividends............................................   $123,748    $(148,801)       $83,939      $58,886
                                                          ========    =========    ===========     ========
Per share data:
  Basic earnings (loss) per share......................      $2.80       $(3.58)                      $1.15
                                                          ========    =========                    ========
  Diluted earnings (loss) per share....................      $2.66       $(3.58)                      $1.13
                                                          ========    =========                    ========
  Weighted average number of shares outstanding for
    basic earnings (loss) per share....................     44,258       41,724        (41,724)(J)   51,358
                                                          ========    =========                    ========

                                                                                         7,100(J)
  Weighted average number of shares outstanding for
    diluted earnings (loss) per share..................     48,894       41,724        (41,724)(J)   52,071
                                                          ========    =========                    ========

                                                                                         7,100(J)
                                                                                        (3,923)(K)


--------------------------------------------------------------------------------
                                                                           S- 27

UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION
--------------------------------------------------------------------------------

UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET



                                                               AS OF MARCH 31, 2002
                                                      EEX DISPOSITIONS   NOTES OFFERING   EEX ACQUISITION
                            HISTORICAL   HISTORICAL          PRO FORMA        PRO FORMA         PRO FORMA      PRO FORMA
                              NEWFIELD          EEX     ADJUSTMENTS(L)      ADJUSTMENTS       ADJUSTMENTS       COMBINED
------------------------------------------------------------------------------------------------------------------------
                                                       (in thousands, except per share data)
                                                                                           
ASSETS
Current assets...........     $171,903    $145,022            $(15,683)                       $(86,611)(N)      $214,631
Oil and gas properties...    2,524,191     890,302                                            (890,302)(O)     3,083,292
                                                                                               559,101(P)
Other....................           --       8,664                                              (8,664)(Q)            --
Less--accumulated
  depreciation, depletion
  and amortization.......   (1,106,436)   (376,406)                                            370,331(O)     (1,106,436)
                                                                                                 6,075(Q)
                           -----------    --------    ----------------     ---------         ---------       -----------
                             1,417,755     522,560                                              36,541         1,976,856
                           -----------    --------    ----------------     ---------         ---------       -----------
Property, plant and
  equipment held for
  sale...................           --      16,342             (16,342)                         35,000(P)         35,000
Other assets.............       18,364       3,068                            $6,125(M)          2,589(Q)         26,909
                                                                                                (3,237)(R)
                           -----------    --------    ----------------     ---------         ---------       -----------
Total assets.............   $1,608,022    $686,992            $(32,025)       $6,125          $(15,718)       $2,253,396
                           ===========    ========    ================     =========         =========       ===========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities......     $149,727    $376,316             $(3,500)    $(241,795)(M)       $25,000(S)       $207,677
                                                                                              (104,000)(T)
                                                                                                 5,929(U)
Other liabilities........        8,278      11,759                                               3,896(V)         23,933
Long-term debt...........      410,642     138,585                           247,920(M)         11,107(T)        808,254
Deferred taxes...........      207,349          --                                             (84,064)(W)       123,285
                           -----------    --------    ----------------     ---------         ---------       -----------
         Total long-term
           liabilities...      626,269     150,344                           247,920           (69,061)          955,472
                           -----------    --------    ----------------     ---------         ---------       -----------
Minority interest third
  party..................           --       5,000                                              (4,850)(X)           150
Company-obligated,
  mandatorily redeemable,
  convertible preferred
  securities of Newfield
  Financial Trust I......      143,750          --                                                               143,750
Stockholders' equity.....      688,276     155,332                                             102,739(Y)        946,347
                           -----------    --------    ----------------     ---------         ---------       -----------
         Total
           liabilities
           and
           stockholders'
           equity........   $1,608,022    $686,992             $(3,500)       $6,125          $(44,243)       $2,253,396
                           ===========    ========    ================     =========         =========       ===========


--------------------------------------------------------------------------------
S- 28

UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION
--------------------------------------------------------------------------------

NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

(A)  To record the reversal of historical EEX exploration expense in accordance
     with the full cost method of accounting for oil and gas activities.

(B)  To record the reversal of historical EEX depreciation, depletion and
     amortization expense recorded in accordance with the successful efforts
     method of accounting for oil and gas activities.

(C)  To record pro forma depreciation, depletion and amortization expense in
     accordance with the full cost method of accounting for oil and gas
     activities based on the preliminary purchase price allocation to
     depreciable and depletable assets.

(D)  To record the reversal of historical EEX impairment related to oil and gas
     properties recorded in accordance with Statement of Financial Accounting
     Standard No. 121, "Accounting for the Impairment of Long-Lived Assets and
     for Long-Lived Assets to Be Disposed Of." The remaining $82 million
     impairment represents the historical EEX impairment charge for non oil and
     gas assets. Full cost ceiling tests were performed on a pro forma combined
     basis resulting in no incremental impairment of oil and gas properties for
     the period presented.

(E)  To record the reversal of the historical EEX gain on the sales of oil and
     gas properties recorded in accordance with the successful efforts method of
     accounting for oil and gas activities.

(F)  To adjust EEX historical interest expense to reflect the reversal of
     amortization of historical debt issuance costs.

(G)  To record the capitalization of interest based on the preliminary
     allocation of the purchase price to unproved oil and gas properties.

(H)  To eliminate the historical interest expense of approximately $1.9 million
     and $8.9 million for the three months ended March 31, 2002 and the year
     ended December 31, 2001, respectively, related to EEX's credit facility and
     to reflect the interest expense which results from the issuance of $250
     million of senior subordinated note obligations with a stated interest rate
     of 8 3/8%. Interest expense also includes amortization of debt issuance
     costs and the note discount which are being amortized over the term of the
     notes.



                                                              YEAR              THREE
                                                             ENDED       MONTHS ENDED
                                                          DECEMBER 31,      MARCH 31,
                                                              2001               2002
-------------------------------------------------------------------------------------
                                                                (in thousands)
                                                                   
Interest expense -- $250 million senior subordinated
  note obligations......................................    $20,937         $5,235
Amortization of note discount -- senior subordinated
  note obligations......................................        138             36
Amortization of debt issuance costs -- senior
  subordinated note obligations.........................        613            153
                                                            -------         ------
                                                            $21,688         $5,424
                                                            =======         ======


(I)  To record income tax expense on the pro forma adjustments based on the
     applicable statutory tax rate of 35%.

(J)  To reverse historical EEX common stock and reflect the issuance of 7.1
     million shares of Newfield common stock.

(K)  To adjust the weighted average number of shares outstanding for the
     calculation of diluted earnings per share to exclude the dilutive effect of
     the shares underlying the 6 1/2% quarterly

--------------------------------------------------------------------------------
                                                                           S- 29

UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION
--------------------------------------------------------------------------------

     income convertible trust preferred securities because to include such
     shares would have been antidilutive.

(L)  To adjust the EEX historical balance sheet for the disposition and
     discontinuance of its international operations.

(M)  To reflect the issuance of $250 million of senior subordinated note
     obligations (net of a discount of 0.832%) and the application of the net
     proceeds therefrom for the repayment of EEX's credit facility and the
     payment of a portion of the transaction costs of the EEX acquisition and
     the adjustment associated with debt issuance costs related to the senior
     subordinated note obligations.

(N)  To reduce historical EEX current assets by $91 million for working capital
     activity subsequent to the balance sheet date and to increase historical
     EEX current commodity derivative assets by $4 million to estimated current
     fair market value.

(O)  To reverse historical EEX oil and gas property balances and the related
     accumulated depreciation, depletion and amortization recorded in accordance
     with the successful efforts method of accounting for oil and gas
     activities.

(P)  To record the preliminary pro forma allocation of the purchase price of the
     acquisition of EEX including estimated acquisition costs to oil and gas
     properties using the purchase method of accounting. The following is a
     calculation and allocation of purchase price to the acquired assets and
     liabilities based on their relative fair values:


                                                           
CALCULATION OF PURCHASE PRICE (IN THOUSANDS EXCEPT PER
  SHARE):
Shares of common stock to be issued.........................     7,100
  Newfield stock price......................................   $36.348
                                                              --------
  Fair value of stock issued................................  $258,071
  Add: Estimated acquisition costs (See Note (S))...........    25,000
Plus fair market value of liabilities assumed
  Other liabilities.........................................    54,908
  Debt......................................................   385,334
                                                              --------
          Total purchase price for assets acquired..........  $723,313
                                                              ========
ALLOCATION OF PURCHASE PRICE (IN THOUSANDS):
  Oil and Gas properties....................................  $559,101
  Property, plant and equipment held for sale...............    35,000
  Deferred Tax Asset........................................    84,064
  Other Assets..............................................    45,148
                                                              --------
          Total.............................................  $723,313
                                                              ========


     The Newfield stock price included in the table above is calculated based on
     the average of the closing prices of Newfield common stock for the five day
     trading period around the execution of the EEX merger agreement. The
     purchase price allocation is subject to change based on:

     +  the fair value of EEX's working capital and other liabilities on the
        effective date;

     +  the actual acquisition costs incurred; and

     +  an additional review of available oil and gas reserve data to determine
        the fair value of the acquired reserves on the effective date.

     These items will not be known until the effective date of the acquisition.

--------------------------------------------------------------------------------
S- 30

UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION
--------------------------------------------------------------------------------

(Q)  To reclassify EEX historical furniture, fixtures and equipment and
     associated accumulated depreciation, depletion and amortization balances to
     conform to our presentation.

(R)  To record the reversal of the capitalized debt issuance costs related to
     EEX's historical long-term debt.

(S)  To accrue for estimated acquisition costs, consisting primarily of bankers'
     and other professional fees and executive severance costs, some of which
     will be paid with the net proceeds of this offering (see Note (M)).
     Executive severance costs are based on the change in control provisions in
     employment contracts and employee plans. No adjustments have been made to
     the pro forma income statement for such costs.

(T)  To adjust historical EEX debt for cash payments of $104 million made
     subsequent to the balance sheet date and to record an increase in the
     estimated fair market value of the gas sales obligation of $11.1 million.
     Current maturities of long term debt included in pro forma combined current
     liabilities are $14.6 million.

(U)  To adjust historical EEX current commodity derivative liabilities to
     estimated current fair market value.

(V)  To accrue for pension and postretirement benefits for the difference
     between projected benefit obligations and plan assets of $6.3 million and
     to reduce historical EEX non current commodity derivative liabilities by
     $2.4 million to estimated current fair market value.

(W)  To record the pro forma deferred income tax effects of the acquisition
     using the purchase method of accounting.

(X)  To adjust the historical EEX minority interest third party balance to fair
     market value to reflect the unwind of the gas sales obligation in
     accordance with the covenants of the merger agreement.

(Y)  To record the pro forma adjustments to stockholder's equity using the
     purchase method of accounting. The adjustment amount is calculated as
     follows (in thousands):


                                                           
Fair value of stock issued, as calculated in Note (P)
  above.....................................................  $258,071
  Less: EEX historical shareholders' equity.................   155,332
                                                              --------
Adjustment to stockholders' equity..........................  $102,739
                                                              ========


(Z)  To adjust EEX historical results of operations for the disposition and
     discontinuance of its international operations, as if the transactions had
     occurred on January 1, 2001.

--------------------------------------------------------------------------------
                                                                           S- 31

UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION
--------------------------------------------------------------------------------

UNAUDITED PRO FORMA COMBINED SUPPLEMENTARY OIL AND GAS DISCLOSURES

The following pro forma estimated reserve quantities show the effect of the
acquisition of EEX as of December 31, 2001:



                                                         AS OF DECEMBER 31, 2001
                                                                        EEX
                                                               DISPOSITIONS
                                  HISTORICAL   HISTORICAL         PRO FORMA        PRO FORMA   PRO FORMA
                                   NEWFIELD           EEX    ADJUSTMENTS(A)   ADJUSTMENTS(B)    COMBINED
--------------------------------------------------------------------------------------------------------
                                                                                
PROVED:
  Oil and condensate (MBbls)....    36,342       14,560             (10,856)          (1,675)     38,371
  Gas (MMcf)....................   718,312      394,987                  --          (87,146)  1,026,153
          Total (MMcfe).........   936,364      482,347             (65,136)         (97,196)  1,256,379
PROVED DEVELOPED:
  Oil and condensate (MBbls)....    34,534        9,724              (6,644)          (1,209)     36,405
  Gas (MMcf)....................   662,879      310,884                  --          (50,894)    922,869
          Total (MMcfe).........   870,083      369,228             (39,864)         (58,148)  1,141,299


------------
(A)  To adjust EEX historical reserves for the disposition of its international
     operations as if the disposition had occurred on January 1, 2001.

(B)  Represents adjustments to EEX's reserves based on Newfield's estimates of
     EEX's reserves as of December 31, 2001. Newfield's estimates vary
     significantly from those of EEX as set forth in "EEX selected financial
     data" in this prospectus supplement. Please read "Difference in estimates
     of EEX proved reserves" in this prospectus supplement.

--------------------------------------------------------------------------------
S- 32

UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION
--------------------------------------------------------------------------------

UNAUDITED PRO FORMA COMBINED SUPPLEMENTARY OIL AND GAS DISCLOSURES

The following pro forma estimated standardized measure of discounted future net
cash flows shows the effect of the acquisition of EEX as of December 31, 2001:



                                               YEAR ENDED DECEMBER 31, 2001
                                                                EEX
                                                       DISPOSITIONS
                         HISTORICAL   HISTORICAL          PRO FORMA         PRO FORMA    PRO FORMA
                          NEWFIELD           EEX     ADJUSTMENTS(A)    ADJUSTMENTS(B)     COMBINED
--------------------------------------------------------------------------------------------------
                                                      (in thousands)
                                                                         
  Future cash
     inflows...........  $2,552,744   $1,227,200          $(194,400)        $(220,367)  $3,365,177
     Less related
       future:
       Production
          costs........    (686,995)    (553,000)(C)         162,600(C)        153,863    (923,532)
       Development and
          abandonment
          costs........    (258,885)          --                 --           (63,253)    (322,138)
                         ----------   ----------    ---------------    --------------   ----------
Future net cash flows
  before income
  taxes................   1,606,864      674,200            (31,800)         (129,757)   2,119,507
Future income tax
  expense..............    (282,460)      (4,300)             4,300           (76,974)    (359,434)
                         ----------   ----------    ---------------    --------------   ----------
Future net cash flows
  before discount......   1,324,404      669,900            (27,500)         (206,731)   1,760,073
10% annual discount for
  estimating timing of
  cash flows...........    (352,886)    (280,700)             5,500           115,904     (512,182)
                         ----------   ----------    ---------------    --------------   ----------
Standardized measure of
  discounted future net
  cash flows...........    $971,518     $389,200           $(22,000)         $(90,827)  $1,247,891
                         ==========   ==========    ===============    ==============   ==========


------------
(A)  To adjust EEX historical reserves for the disposition of its international
     operations as if the disposition had occurred on January 1, 2001.

(B)  Represents adjustments attributable to EEX's reserves based on Newfield's
     estimates of EEX's reserves as of December 31, 2001. Newfield's estimates
     vary significantly from those of EEX as set forth in "EEX selected
     financial data" in this prospectus supplement. Please read "Difference in
     estimates of EEX proved reserves" in this prospectus supplement.

(C)  Includes related future development costs.

--------------------------------------------------------------------------------
                                                                           S- 33


--------------------------------------------------------------------------------

Difference in estimates of EEX proved reserves

Our estimate of EEX's proved oil and gas reserves at December 31, 2001 is
approximately 23% lower than EEX's estimate. EEX disagrees with our estimate and
believes that no adjustment is required with respect to its reported estimate of
proved reserves at December 31, 2001.

In general, an estimate of proved reserves depends on the availability,
completeness and accuracy of data needed to develop the estimate and on the
experience and judgment of the reservoir engineer making the estimate.
Estimating accumulations of oil and gas is complex and is not exact because of
the numerous uncertainties inherent in the process. Estimates prepared by
different persons may vary significantly because of the judgments required when
interpreting the data. See "Risk Factors--Risks Associated with Our
Operations--Reserve estimates are inherently uncertain and depend on many
assumptions that may turn out to be inaccurate" in the accompanying prospectus.
In fact, it is common for the proved reserve estimates of the buyer and seller
of oil and gas properties to vary significantly.

After our initial filing of the registration statement on Form S-4 in connection
with our acquisition of EEX, representatives of EEX again met with us to assist
us in categorizing, on a field-by-field basis, the differences in estimates of
proved reserves. We placed substantially all of the differences into one of four
categories:

+  the performance history of the reservoir (46% of the difference);

+  the map or drainage area or the volumetrics associated with the area (30% of
   the difference);

+  new well or discovery (14% of the difference); and

+  the availability of data (11% of the difference).

The predominant method of determining proved reserves associated with producing
wells is to study the performance history and draw conclusions from that
history. The performance history of a well, which includes production and
pressure data, can be used to project what the well will produce in the future.
Utilizing trends, the engineer can predict how much the well will ultimately
recover, and thereby predict the remaining proved reserves. The most common
techniques are graphing the well's production versus time or the well's pressure
versus production, and extrapolating a trend line. Because data generally does
not fit a perfectly straight line, the best fit of the data is interpretive. The
engineer must decide whether external conditions have influenced some of the
data points more than others, what conditions may change a trend in the future
and whether there are reasons some of the historical data should be relied upon
to a greater or lesser degree than other historical data. Additionally, the
accuracy of data measurement in the field can influence how trends in the data
are interpreted. Frequently, an engineer also will use analogies drawn from
similar fields and wells that produce from similar sands in the same geologic
region.

For a reservoir that does not have an established production history, the
primary method of estimating proved reserves is the volumetric method. This
method involves the calculation of the volume of oil and gas within the
hydrocarbon reservoir by geologic interpretation and analysis. The configuration
and size of the hydrocarbon reservoir are determined by using well logs and
seismic data. Well logs also are used to determine the physical parameters of
the reservoir, such as the porosity of the rocks in which the reservoir resides,
the relative volumes of oil, gas and water and the portion of the reservoir that
has adequate fluid flow properties so that it may be produced. Interpretive
differences in these parameters based upon the experience and judgment of the
geologist or engineer can result in different volumes being mapped or included
in the drainage area. A seemingly small difference in just one component of the
parameters used to determine volumes of proved reserves can have a significant

--------------------------------------------------------------------------------
S- 34

DIFFERENCE IN ESTIMATES OF EEX PROVED RESERVES
--------------------------------------------------------------------------------

effect on the outcome. Also included in this category of differences are
estimates of the areas that can be produced by one or more wells and the
recovery efficiency of a well. Generally, the drainage area is determined based
upon technical data obtained from producing the wells or by analogy to another
similar reservoir.

Differences in reserve determinations relating to recently drilled wells or new
discoveries often arise because of the limited amount of data available to
support either volumetric or performance history reserve determinations. The
determination of proved reserves is subject to even greater variation between
interpreters when the newly discovered producing zone is not a recognized or
significant producing zone in a geologic trend and there are few, if any,
analogies for producing characteristics or experience with hydrocarbon
recoveries on a per well or per completion basis.

In the course of determining proved reserves, data from both the wells being
analyzed and from other wells in a geologic trend, together with two-dimensional
and three-dimensional seismic data, can be used by geologists and engineers in
their evaluation. Data that one party has that are not specific to the well
being analyzed but are relevant to the analysis may be different from the data
being used by the other party. One party may have performance history data from
other wells in which it owns an interest that are relevant to the analysis but
are not available to the other party. Additionally, new data are constantly
becoming available, but parties may receive it at different times or give it
different weight in a particular application. If different data are used in the
analysis, it is likely to result in a different determination of proved
reserves.

Description of existing indebtedness

REVOLVING CREDIT FACILITY AND MONEY MARKET LINES

We have a $425 million reserve-based revolving credit facility that matures on
January 23, 2004. The amount available under our credit facility is subject to a
calculated borrowing base determined by banks holding 75% of the aggregate
commitments. The borrowing base is reduced by the aggregate outstanding
principal amount of our senior notes ($300 million). As of August 1, 2002, the
borrowing base was $525 million. The borrowing base is redetermined at least
semi-annually. We cannot assure you that the banks will not elect to redetermine
the borrowing base in the future.

Borrowings under our credit facility accrue interest at a rate equal to (a) for
base rate loans, the higher of (i) the federal funds rate plus 0.5% or (ii) the
lead bank's publicly announced prime rate, plus, in either case, an applicable
margin, based on our funded debt to EBITDA ratio and our credit ratings, ranging
from 0.0% to 0.5%, or (b) for Eurodollar loans, the published Eurodollar rate
plus an applicable margin, based on our funded debt to EBITDA ratio and our
credit ratings, ranging from 1.125% to 1.75%.

The terms of our credit facility include, among other restrictions, requirements
as to the maintenance of a minimum net worth and certain minimum financial
ratios, including maintaining working capital and funded debt to EBITDA ratios.
In addition, our credit facility contains customary covenants that limit our
ability to, among other things:

+  incur debt;

+  repurchase capital stock;

+  enter into merger or consolidation transactions;

+  dispose of properties; and

+  enter into certain contracts and leases.

--------------------------------------------------------------------------------
                                                                           S- 35

DESCRIPTION OF EXISTING INDEBTEDNESS
--------------------------------------------------------------------------------

At March 31, 2002 we had $113 million available under our credit facility and
had outstanding borrowings of $97 million.

We also have money market lines of credit with various banks in an amount
limited by the credit facility to $40 million. As of March 31, 2002, there were
$14 million of borrowings outstanding under these lines of credit.

The lenders under our credit facility have agreed that our borrowing base will
increase to $735 million upon consummation of the EEX acquisition. In addition
to the reduction for our outstanding senior notes, the borrowing base would be
reduced by an amount equal to the aggregate principal amount of the outstanding
EEX Secured Notes ($100.8 million as of March 31, 2002) plus a to-be-agreed
percentage of the aggregate principal amount of the notes issued in this
offering. JPMorgan Chase, the agent bank under our credit facility, has
recommended to our other lenders that they agree that such percentage will be
30%.

On a pro forma basis after giving effect to the acquisition of EEX, this
offering and the amendment of our credit facility (assuming that our lenders
agree that the borrowing base will be reduced by 30% of the aggregate principal
amount of the notes issued in this offering), as of March 31, 2002, we had
approximately $90 million available under our credit facility and money market
lines of credit and had outstanding borrowings of approximately $174.6 million.

SENIOR NOTES DUE 2007 AND 2011

On October 9, 1997, we sold $125 million aggregate principal amount of 7.45%
Senior Notes due 2007. On February 22, 2001, we sold $175 million aggregate
principal amount of 7 5/8% Senior Notes due 2011.

We may redeem some or all of the Senior Notes due 2007 and the Senior Notes due
2011 at any time before their maturity at a redemption price based on a
make-whole amount plus accrued and unpaid interest to the date of redemption.
Neither the Senior Notes due 2007 nor the Senior Notes due 2011 are entitled to
the benefit of any sinking fund. The indentures governing the Senior Notes due
2007 and the Senior Notes due 2011 contain covenants that limit our ability to,
among other things:

+  incur debt secured by certain liens;

+  enter into sale/leaseback transactions; and

+  enter into merger or consolidation transactions.

The indentures governing the Senior Notes due 2007 and the Senior Notes due 2011
also provide that if any of our subsidiaries guarantees any of our indebtedness
at any time in the future, then we will cause the Senior Notes due 2007 and the
Senior Notes due 2011 to be equally and ratably guaranteed by such subsidiary.
The Senior Notes due 2007 and the Senior Notes due 2011 are our unsecured and
unsubordinated obligations and rank equally with all of our other existing and
future unsecured and unsubordinated obligations.

EEX SECURED NOTES

In the second quarter of 2001, EEX assumed the obligations under certain secured
notes due 2009 in connection with the termination of two leveraged leasing
arrangements (the "EEX Secured Notes"). The EEX Secured Notes accrue interest at
a rate of 7.54% per year and are secured by EEX's interest in certain pipelines
and a combination deepwater drilling rig and processing facility located in the
Gulf of Mexico. EEX may redeem all of the EEX Secured Notes at any time at a
redemption price equal to 100% of the unpaid principal amount of the EEX Secured
Notes plus any required make-whole amounts and accrued and unpaid interest to
the date of redemption. Following our acquisition of EEX,

--------------------------------------------------------------------------------
S- 36

DESCRIPTION OF EXISTING INDEBTEDNESS
--------------------------------------------------------------------------------

EEX will be our wholly owned subsidiary, and the EEX Secured Notes will remain
outstanding. As of March 31, 2002, the outstanding principal amount of the EEX
Secured Notes was $100.8 million. Provisions of the EEX Secured Notes provide
for the amortization of principal over their term.

SUBORDINATION

Payments of principal, interest and premium, if any, on the notes will be
subordinated to payments on our existing and future senior debt, including
amounts outstanding under our credit facility, our Senior Notes due 2007 and our
Senior Notes due 2011. As of March 31, 2002, on a pro forma basis giving effect
to this offering and our acquisition of EEX, our senior debt was approximately
$474.2 million, which is comprised of borrowings under our credit facility,
money market lines of credit, Senior Notes due 2007 and Senior Notes due 2011.

In addition, payments of principal, interest and premium, if any, on the notes
will be effectively subordinated to the payment of all debts and liabilities of
our subsidiaries. As of March 31, 2002, on a pro forma basis giving effect to
this offering and our acquisition of EEX, our subsidiaries had approximately
$226.0 million of liabilities (excluding intercompany liabilities and deferred
revenue), including the EEX Secured Notes.

Please read "Description of the notes--Ranking" in this prospectus supplement
for more information about the subordination of the notes.

--------------------------------------------------------------------------------
                                                                           S- 37


--------------------------------------------------------------------------------

Description of the notes

Newfield Exploration Company will issue the Notes under a Subordinated Indenture
dated as of December 10, 2001, between itself and Wachovia Bank, National
Association (formerly First Union National Bank), as Trustee, as supplemented by
an indenture supplement creating the Notes (the "Indenture"). The terms of the
Notes include those stated in the Indenture and those made part of the Indenture
by reference to the Trust Indenture Act.

Certain terms used in this description are defined under the subheading
"--Certain Definitions." In this description, the words "Company," "we," "us"
and "our" refer only to Newfield Exploration Company and not to any of its
subsidiaries.

The following description and the description in the accompanying prospectus are
summaries of the material provisions of the Notes and the Indenture. These
descriptions do not restate the Indenture in its entirety. We urge you to read
the Indenture because it, and not this description, defines your rights as
holders of the Notes. We have filed a copy of the Indenture as an exhibit to the
registration statement that includes the accompanying prospectus.

The description of the Notes in this prospectus supplement replaces the
description of the general provisions of the Notes and the Indenture in the
accompanying prospectus to the extent that it is inconsistent with the
accompanying prospectus. The Notes are an issue of "subordinated debt
securities" as that term is used in the accompanying prospectus.

GENERAL

These Notes:

+  are unsecured senior subordinated obligations of the Company;

+  are subordinated in right of payment to all existing and future Senior
   Indebtedness of the Company; and

+  are senior in right of payment to any future Subordinated Obligations of the
   Company.

PRINCIPAL, MATURITY AND INTEREST

The Company will issue the Notes initially with a maximum aggregate principal
amount of $250 million. The Company will issue the Notes in denominations of
$1,000 and any integral multiple of $1,000. The Notes will mature on August 15,
2012. Subject to our compliance with the covenant described under the subheading
"--Certain Covenants--Limitation on Indebtedness," we are entitled to, without
the consent of the holders, issue more Notes under the Indenture on the same
terms and conditions and with the same CUSIP number as the Notes being offered
hereby in an unlimited principal amount (the "Additional Notes"). The Notes and
the Additional Notes, if any, will be treated as a single class for all purposes
of the Indenture, including waivers, amendments, redemptions and offers to
purchase. Unless the context otherwise requires, for all purposes of the
Indenture and this "Description of the notes," references to the Notes include
any Additional Notes actually issued.

Interest on these Notes will accrue at the rate of 8 3/8% per annum and will be
payable semiannually in arrears on February 15 and August 15, commencing on
February 15, 2003. We will make each interest payment to the holders of record
of these Notes on the immediately preceding February 1 and August 1. We will pay
interest on overdue principal at 1% per annum in excess of the above rate and
will pay interest on overdue installments of interest at such higher rate to the
extent lawful.

--------------------------------------------------------------------------------
S- 38

DESCRIPTION OF THE NOTES
--------------------------------------------------------------------------------

Interest on these Notes will accrue from the date of original issuance. Interest
will be computed on the basis of a 360-day year comprised of twelve 30-day
months.

OPTIONAL REDEMPTION

On and after August 15, 2007, we will be entitled at our option to redeem all or
a portion of the Notes upon not less than 30 nor more than 60 days' notice, at
the redemption prices (expressed in percentages of principal amount on the
redemption date), plus accrued interest to the redemption date (subject to the
right of Holders of record on the relevant record date to receive interest due
on the relevant interest payment date), if redeemed during the 12-month period
commencing on August 15 of the years set forth below:



                                                              REDEMPTION
PERIOD                                                          PRICE
------------------------------------------------------------------------
                                                           
2007........................................................   104.188%
2008........................................................   102.792%
2009........................................................   101.405%
2010 and thereafter.........................................   100.000%


Prior to August 15, 2005, we may at our option on one or more occasions redeem
Notes (which includes Additional Notes, if any) in an aggregate principal amount
not to exceed 35% of the aggregate principal amount of the Notes (which includes
Additional Notes, if any) issued prior to the redemption date at a redemption
price (expressed as a percentage of principal amount) of 108.375%, plus accrued
and unpaid interest to the redemption date, with the Net Cash Proceeds from one
or more Public Equity Offerings; provided that

+  at least 65% of such aggregate principal amount of Notes (which includes
   Additional Notes, if any) remains outstanding immediately after the
   occurrence of each such redemption (other than Notes held, directly or
   indirectly, by the Company or its Affiliates); and

+  each such redemption occurs within 90 days after the date of the related
   Public Equity Offering.

We will be entitled, at our option, at any time as a whole prior to August 15,
2007, to redeem the Notes (which includes the Additional Notes, if any) at a
redemption price equal to the sum of:

+  the principal amount thereof, plus

+  accrued and unpaid interest, if any, to the redemption date, plus

+  the Applicable Premium at the redemption date (which is computed with
   reference to the applicable Treasury Rate).

ESCROW OF PROCEEDS; SPECIAL MANDATORY REDEMPTION

At the closing of this offering, the underwriters will place into escrow the net
proceeds of the offering (before expenses) pursuant to an escrow agreement with
Wachovia Bank, National Association, as Escrow Agent (the "Escrow Agreement").

The escrowed funds will be held by Wachovia Bank, National Association, as
Escrow Agent, pursuant to the Escrow Agreement. While in escrow, the escrowed
funds may be invested in Temporary Cash Investments. A copy of the Escrow
Agreement is available upon request to the Company. The Escrow Agent is also the
Trustee under the Indenture for the Notes.

--------------------------------------------------------------------------------
                                                                           S- 39

DESCRIPTION OF THE NOTES
--------------------------------------------------------------------------------

Upon the occurrence of the earliest of the following three events (the "Special
Mandatory Redemption Trigger"), the Company will redeem all the Notes (the
"Special Mandatory Redemption") at a redemption price in cash equal to 101% of
the aggregate principal amount thereof plus accrued and unpaid interest thereon
to the mandatory redemption date:

+  December 31, 2002 if the EEX acquisition has not been consummated by such
   date;

+  the abandonment of the EEX acquisition; or

+  the termination of the EEX merger agreement.

Within ten days of the occurrence of the Special Mandatory Redemption Trigger,
notice of the Special Mandatory Redemption will be mailed by first-class mail to
each holder of Notes at its registered address and to the Escrow Agent, stating,
among other matters prescribed in the Indenture, that a Special Mandatory
Redemption Trigger has occurred and that all of the Notes will be redeemed on
the redemption date set forth in such notice (which shall be no earlier than 15
days and no later than 30 days from the date such notice is mailed).

If the Escrow Agent receives notice from the Company that the closing of the EEX
acquisition has occurred or will occur on or prior to December 31, 2002, the
Escrow Agent will release all escrowed funds to the Company upon presentation of
an Officers' Certificate certifying that (1) the Company simultaneously with
such release will fully complete the EEX acquisition in conformity in all
material respects with the terms and with satisfaction of all material
conditions of the EEX merger agreement (after giving effect to any amendment,
waiver or modification to any term or condition, which amendment, waiver or
modification does not have a material adverse effect on the Holders) and (2) the
terms of the transactions entered into and the operations and assets and
liabilities acquired and assumed in the EEX acquisition conform in all material
respects to the descriptions thereof contained in this prospectus supplement,
subject only to any changes provided for, discussed or contemplated in this
prospectus supplement. The Company will have no rights to any escrowed funds
prior to such a release.

If the Escrow Agent receives a notice of mandatory redemption, the Escrow Agent
will liquidate the escrowed funds then held by it sufficiently prior to the
mandatory redemption date to permit it to release to the Trustee or a paying
agent for the Notes all the escrowed funds. Concurrently with such release to
the Trustee or such paying agent, the Company will deliver to the Trustee or
such paying agent any additional funds needed to complete the Special Mandatory
Redemption.

Certain provisions relating to the Company's obligation to redeem Notes in a
Special Mandatory Redemption may not be waived or modified without the written
consent of the Holders of all the Notes.

SELECTION AND NOTICE OF REDEMPTION

If we are redeeming less than all the Notes at any time, the Trustee will select
Notes on a pro rata basis, by lot or by such other method as the Trustee in its
sole discretion shall deem to be fair and appropriate.

We will redeem Notes of $1,000 or less in whole and not in part. We will cause
notices of redemption to be mailed by first-class mail at least 30 but not more
than 60 days before the redemption date to each Holder of Notes to be redeemed
at its registered address, except that the notice of Special Mandatory
Redemption shall be as described above.

If any Note is to be redeemed in part only, the notice of redemption that
relates to that Note will state the portion of the principal amount thereof to
be redeemed. We will issue a new Note in a principal amount equal to the
unredeemed portion of the original Note in the name of the holder upon

--------------------------------------------------------------------------------
S- 40

DESCRIPTION OF THE NOTES
--------------------------------------------------------------------------------

surrender of the original Note. Notes called for redemption become due on the
date fixed for redemption. On and after the redemption date, interest ceases to
accrue on Notes or portions of them called for redemption.

NO OTHER MANDATORY REDEMPTION; OFFERS TO PURCHASE; OPEN MARKET PURCHASES

We are not required to make any mandatory redemption or sinking fund payments
with respect to the Notes except as described in "--Escrow of Proceeds; Special
Mandatory Redemption" above. However, under certain circumstances, we may be
required to offer to purchase Notes as described under the captions "--Change of
Control" and "--Certain Covenants--Limitation on Sales of Assets and Subsidiary
Stock." We may at any time and from time to time purchase Notes in the open
market or otherwise.

GUARANTIES

Under the circumstances described below, our obligations under the Notes may in
the future be jointly and severally guaranteed by our existing or future
Subsidiaries as Subsidiary Guarantors. Initially, we expect that there will be
no Subsidiary Guarantors. Although the Indenture does not contain any
requirement that any Subsidiary initially execute and deliver a Guaranty
Agreement providing for a Subsidiary Guarantee, the covenant described below
under "--Certain Covenants--Future Guarantors" may require a Subsidiary in the
future to execute and deliver a Guaranty Agreement.

Under its Subsidiary Guarantee, each Subsidiary Guarantor will guarantee,
jointly and severally, on a senior subordinated basis to each Holder and the
Trustee, the full and prompt performance of our obligations under the Indenture
and the Notes, including the payment of principal of (or premium, if any, on)
and interest on the Notes.

The obligations of each Subsidiary Guarantor under its Subsidiary Guaranty will
be limited as necessary to prevent that Subsidiary Guaranty from constituting a
fraudulent conveyance under applicable law. See "Risk Factors--Risks Associated
with the Notes--Federal and state statutes allow courts, under specific
circumstances, to void subsidiary guarantees."

Each Subsidiary Guarantor that makes a payment under its Subsidiary Guaranty
will be entitled upon payment in full of all guarantied obligations under the
Indenture to a contribution from each other Subsidiary Guarantor in an amount
equal to such other Subsidiary Guarantor's pro rata portion of such payment
based on the respective net assets of all the Subsidiary Guarantors at the time
of such payment determined in accordance with GAAP.

If a Subsidiary Guaranty were rendered voidable, it could be subordinated by a
court to all other indebtedness (including guarantees and other contingent
liabilities) of the applicable Subsidiary Guarantor, and, depending on the
amount of such indebtedness, a Subsidiary Guarantor's liability on its
Subsidiary Guaranty could be reduced to zero. See "Risk factors--Risks
Associated with the Notes--Federal and state statutes allow courts, under
specific circumstances, to void subsidiary guarantees."

The Subsidiary Guaranty of a Subsidiary Guarantor will be released:

     (1) upon the sale or other disposition (including by way of consolidation
     or merger) of all of the Capital Stock of that Subsidiary Guarantor, in
     each case other than to the Company or an Affiliate of the Company and as
     permitted by the Indenture;

     (2) upon the liquidation and dissolution of such Subsidiary Guarantor;

--------------------------------------------------------------------------------
                                                                           S- 41

DESCRIPTION OF THE NOTES
--------------------------------------------------------------------------------

     (3) upon our exercise of our legal defeasance or covenant defeasance option
     as described under "--Defeasance;" or

     (4) upon the designation of such Subsidiary Guarantor as an Unrestricted
     Subsidiary.

RANKING

SENIOR INDEBTEDNESS VERSUS NOTES
The payment of the principal of, premium, if any, and interest on the Notes and
the payment of any Subsidiary Guaranty will be subordinate in right of payment
to the prior payment in full of all Senior Indebtedness of the Company or the
relevant Subsidiary Guarantor, as the case may be, including the obligations of
the Company and such Subsidiary Guarantor under the Revolving Credit Facility.

As of March 31, 2002, after giving pro forma effect to this offering, the EEX
acquisition and the application of the estimated net proceeds from this
offering:

     (1) the Company's Senior Indebtedness would have been approximately $474.2
     million, none of which would have been Secured Indebtedness; and

     (2) the Indebtedness of the Company's Subsidiaries (excluding intercompany
     Indebtedness and deferred revenues) would have been approximately $226.0
     million, of which $100.8 million would have been Secured Indebtedness.

Although the Indenture contains limitations on the amount of additional
Indebtedness that the Company and the Restricted Subsidiaries may incur, under
certain circumstances the amount of such Indebtedness could be substantial and,
in any case, such Indebtedness may be Senior Indebtedness. See "--Certain
Covenants--Limitation on Indebtedness."

LIABILITIES OF SUBSIDIARIES VERSUS NOTES
All of our international and U.S. mid-continent properties are owned and
operated by our subsidiaries, and EEX will become a subsidiary as part of the
EEX acquisition. Distributions or advances from our subsidiaries are a source of
funds to meet our debt service obligations. Contractual provisions or laws, as
well as our subsidiaries' financial condition and operating requirements, may
limit our ability to obtain cash from our subsidiaries that we require to pay
our debt service obligations, including payments on the Notes. Holders of the
Notes will have a junior position to the claims of creditors, including trade
creditors and tort claimants, of our subsidiaries that do not guarantee the
Notes and to all secured or senior creditors of our subsidiaries, whether or not
they guarantee the Notes, with respect to the assets securing the claims of
those secured creditors and generally with respect to senior creditors.

Although the Indenture limits the incurrence of Indebtedness and the issuance of
preferred stock of certain of our subsidiaries, such limitation is subject to a
number of significant qualifications. Moreover, the Indenture does not impose
any limitation on the incurrence by such subsidiaries of liabilities that are
not considered Indebtedness under the Indenture. See "--Certain Covenants--
Limitation on Indebtedness."

OTHER SENIOR SUBORDINATED INDEBTEDNESS VERSUS NOTES
Only Indebtedness of the Company or any Subsidiary Guarantor that is Senior
Indebtedness will rank senior to the Notes and the relevant Subsidiary Guaranty
in accordance with the provisions of the Indenture. The Notes and each
Subsidiary Guaranty will in all respects rank pari passu with all other Senior
Subordinated Indebtedness of the Company and the relevant Subsidiary Guarantor,
respectively.

We have agreed in the Indenture that we and any Subsidiary Guarantor will not
Incur, directly or indirectly, any Indebtedness that is contractually
subordinate or junior in right of payment to our

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Senior Indebtedness or the Senior Indebtedness of such Subsidiary Guarantor,
unless such Indebtedness is Senior Subordinated Indebtedness of the Company or
the Subsidiary Guarantor, as applicable, or is expressly subordinated in right
of payment to Senior Subordinated Indebtedness of the Company or the Subsidiary
Guarantor, as applicable. The Indenture does not treat unsecured Indebtedness as
subordinated or junior to Secured Indebtedness merely because it is unsecured.

PAYMENT OF NOTES

We are not permitted to pay principal of, premium, if any, or interest on the
Notes or make any deposit pursuant to the provisions described under
"--Defeasance" below and may not purchase, redeem or otherwise retire any Notes
(collectively, "pay the Notes") if either of the following occurs (a "Payment
Default"):

     (1) any Obligation on any Designated Senior Indebtedness of the Company is
     not paid in full when due; or

     (2) any other default on Designated Senior Indebtedness of the Company
     occurs and the maturity of such Designated Senior Indebtedness is
     accelerated in accordance with its terms;

unless, in either case, the Payment Default has been cured or waived and any
such acceleration has been rescinded or such Designated Senior Indebtedness has
been paid in full in cash or cash equivalents. Regardless of the foregoing, we
are permitted to pay the Notes if we and the Trustee receive written notice
approving such payment from the Representatives of all Designated Senior
Indebtedness with respect to which the Payment Default has occurred and is
continuing.

During the continuance of any default (other than a Payment Default) with
respect to any Designated Senior Indebtedness of the Company pursuant to which
the maturity thereof may be accelerated without further notice (except such
notice as may be required to effect such acceleration) or the expiration of any
applicable grace periods, we are not permitted to pay the Notes for a period (a
"Payment Blockage Period") commencing upon the receipt by the Trustee and by us
of written notice (a "Payment Blockage Notice") of such default from the
Representative of such Designated Senior Indebtedness specifying an election to
effect a Payment Blockage Period and ending 179 days thereafter. The Payment
Blockage Period will end earlier if such Payment Blockage Period is terminated:

     (1) by written notice to the Trustee and us from the Person or Persons who
     gave such Payment Blockage Notice;

     (2) because the default giving rise to such Payment Blockage Notice is
     cured, waived or otherwise no longer continuing; or

     (3) because such Designated Senior Indebtedness has been discharged or
     repaid in full in cash or cash equivalents.

Notwithstanding the provisions described above, unless the holders of such
Designated Senior Indebtedness or the Representative of such Designated Senior
Indebtedness have accelerated the maturity of such Designated Senior
Indebtedness, we are permitted to resume paying the Notes after the end of such
Payment Blockage Period. The Notes shall not be subject to more than one Payment
Blockage Period in any consecutive 360-day period irrespective of the number of
defaults with respect to Designated Senior Indebtedness of the Company during
such period. However, in no event may the total number of days during which any
Payment Blockage Period or Periods is in effect exceed 179 days in the aggregate
during any consecutive 360-day period, and there must be 181 days during any
consecutive 360-day period during which no Payment Blockage Period is in effect.

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Upon any payment or distribution of the assets of the Company upon a
liquidation, dissolution or reorganization of or similar proceeding relating to
the Company or its property:

     (1) the holders of Senior Indebtedness of the Company will be entitled to
     receive payment in full in cash or cash equivalents of such Senior
     Indebtedness before the Holders of the Notes are entitled to receive any
     payment; and

     (2) until the Senior Indebtedness of the Company is paid in full in cash or
     cash equivalents, any payment or distribution to which Holders of the Notes
     would be entitled but for the subordination provisions of the Indenture
     will be made to holders of such Senior Indebtedness as their interests may
     appear, except that Holders of Notes may receive certain Capital Stock and
     subordinated debt obligations.

If a distribution is made to Holders of the Notes that, due to the subordination
provisions, should not have been made to them, such Holders of the Notes are
required to hold it in trust for the holders of Senior Indebtedness of the
Company and pay it over to them as their interests may appear.

If payment of the Notes is accelerated because of an Event of Default, the
Company or the Trustee must promptly notify the holders of Designated Senior
Indebtedness of the Company or the Representative of such Designated Senior
Indebtedness of the acceleration.

A Subsidiary Guarantor's obligations under its Subsidiary Guaranty will be
senior subordinated obligations. As such, the rights of Noteholders to receive
payment by a Subsidiary Guarantor pursuant to its Subsidiary Guaranty will be
subordinated in right of payment to the rights of holders of Senior Indebtedness
of such Subsidiary Guarantor. The terms of the subordination provisions
described above with respect to the Company's obligations under the Notes apply
equally to a Subsidiary Guarantor and the obligations of such Subsidiary
Guarantor under its Subsidiary Guaranty.

By reason of the subordination provisions contained in the Indenture, in the
event of a liquidation or insolvency proceeding, creditors of the Company or a
Subsidiary Guarantor who are holders of Senior Indebtedness of the Company or a
Subsidiary Guarantor, as the case may be, may recover more, ratably, than the
Holders of the Notes, and creditors of ours who are not holders of Senior
Indebtedness may recover less, ratably, than holders of our Senior Indebtedness
and may recover more, ratably, than the Holders of the Notes.

The terms of the subordination provisions described above will not apply to
payments from money or the proceeds of U.S. Government Obligations held in trust
by the Trustee for the payment of principal of and interest on the Notes
pursuant to the provisions described under "--Defeasance."

BOOK-ENTRY, DELIVERY AND FORM; PAYMENT

We will initially issue the Notes in the form of one or more global notes. See
"Description of Debt Securities--Payment and Transfer" and "--Book-Entry System"
in the accompanying prospectus.

CHANGE OF CONTROL

Upon the occurrence of any of the following events (each a "Change of Control"),
then unless the Company shall have exercised its right to redeem all the Notes
each Holder shall have the right to require that the Company repurchase such
Holder's Notes at a purchase price in cash equal to 101% of the principal amount
thereof on the date of purchase plus accrued and unpaid interest, if any, to the
date of purchase (subject to the right of holders of record on the relevant
record date to receive interest due on the relevant interest payment date):

     (1) any "person" (as such term is used in Sections 13(d) and 14(d) of the
     Exchange Act) is or becomes the "beneficial owner" (as defined in Rules
     l3d-3 and l3d-5 under the Exchange Act,

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     except that for purposes of this clause (1) such person shall be deemed to
     have "beneficial ownership" of all shares that any such person has the
     right to acquire, whether such right is exercisable immediately or only
     after the passage of time), directly or indirectly, of more than 50% of the
     total voting power of the Voting Stock of the Company;

     (2) during any period of two consecutive years, individuals who, at the
     beginning of such period, constituted the Board of Directors (together with
     any new directors whose election by such Board of Directors or whose
     nomination for election by the shareholders of the Company was approved by
     a vote of the majority of the directors of the Company then still in office
     who were either directors at the beginning of such period or whose election
     or nomination for election was previously so approved) cease for any reason
     to constitute a majority of the Board of Directors then in office;

     (3) the adoption of a plan relating to the liquidation or dissolution of
     the Company; or

     (4) the merger or consolidation of the Company with or into another Person
     or the merger of another Person with or into the Company, or the sale of
     all or substantially all the assets of the Company (determined on a
     consolidated basis) to another Person, other than a transaction following
     which (A) in the case of a merger or consolidation transaction, holders of
     securities that represented 100% of the Voting Stock of the Company
     immediately prior to such transaction (or other securities into which such
     securities are converted as part of such merger or consolidation
     transaction) own directly or indirectly at least a majority of the voting
     power of the Voting Stock of the surviving Person in such merger or
     consolidation transaction immediately after such transaction and (B) in the
     case of a sale of assets transaction, each transferee becomes an obligor in
     respect of the Notes and a Subsidiary of the transferor of such assets.

Unless we have exercised our right to redeem all the Notes and have delivered an
irrevocable notice of redemption to the Trustee, within 30 days following any
Change of Control, we will mail a notice to each Holder with a copy to the
Trustee (the "Change of Control Offer") stating:

     (1) that a Change of Control has occurred and that such Holder has the
     right to require us to purchase such Holder's Notes at a purchase price in
     cash equal to 101% of the principal amount thereof on the date of purchase,
     plus accrued and unpaid interest, if any, to the date of purchase (subject
     to the right of Holders of record on the relevant record date to receive
     interest on the relevant interest payment date);

     (2) the circumstances and relevant facts regarding such Change of Control
     (including information with respect to pro forma historical income, cash
     flow and capitalization, in each case after giving effect to such Change of
     Control);

     (3) the purchase date (which shall be no earlier than 30 days nor later
     than 60 days from the date such notice is mailed); and

     (4) the instructions, as determined by us, consistent with the covenant
     described hereunder, that a Holder must follow in order to have its Notes
     purchased.

We will not be required to make a Change of Control Offer following a Change of
Control if a third party makes the Change of Control Offer in the manner, at the
times and otherwise in compliance with the requirements set forth in the
Indenture applicable to a Change of Control Offer made by us and purchases all
Notes validly tendered and not withdrawn under such Change of Control Offer.

We will comply, to the extent applicable, with the requirements of Section 14(e)
of the Exchange Act and any other securities laws or regulations in connection
with the repurchase of Notes as a result of a Change of Control. To the extent
that the provisions of any securities laws or regulations conflict with the
provisions of the covenant described hereunder, we will comply with the
applicable securities laws

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and regulations and shall not be deemed to have breached our obligations under
the covenant described hereunder by virtue of our compliance with such
securities laws or regulations.

The Change of Control purchase feature of the Notes may in certain circumstances
make more difficult or discourage a sale or takeover of the Company and, thus,
the removal of incumbent management. The Change of Control purchase feature is a
result of negotiations between the Company and the underwriters. We have no
present intention to engage in a transaction involving a Change of Control,
although it is possible that we could decide to do so in the future. Subject to
the limitations discussed below, we could, in the future, enter into certain
transactions, including acquisitions, refinancings or other recapitalizations,
that would not constitute a Change of Control under the Indenture, but that
could increase the amount of indebtedness outstanding at such time or otherwise
affect our capital structure or credit ratings. Restrictions on our ability to
Incur additional Indebtedness are contained in the covenants described under
"--Certain Covenants--Limitation on Indebtedness." Such restrictions can only be
waived with the consent of the holders of a majority in principal amount of the
Notes then outstanding. Except for the limitations contained in such covenants,
however, the Indenture will not contain any covenants or provisions that may
afford holders of the Notes protection in the event of a highly leveraged
transaction.

The Revolving Credit Facility provides that the occurrence of certain change of
control events with respect to the Company will constitute a default thereunder.
In the event that at the time of a Change of Control the terms of any Senior
Indebtedness of the Company (including the Revolving Credit Facility) restrict
or prohibit the purchase of Notes following such Change of Control, then prior
to the mailing of the notice to Holders but in any event within 30 days
following any Change of Control, we undertake to (1) repay in full all such
Senior Indebtedness or (2) obtain the requisite consents under the agreements
governing such Senior Indebtedness to permit the repurchase of the Notes. If we
do not repay such Senior Indebtedness or obtain such consents, we will remain
prohibited from purchasing Notes. In such case, our failure to comply with the
foregoing undertaking, after appropriate notice and lapse of time would result
in an Event of Default with respect to the Notes, which would, in turn,
constitute a default under the Revolving Credit Facility. In such circumstances,
the subordination provisions in the Indenture would likely restrict payment to
the Holders of Notes.

Future indebtedness that we may incur may contain prohibitions on the occurrence
of certain events that would constitute a Change of Control or require the
repurchase of such indebtedness upon a Change of Control. Moreover, the exercise
by the Holders of their right to require us to repurchase the Notes could cause
a default under such indebtedness, even if the Change of Control itself does
not, due to the financial effect of such repurchase on us. Finally, our ability
to pay cash to the Holders of Notes following the occurrence of a Change of
Control may be limited by our then existing financial resources. There can be no
assurance that sufficient funds will be available when necessary to make any
required repurchases.

The definition of "Change of Control" includes a disposition of all or
substantially all of the assets of the Company (determined on a consolidated
basis) to any Person. Although there is a limited body of case law interpreting
the phrase "substantially all," there is no precise established definition of
the phrase under applicable law. Accordingly, in certain circumstances there may
be a degree of uncertainty as to whether a particular transaction would involve
a disposition of "all or substantially all" of the assets of the Company. As a
result, it may be unclear as to whether a Change of Control has occurred and
whether a Holder of Notes may require the Company to make an offer to repurchase
the Notes as described above.

The provisions under the Indenture relative to our obligation to make an offer
to repurchase the Notes as a result of a Change of Control may be waived or
modified with the written consent of the Holders of a majority in principal
amount of the Notes.

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CERTAIN COVENANTS

The Indenture contains covenants including, among others, the following:

COVENANT SUSPENSION

During any period that the Notes have a rating equal to or higher than BBB- by
S&P and Baa3 by Moody's ("Investment Grade Ratings") and no Default has occurred
and is continuing, the Company and the Restricted Subsidiaries will not be
subject to the following covenants:

     (a) paragraphs (a) through (d) of the covenant described under
     "--Limitation on Indebtedness;"

     (b) "--Limitation on Restricted Payments;"

     (c) "Limitation on Restrictions on Distributions from Restricted
     Subsidiaries;"

     (d) "Limitation on Sales of Assets and Subsidiary Stock;"

     (e) "Limitation on Affiliate Transactions;"

     (f) clause (3) of the covenant described under "--Merger and
     Consolidation;" and

     (g) "--Future Guarantors,"

(collectively, the "Suspended Covenants"). In the event that the Company and the
Restricted Subsidiaries are not subject to the Suspended Covenants for any
period of time as a result of the preceding sentence, and subsequently one or
both of S&P and Moody's downgrades the rating assigned to the Notes below BBB-,
in the case of S&P, and below Baa3, in the case of Moody's, then the Company and
the Restricted Subsidiaries will thereafter again be subject to the Suspended
Covenants (subject to subsequent suspension if the Notes again receive
Investment Grade Ratings), and, with respect to Restricted Payments proposed to
be made after the time of such downgrade, the permissibility of such proposed
Restricted Payments will be calculated in accordance with the terms of the
covenant described below under "--Limitation on Restricted Payments" as though
such covenant had been in effect since the Issue Date, it being understood,
however, that no actions taken by the Company or any Restricted Subsidiary
during the suspension period shall constitute a Default or an Event of Default
under the Suspended Covenants.

LIMITATION ON INDEBTEDNESS

(a) The Company will not, and will not permit any Restricted Subsidiary to,
Incur, directly or indirectly, any Indebtedness; provided, however, that the
Company and the Subsidiary Guarantors will be entitled to Incur Indebtedness if,
on the date of such Incurrence and after giving effect thereto on a pro forma
basis, no Default has occurred and is continuing and the Consolidated Coverage
Ratio exceeds 2.5 to 1.

(b) Notwithstanding the foregoing paragraph (a), the Company and the Restricted
Subsidiaries will be entitled to Incur any or all of the following Indebtedness
("Permitted Indebtedness"):

     (1) Indebtedness Incurred by the Company and its Restricted Subsidiaries
     pursuant to Credit Facilities; provided, however, that, immediately after
     giving effect to any such Incurrence, the aggregate principal amount of all
     Indebtedness Incurred under this clause (1) and then outstanding does not
     exceed the greater of (A) $425 million less the sum of all principal
     payments with respect to such Indebtedness pursuant to paragraph (a)(3) (A)
     of the covenant described under "--Limitation on Sales of Assets and
     Subsidiary Stock" and (B) $200 million plus 20% of ACNTA as of the date of
     such Incurrence;

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     (2) Indebtedness owed to and held by the Company or a Wholly Owned
     Subsidiary; provided, however, that (A) any subsequent issuance or transfer
     of any Capital Stock which results in any such Wholly Owned Subsidiary
     ceasing to be a Wholly Owned Subsidiary or any subsequent transfer of such
     Indebtedness (other than to the Company or a Wholly Owned Subsidiary) shall
     be deemed, in each case, to constitute the Incurrence of such Indebtedness
     by the obligor thereon and (B) if the Company is the obligor on such
     Indebtedness, unless such Indebtedness is owing to a Subsidiary Guarantor,
     such Indebtedness is expressly subordinated to the prior payment in full in
     cash of all obligations with respect to the Notes;

     (3) the Notes (but excluding any Additional Notes) and all Subsidiary
     Guaranties;

     (4) Indebtedness outstanding on the Issue Date (other than Indebtedness
     described in clause (1), (2) or (3) of this covenant);

     (5) Indebtedness of a Restricted Subsidiary Incurred and outstanding on or
     prior to the date on which such Subsidiary became a Restricted Subsidiary
     or was acquired by the Company (other than Indebtedness Incurred in
     connection with, or to provide all or any portion of the funds or credit
     support utilized to consummate, the transaction or series of related
     transactions pursuant to which such Subsidiary became a Restricted
     Subsidiary or was acquired by the Company); provided, however, that on the
     date such Subsidiary became a Restricted Subsidiary or was acquired by the
     Company and after giving pro forma effect thereto, the Company would have
     been able to Incur at least $1.00 of additional Indebtedness pursuant to
     paragraph (a) of this covenant;

     (6) Refinancing Indebtedness in respect of Indebtedness Incurred pursuant
     to paragraph (a) or pursuant to clause (3), (4), or (5) or this clause (6);
     provided, however, that to the extent such Refinancing Indebtedness
     directly or indirectly Refinances Indebtedness of a Restricted Subsidiary
     Incurred pursuant to clause (5), such Refinancing Indebtedness shall be
     Incurred only by such Restricted Subsidiary or the Company;

     (7) Hedging Obligations consisting of Interest Rate Agreements directly
     related to Indebtedness outstanding on the Issue Date or permitted to be
     Incurred by the Company and its Restricted Subsidiaries pursuant to the
     Indenture;

     (8) Hedging Obligations consisting of Oil and Natural Gas Hedging Contracts
     and Currency Agreements entered into in the ordinary course of business for
     the purpose of limiting risks that arise in the ordinary course of business
     of the Company and its Subsidiaries;

     (9) obligations in respect of performance, bid and surety bonds, including
     Guarantees and letters of credit functioning as or supporting such
     performance, bid and surety bonds, completion guarantees and other
     reimbursement obligations provided by the Company or any Restricted
     Subsidiary in the ordinary course of business (in each case other than for
     an obligation for money borrowed);

     (10) Indebtedness arising from the honoring by a bank or other financial
     institution of a check, draft or similar instrument drawn against
     insufficient funds in the ordinary course of business; provided, however,
     that such Indebtedness is extinguished within two Business Days of its
     Incurrence;

     (11) Indebtedness consisting of any Guarantee by the Company or a
     Subsidiary Guarantor of Indebtedness of the Company or a Subsidiary
     Guarantor outstanding on the Issue Date or permitted by the Indenture to be
     Incurred by the Company or a Subsidiary Guarantor;

     (12) Indebtedness represented by Capital Lease Obligations, mortgage
     financings or purchase money obligations, in each case, Incurred for the
     purpose of financing all or any part of the

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     purchase price, cost of construction or improvement or carrying cost of
     assets used in the business of the Company and its Restricted Subsidiaries
     and related financing costs, and Refinancing Indebtedness Incurred to
     Refinance any Indebtedness Incurred pursuant to this clause, in an
     aggregate principal amount at any one time outstanding not to exceed $25
     million;

     (13) Indebtedness arising from any agreement providing for indemnities,
     Guarantees, purchase price adjustments, holdbacks, contingency payment
     obligations based on the performance of the acquired or disposed assets or
     similar obligations (other than Guarantees of Indebtedness) Incurred by any
     Person in connection with the acquisition or disposition of assets;

     (14) in-kind obligations relating to net oil or natural gas balancing
     positions arising in the ordinary course of business;

     (15) Non-Recourse Purchase Money Indebtedness; and

     (16) Indebtedness of the Company or of any of its Restricted Subsidiaries
     in an aggregate principal amount which, when taken together with all other
     Indebtedness of the Company and its Restricted Subsidiaries outstanding on
     the date of such Incurrence (other than Indebtedness permitted by clauses
     (1) through (15) above or paragraph (a)) does not exceed $50 million.

(c) Notwithstanding the foregoing, neither the Company nor any Subsidiary
Guarantor will Incur any Indebtedness pursuant to the foregoing paragraph (b) if
the proceeds thereof are used, directly or indirectly, to Refinance any
Subordinated Obligations of the Company or any Subsidiary Guarantor unless such
Indebtedness shall be subordinated to the Notes or the applicable Subsidiary
Guaranty to at least the same extent as such Subordinated Obligations.

(d) For purposes of determining compliance with this covenant:

     (1) any Indebtedness remaining outstanding under the Revolving Credit
     Facility on the Issue Date will be treated as Incurred on such date under
     clause (1) of paragraph (b) above;

     (2) in the event that an item of Indebtedness (or any portion thereof)
     meets the criteria of more than one of the types of Permitted Indebtedness
     described above, or is entitled to be incurred in compliance with the
     Consolidated Coverage Ratio in clause (a) of this covenant, the Company, in
     its sole discretion, may classify such item of Indebtedness (or any portion
     thereof) as of the time of Incurrence in any manner that complies with this
     covenant and will only be required to include the amount and type of such
     Indebtedness in one of the above clauses; and

     (3) the Company will be entitled to divide and classify an item of
     Indebtedness in more than one of the types of Permitted Indebtedness
     described above or as having been incurred in compliance with the
     Consolidated Coverage Ratio in clause (a) of this covenant.

(e) Notwithstanding paragraphs (a) and (b) above, neither the Company nor any
Subsidiary Guarantor will Incur any Indebtedness if such Indebtedness is
contractually subordinate or junior in right of payment to any Senior
Indebtedness of such Person, unless such Indebtedness is Senior Subordinated
Indebtedness of such Person or is expressly subordinated in right of payment to
Senior Subordinated Indebtedness of such Person.

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LIMITATION ON RESTRICTED PAYMENTS

(a) The Company will not, and will not permit any Restricted Subsidiary,
directly or indirectly, to make a Restricted Payment if at the time the Company
or such Restricted Subsidiary makes such Restricted Payment:

     (1) a Default shall have occurred and be continuing (or would result
     therefrom);

     (2) the Company is not entitled to Incur an additional $1.00 of
     Indebtedness pursuant to paragraph (a) of the covenant described under
     "--Limitation on Indebtedness;" or

     (3) the aggregate amount of such Restricted Payment and all other
     Restricted Payments since the Issue Date would exceed the sum of (without
     duplication):

        (A) 50% of the Consolidated Net Income accrued during the period
        (treated as one accounting period) from the beginning of the fiscal
        quarter in which the Issue Date occurs to the end of the most recent
        fiscal quarter for which financial statements of the Company are
        publicly available prior to the date of such Restricted Payment (or, in
        case such Consolidated Net Income shall be a deficit, minus 100% of such
        deficit); plus

        (B) 100% of the aggregate Net Cash Proceeds or the fair market value of
        property other than cash (including Capital Stock of Persons engaged in
        the Oil and Gas Business or assets used in the Oil and Gas Business)
        received by the Company from the issuance or sale of its Capital Stock
        (other than Disqualified Stock) subsequent to the Issue Date (other than
        an issuance or sale (w) in connection with the acquisition of EEX
        Corporation by merger, (x) to a Subsidiary of the Company, (y) to an
        employee stock ownership plan or (z) to a trust established by the
        Company or any of its Subsidiaries for the benefit of their employees)
        and 100% of any cash capital contribution received by the Company from
        its shareholders subsequent to the Issue Date; plus

        (C) the aggregate Net Cash Proceeds received by the Company subsequent
        to the Issue Date from the issuance or sale of its Capital Stock (other
        than Disqualified Stock) to an employee stock ownership plan or to a
        trust established by the Company or any of its Subsidiaries for the
        benefit of their employees; provided, however, that if such employee
        stock ownership plan or trust Incurs any Indebtedness to finance the
        purchase of such Capital Stock, such aggregate amount shall be limited
        to the excess of such Net Cash Proceeds over the amount of such
        Indebtedness plus an amount equal to any increase in the Consolidated
        Net Worth of the Company resulting from principal repayments made from
        time to time by such employee stock ownership plan or trust with respect
        to such Indebtedness; plus

        (D) the amount by which Indebtedness of the Company is reduced on the
        Company's balance sheet upon the conversion or exchange (other than by a
        Subsidiary of the Company) subsequent to the Issue Date of any
        Indebtedness of the Company convertible or exchangeable for Capital
        Stock (other than Disqualified Stock) of the Company (less the amount of
        any cash, or the fair value of any other property, distributed by the
        Company upon such conversion or exchange); provided, however, that the
        foregoing amount shall not exceed the Net Cash Proceeds received by the
        Company or any Restricted Subsidiary from the sale of such Indebtedness
        (excluding Net Cash Proceeds from sales to a Subsidiary of the Company
        or to an employee stock ownership plan or to a trust established by the
        Company or any of its Subsidiaries for the benefit of their employees);
        plus

        (E) an amount equal to the sum of (x) the net reduction in the
        Investments (other than Permitted Investments) made by the Company or
        any Restricted Subsidiary in any Person resulting from repurchases,
        repayments or redemptions of such Investments by such Person,

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        proceeds realized on the sale of such Investment and proceeds
        representing the return of capital (excluding dividends and
        distributions), in each case received by the Company or any Restricted
        Subsidiary, and (y) to the extent such Person is an Unrestricted
        Subsidiary, the portion (proportionate to the Company's equity interest
        in such Subsidiary) of the fair market value of the net assets of such
        Unrestricted Subsidiary at the time such Unrestricted Subsidiary is
        designated a Restricted Subsidiary; provided, however, that to the
        extent the foregoing sum exceeds, in the case of any such Person or
        Unrestricted Subsidiary, the amount of Investments (excluding Permitted
        Investments) previously made (and treated as a Restricted Payment) by
        the Company or any Restricted Subsidiary in such Person or Unrestricted
        Subsidiary, such excess shall not be included in this clause (E) unless
        the amount represented by such excess has not been and will not be taken
        into account in one of the foregoing clauses (A)-(D); plus

        (F) $15.0 million.

(b) The preceding provisions will not prohibit:

     (1) any Restricted Payment made out of the Net Cash Proceeds of the
     substantially concurrent issuance or sale of, or made by conversion into or
     exchange for, Capital Stock of the Company (other than Disqualified Stock
     and other than Capital Stock issued or sold to a Subsidiary of the Company
     or an employee stock ownership plan or to a trust established by the
     Company or any of its Subsidiaries for the benefit of their employees) or a
     substantially concurrent cash capital contribution received by the Company
     from one or more of its shareholders; provided, however, that (A) such
     Restricted Payment shall be excluded in the calculation of the amount of
     Restricted Payments and (B) the Net Cash Proceeds from such sale or such
     cash capital contribution (to the extent so used for such Restricted
     Payment) shall be excluded from the calculation of amounts under clause
     (3)(B) of paragraph (a) above;

     (2) any purchase, repurchase, redemption, defeasance or other acquisition
     or retirement for value of Subordinated Obligations of the Company or any
     Subsidiary Guarantor made by exchange for, or out of the proceeds of the
     substantially concurrent sale of, Indebtedness which is permitted to be
     Incurred pursuant to the covenant described under "--Limitation on
     Indebtedness;" provided, however, that such purchase, repurchase,
     redemption, defeasance or other acquisition or retirement for value shall
     be excluded in the calculation of the amount of Restricted Payments;

     (3) any purchase, repurchase, redemption, defeasance or other acquisition
     or retirement for value of Disqualified Stock of the Company or a
     Subsidiary Guarantor made by conversion into or exchange for, or out of the
     proceeds of the substantially concurrent issuance or sale (other than to a
     Subsidiary of the Company or an employee stock ownership plan or to a trust
     established by the Company or any of its Subsidiaries for the benefit of
     their employees) of, Disqualified Stock of the Company which is permitted
     to be issued pursuant to the covenant described under "--Limitation on
     Indebtedness;" provided, however, that such purchase, repurchase,
     redemption, defeasance or other acquisition or retirement for value shall
     be excluded in the calculation of the amount of Restricted Payments;

     (4) (A) distributions on the Existing Trust Preferred Securities at a rate
     per annum not to exceed 6 1/2% of the $50 liquidation preference per
     Existing Trust Preferred Security and (B) other dividends paid within 60
     days after the date of declaration thereof if at such date of declaration
     such dividend would have complied with this covenant; provided, however,
     that at the time of payment of such distribution or dividend, no other
     Default shall have occurred and be continuing (or result therefrom);
     provided further, however, that such distribution or dividend shall be
     included in the calculation of the amount of Restricted Payments at the
     time of payment;

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     (5) so long as no Default has occurred and is continuing, the purchase,
     redemption or other acquisition or retirement for value of shares of
     Capital Stock of the Company or any of its Subsidiaries from employees,
     former employees, directors or former directors of the Company or any of
     its Subsidiaries (or permitted transferees of such employees, former
     employees, directors or former directors), pursuant to the terms of the
     agreements (including employment agreements) or plans (or amendments
     thereto) approved by the Board of Directors under which such individuals
     purchase or sell or are granted the option to purchase or sell, shares of
     such Capital Stock; provided, however, that the aggregate amount of such
     purchases, redemptions and other acquisitions and retirements (excluding
     amounts representing cancellation of Indebtedness) shall not exceed $2.0
     million in any calendar year; provided further, however, that such
     purchases, redemptions and other acquisitions and retirements shall be
     excluded in the calculation of the amount of Restricted Payments;

     (6) repurchases, acquisitions or retirements of shares of Company common
     stock deemed to occur upon the exercise of stock options or similar rights
     issued under employee benefit plans when shares are surrendered to pay all
     or a portion of the exercise price or to satisfy any federal income tax
     obligations; provided, however, that such repurchases, acquisitions or
     retirements shall be excluded in the calculation of the amount of
     Restricted Payments;

     (7) the payment of cash in lieu of fractional shares of Capital Stock in
     connection with any transaction otherwise permitted under this covenant;
     provided, however, that such payment will be excluded in the calculation of
     the amount of Restricted Payments;

     (8) upon the occurrence of a Change of Control or an Asset Disposition and
     within 60 days after the completion of the offer to repurchase the Notes
     pursuant to the covenants described under "--Change of Control" above or
     "--Limitation on Sales of Assets and Subsidiary Stock" below (including the
     purchase of all Notes tendered), any purchase, repurchase, redemption,
     defeasance, acquisition or other retirement for value of Subordinated
     Obligations required pursuant to the terms thereof as a result of such
     Change of Control or Asset Disposition at a purchase or redemption price
     not to exceed 101% of the outstanding principal amount thereof, plus
     accrued and unpaid interest thereon, if any; provided, however, that (A) at
     the time of such purchase, repurchase, redemption, defeasance or other
     acquisition or retirement for value, no Default shall have occurred and be
     continuing (or would result therefrom), and (B) such purchase, repurchase,
     redemption, defeasance or other acquisition and retirement for value will
     be excluded in the calculation of the amount of Restricted Payments; or

     (9) any redemption pursuant to a Qualified Redemption Transaction;
     provided, however, that such redemption shall be included in the
     calculation of the amount of Restricted Payments at the time of the
     redemption.

The amount of all Restricted Payments (other than cash) shall be the fair market
value on the date of the Restricted Payment of the assets proposed to be
transferred by the Company or such Restricted Subsidiary, as the case may be, in
accordance with the Restricted Payment.

For purposes of determining compliance with this covenant, in the event that a
Restricted Payment meets the criteria of more than one of the types of
Restricted Payments described above, the Company, in its sole discretion, may
order and classify such Restricted Payment in any manner in compliance with this
covenant.

LIMITATION ON RESTRICTIONS ON DISTRIBUTIONS FROM RESTRICTED SUBSIDIARIES

The Company will not, and will not permit any Restricted Subsidiary to, create
or otherwise cause or permit to exist or become effective any consensual
encumbrance or restriction on the ability of any

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Restricted Subsidiary to (a) pay dividends or make any other distributions on
its Capital Stock to the Company or a Restricted Subsidiary or pay any
Indebtedness owed to the Company, (b) make any loans or advances to the Company
or (c) transfer any of its property or assets to the Company, except:

     (1) with respect to clauses (a), (b) and (c),

        (i) any encumbrance or restriction pursuant to an agreement governing
        Indebtedness or Capital Stock and other agreements or instruments in
        effect at or entered into on the Issue Date;

        (ii) any encumbrance or restriction with respect to a Restricted
        Subsidiary pursuant to an agreement relating to any Indebtedness
        Incurred by such Restricted Subsidiary or Capital Stock or other
        agreement or instrument of such Restricted Subsidiary in existence on or
        prior to the date on which such Restricted Subsidiary was acquired by
        the Company or otherwise became a Restricted Subsidiary (other than
        Indebtedness Incurred, Capital Stock issued or agreements or instruments
        entered into as consideration in, or to provide all or any portion of
        the funds or credit support utilized to consummate, the transaction or
        series of related transactions pursuant to which such Restricted
        Subsidiary became a Restricted Subsidiary or was acquired by the
        Company) and outstanding on such date;

        (iii) any encumbrance or restriction pursuant to an agreement effecting
        a Refinancing in whole or in part of Indebtedness Incurred pursuant to
        an agreement referred to in clause (i) or (ii) of clause (1) of this
        covenant or this clause (iii) or clause (B) of clause (2) of this
        covenant or contained in any amendment to, or modification, restatement,
        renewal, increase, supplement, replacement or extension of an agreement
        referred to in clause (i) or (ii) of clause (1) of this covenant or this
        clause (iii) or clause (B) of clause (2) of this covenant; provided,
        however, that the encumbrances and restrictions with respect to such
        Restricted Subsidiary contained in any such refinancing agreement or
        amendment, modification, restatement, renewal, increase, supplement,
        replacement or extension agreement are not materially more restrictive,
        taken as a whole, than encumbrances and restrictions with respect to
        such Restricted Subsidiary contained in such predecessor agreements;

        (iv) any customary encumbrance or restriction with respect to a
        Restricted Subsidiary imposed pursuant to a merger agreement or an
        agreement entered into for the sale or disposition of all or
        substantially all the Capital Stock or assets of such Restricted
        Subsidiary pending the closing of such sale or disposition;

        (v) customary encumbrances and restrictions contained in agreements of
        the types described in the definition of the term "Permitted Business
        Investments;" and

        (vi) customary supermajority voting provisions and other customary
        provisions with respect to the disposition or distribution of assets,
        each contained in corporate charters, bylaws, stockholders' agreements,
        limited liability company agreements, partnership agreements, joint
        venture agreements and other similar agreements entered into in the
        ordinary course of business of the Company and its Restricted
        Subsidiaries; and

     (2) with respect to clause (c) only,

        (A) any such encumbrance or restriction consisting of customary
        nonassignment provisions (including provisions forbidding subletting or
        sublicensing) in leases governing leasehold interests and licenses to
        the extent such provisions restrict the transfer of the lease or license
        or the property leased or licensed thereunder;

        (B) any encumbrance or restriction contained in credit agreements,
        security agreements or mortgages securing Indebtedness of the Company or
        a Restricted Subsidiary to the extent

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        such encumbrance or restriction restricts the transfer of the property
        subject to such credit agreements, security agreements or mortgages;

        (C) encumbrances and restrictions contained in any agreement, instrument
        or Capital Stock assumed by the Company or any of its Restricted
        Subsidiaries or for which any of them becomes liable as in effect at the
        time of such transaction (except to the extent such agreement,
        instrument or Capital Stock was entered into in connection with or in
        contemplation of such transaction), which encumbrances and restrictions
        are not applicable to, any assets other than assets acquired in
        connection with such transaction and all improvements, additions and
        accessions thereto and products and proceeds thereof;

        (D) restrictions on cash or other deposits imposed by customers under
        contracts entered into in the ordinary course of business;

        (E) encumbrances and restrictions contained in contracts entered into in
        the ordinary course of business, not relating to any Indebtedness, and
        that do not, individually or in the aggregate, detract from the value
        of, or from the ability of the Company and the Restricted Subsidiaries
        to realize the value of, property or assets of the Company or any
        Restricted Subsidiary in any manner material to the Company or any
        Restricted Subsidiary; and

        (F) restrictions on the transfer of property or assets required by any
        regulatory authority having jurisdiction over the Company or such
        Restricted Subsidiary.

LIMITATION ON LIENS

The Company will not, and will not permit any Subsidiary Guarantor to, directly
or indirectly, create, incur, assume or suffer to exist or become effective any
Lien securing Indebtedness of any kind except for Permitted Liens, on or with
respect to any of its assets, whether owned at the Issue Date or thereafter
acquired, unless (A) in the case of any Lien securing Subordinated Obligations,
the Notes are secured by a Lien on such assets that is senior in priority to
such Lien and (B) in the case of any other Lien, the Notes are either secured
equally and ratably with such Indebtedness or are secured by a Lien on such
assets that is senior in priority to such Lien.

LIMITATION ON SALES OF ASSETS AND SUBSIDIARY STOCK

(a) The Company will not, and will not permit any Restricted Subsidiary to,
directly or indirectly, consummate any Asset Disposition unless:

     (1) the Company or such Restricted Subsidiary receives consideration at the
     time of such Asset Disposition at least equal to the fair market value
     (including as to the value of all non-cash consideration) (as determined in
     good faith by the Board of Directors, an Officer or an officer of such
     Restricted Subsidiary with responsibility for such transaction, which
     determination shall be conclusive evidence of compliance with this
     provision), of the shares and assets subject to such Asset Disposition;

     (2) at least 75% of the consideration thereof received by the Company or
     such Restricted Subsidiary is in the form of cash or cash equivalents, oil
     and natural gas properties or capital assets to be used by the Company or
     any Restricted Subsidiary in the Oil and Gas Business; and

     (3) an amount equal to 100% of the Net Available Cash from such Asset
     Disposition is applied by the Company (or such Restricted Subsidiary, as
     the case may be)

        (A) first, to the extent the Company elects (or is required by the terms
        of any Indebtedness), to prepay, repay, purchase, repurchase, redeem,
        defease or otherwise acquire or retire for value Senior Indebtedness of
        the Company or any Subsidiary Guarantor or Indebtedness

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        (other than any Disqualified Stock) of a Wholly Owned Subsidiary that is
        not a Subsidiary Guarantor (in each case other than Indebtedness owed to
        the Company or an Affiliate of the Company) within one year from the
        later of the date of such Asset Disposition or the receipt of such Net
        Available Cash;

        (B) second, to the extent of the balance of such Net Available Cash
        after application in accordance with clause (A), to the extent the
        Company elects, to acquire Additional Assets or to make capital
        expenditures in the Oil and Gas Business within one year from the later
        of the date of such Asset Disposition or the receipt of such Net
        Available Cash; and

        (C) third, to the extent of the balance of such Net Available Cash after
        application in accordance with clauses (A) and (B), to make an offer to
        the Holders of the Notes (and to holders of other Senior Subordinated
        Indebtedness of the Company designated by the Company) to purchase Notes
        (and such other Senior Subordinated Indebtedness of the Company)
        pursuant to and subject to the conditions contained in the Indenture;

provided, however, that in connection with any prepayment, repayment, purchase,
repurchase, redemption, defeasance or other acquisition or retirement for value
of Indebtedness pursuant to clause (A) or (C) above, the Company or such
Restricted Subsidiary shall permanently retire such Indebtedness and shall cause
the related loan commitment (if any) to be permanently reduced in an amount
equal to the principal amount so prepaid, repaid or purchased.

Notwithstanding the foregoing provisions of this covenant, the Company and the
Restricted Subsidiaries will not be required to apply any Net Available Cash in
accordance with this covenant except to the extent that the aggregate Net
Available Cash from all Asset Dispositions which is not applied in accordance
with this covenant exceeds $20 million. Pending application of Net Available
Cash pursuant to this covenant, such Net Available Cash shall be invested in
Temporary Cash Investments or applied to temporarily reduce revolving credit
indebtedness.

For the purposes of this covenant, the following are deemed to be cash or cash
equivalents:

     (1) the assumption of Indebtedness of the Company or any Restricted
     Subsidiary and the release of the Company or such Restricted Subsidiary
     from all liability on such Indebtedness in connection with such Asset
     Disposition; and

     (2) securities received by the Company or any Restricted Subsidiary from
     the transferee that are converted by the Company or such Restricted
     Subsidiary into cash within 120 days of their receipt.

Notwithstanding the foregoing, the 75% limitation referred to in paragraph
(a)(2) above shall be deemed satisfied with respect to any Asset Disposition in
which the cash or cash equivalents portion of the consideration received
therefrom, determined in accordance with the foregoing provision on an after-tax
basis, is equal to or greater than what the after-tax proceeds would have been
had such Asset Disposition complied with the aforementioned 75% limitation.

The requirement of clause (a)(3)(B) above shall be deemed to be satisfied if an
agreement (including a lease, whether a capital lease or an operating lease)
committing to make the acquisitions or expenditures referred to therein is
entered into by the Company or its Restricted Subsidiary within the time period
specified in such clause and such Net Available Cash is subsequently applied in
accordance with such agreement within six months following such agreement.

(b) In the event of an Asset Disposition that requires the purchase of Notes
(and other Senior Subordinated Indebtedness of the Company) pursuant to clause
(a)(3)(C) above, the Company will make such offer to purchase Notes on or before
the 366th day after the date of such Asset Disposition or the receipt of such
Net Available Cash, and will purchase Notes tendered pursuant to an offer by

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the Company for the Notes (and such other Senior Subordinated Indebtedness of
the Company) at a purchase price of 100% of their principal amount (or, in the
event such other Senior Subordinated Indebtedness of the Company was issued with
significant original issue discount, 100% of the accreted value thereof) without
premium, plus accrued but unpaid interest (or, in respect of such other Senior
Subordinated Indebtedness of the Company, such lesser price, if any, as may be
provided for by the terms of such Senior Subordinated Indebtedness of the
Company) in accordance with the procedures (including prorating in the event of
oversubscription) set forth in the Indenture. If the aggregate purchase price of
the securities tendered exceeds the Net Available Cash allotted to their
purchase, the Company will select the securities to be purchased on a pro rata
basis but in round denominations, which in the case of the Notes will be
denominations of $1,000 principal amount or multiples thereof. The Company shall
not be required to make such an offer to purchase Notes (and other Senior
Subordinated Indebtedness of the Company) pursuant to this covenant if the Net
Available Cash available therefor is less than $20 million (which lesser amount
shall be carried forward for purposes of determining whether such an offer is
required with respect to the Net Available Cash from any subsequent Asset
Disposition). Upon completion of such an offer to purchase, Net Available Cash
will be deemed to be reduced by the aggregate amount of such offer.

(c) The Company will comply, to the extent applicable, with the requirements of
Section 14(e) of the Exchange Act and any other securities laws or regulations
in connection with the repurchase of Notes pursuant to this covenant. To the
extent that the provisions of any securities laws or regulations conflict with
provisions of this covenant, the Company will comply with the applicable
securities laws and regulations and will not be deemed to have breached its
obligations under this covenant by virtue of its compliance with such securities
laws or regulations.

LIMITATION ON AFFILIATE TRANSACTIONS

(a) The Company will not, and will not permit any Restricted Subsidiary to,
enter into any transaction (including the purchase, sale, lease or exchange of
any property, employee compensation arrangements or the rendering of any
service) with, or for the benefit of, any Affiliate of the Company (an
"Affiliate Transaction") unless:

     (1) the terms of the Affiliate Transaction are no less favorable to the
     Company or such Restricted Subsidiary than those that could reasonably be
     expected to be obtained at the time of the Affiliate Transaction in
     arm's-length dealings with a Person who is not an Affiliate;

     (2) if such Affiliate Transaction involves an amount in excess of $15
     million, the terms of the Affiliate Transaction are set forth in writing
     and a majority of the non-employee directors of the Company disinterested
     with respect to such Affiliate Transaction have determined in good faith
     that the criteria set forth in clause (1) are satisfied and have approved
     the relevant Affiliate Transaction as evidenced by a resolution of the
     Board of Directors; and

     (3) if such Affiliate Transaction involves an amount in excess of $30
     million, the Board of Directors shall also have received a written opinion
     from an Independent Qualified Party to the effect that such Affiliate
     Transaction is fair, from a financial standpoint, to the Company and its
     Restricted Subsidiaries or is not less favorable to the Company and its
     Restricted Subsidiaries than could reasonably be expected to be obtained at
     the time in an arm's-length transaction with a Person who was not an
     Affiliate.

(b) The provisions of the preceding paragraph (a) will not prohibit:

     (1) any Investment or other Restricted Payment, in each case not prohibited
     to be made pursuant to the covenant described under "--Limitation on
     Restricted Payments;"

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     (2) any issuance of securities, or other payments, awards or grants in
     cash, securities or otherwise pursuant to, or the funding of, employment
     arrangements, stock options and stock ownership plans and other benefit
     plans approved by the Board of Directors;

     (3) loans or advances to officers, directors and employees who are
     Affiliates in the ordinary course of business of the Company or its
     Restricted Subsidiaries, but in any event not to exceed $3.0 million in the
     aggregate outstanding at any one time;

     (4) any transaction with a Restricted Subsidiary or joint venture or
     similar entity which would constitute an Affiliate Transaction solely
     because the Company or a Restricted Subsidiary owns an equity interest in
     or otherwise controls such Restricted Subsidiary, joint venture or similar
     entity;

     (5) the issuance or sale of any Capital Stock (other than Disqualified
     Stock) of the Company;

     (6) reasonable fees and reasonable compensation paid to, and indemnity and
     similar arrangements provided on behalf of, officers, directors and
     employees of the Company or any Restricted Subsidiary as determined in good
     faith by the Board of Directors or the Company's senior management; and

     (7) any agreement as in effect on the Issue Date and described in this
     prospectus supplement or the accompanying prospectus or any renewals or
     extensions of any such agreement (so long as such renewals or extensions
     are not less favorable to the Company or the Restricted Subsidiaries) and
     the transactions evidenced thereby.

MERGER AND CONSOLIDATION

The Company will not consolidate with or merge with or into, or convey,
transfer, lease or otherwise dispose of, in one transaction or a series of
related transactions, directly or indirectly, all or substantially all the
assets of the Company and its Restricted Subsidiaries, taken as a whole, to, any
Person, unless:

     (1) the resulting, surviving or transferee Person (the "Successor Company")
     shall be a Person organized and existing under the laws of the United
     States of America, any State thereof or the District of Columbia and the
     Successor Company (if not the Company) shall expressly assume, by an
     indenture supplemental thereto, executed and delivered to the Trustee, in
     form satisfactory to the Trustee, all the obligations of the Company under
     the Notes and the Indenture;

     (2) immediately after giving pro forma effect to such transaction (and
     treating any Indebtedness which becomes an obligation of the Successor
     Company or any Subsidiary as a result of such transaction as having been
     Incurred by such Successor Company or such Subsidiary at the time of such
     transaction), no Default shall have occurred and be continuing;

     (3) immediately after giving pro forma effect to such transaction, the
     Successor Company would be able to Incur an additional $1.00 of
     Indebtedness pursuant to paragraph (a) of the covenant described under
     "--Limitation on Indebtedness;"

     (4) the Company shall have delivered to the Trustee an Officers'
     Certificate and an Opinion of Counsel, each stating that such
     consolidation, merger, conveyance, transfer or lease and such supplemental
     indenture (if any) comply with the Indenture; and

     (5) the Company shall have delivered to the Trustee an Opinion of Counsel
     to the effect that the Holders will not recognize income, gain or loss for
     Federal income tax purposes as a result of such transaction and will be
     subject to Federal income tax on the same amounts, in the same manner and
     at the same times as would have been the case if such transaction had not
     occurred;

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provided, however, that clause (3) will not be applicable to (A) the Company
consolidating with, merging into, conveying, transferring, leasing or otherwise
disposing of all or part of its assets to the Company or a Subsidiary Guarantor
or (B) the Company merging with an Affiliate of the Company solely for the
purpose and with the sole effect of reincorporating the Company in another
jurisdiction within the United States of America or (C) at a time when the
Company and its Restricted Subsidiaries are not subject to the Suspended
Covenants.

For purposes of this covenant, the conveyance, transfer, lease or other
disposition of all or substantially all of the assets of one or more
Subsidiaries of the Company, which assets, if held by the Company instead of
such Subsidiaries, would constitute all or substantially all of the assets of
the Company on a consolidated basis, shall be deemed to be the disposition of
all or substantially all of the assets of the Company.

The Successor Company (if not the Company) will be the successor to the Company
and shall succeed to, and be substituted for, and may exercise every right and
power of, the Company under the Indenture, and the predecessor Company, except
in the case of a lease, shall be released from the obligation to pay the
principal of and interest on the Notes.

The Company will not permit any Subsidiary Guarantor to consolidate with or
merge with or into any Person, except another Subsidiary Guarantor or the
Company, unless:

     (1) except in the case of a Subsidiary Guarantor whose Capital Stock has
     been disposed of in its entirety to another Person (other than to the
     Company or an Affiliate of the Company), including through a merger or
     consolidation, if in connection therewith the Company complies with its
     obligations under the covenant described under "--Limitation on Sales of
     Assets and Subsidiary Stock" in respect of such disposition, the resulting
     or surviving Person (if not such Subsidiary Guarantor) shall be a Person
     organized and existing under the laws of the jurisdiction under which such
     Subsidiary Guarantor was organized or under the laws of the United States
     of America, or any State thereof or the District of Columbia, and such
     Person shall expressly assume, by a Guaranty Agreement, all the obligations
     of such Subsidiary Guarantor under its Subsidiary Guaranty;

     (2) immediately after giving effect to such transaction on a pro forma
     basis (and treating any Indebtedness which becomes an obligation of the
     resulting or surviving Person as a result of such transaction as having
     been issued by such Person at the time of such transaction), no Default
     shall have occurred and be continuing; and

     (3) the Company delivers to the Trustee an Officers' Certificate and an
     Opinion of Counsel, each stating that such consolidation or merger and such
     Guaranty Agreement comply with the Indenture.

FUTURE GUARANTORS

The Company will cause each Restricted Subsidiary that Guarantees or secures any
other Indebtedness of the Company to, at the same time, execute and deliver to
the Trustee a Guaranty Agreement pursuant to which such Restricted Subsidiary
will Guarantee payment of the Notes on the same terms and conditions as those
set forth in the Indenture.

SEC REPORTS

Notwithstanding that the Company may not be subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act, the Company will file
with the SEC (to the extent the SEC will accept such filings) and provide the
Trustee and Noteholders with such annual reports and such information, documents
and other reports as are specified in Sections 13 and 15(d) of the Exchange Act
and

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applicable to a U.S. corporation subject to such Sections (but, without exhibits
in the case of Noteholders), such information, documents and other reports to be
so filed and provided at the times specified for the filings of such
information, documents and reports under such Sections.

DEFAULTS

In lieu of the Events of Default described in the accompanying prospectus under
the caption "Description of Debt Securities--Events of Default," each of the
following will be an Event of Default with respect to the Notes:

     (1) a default in the payment of interest on the Notes when due, continued
     for 30 days;

     (2) a default in the payment of principal of any Note when due at its
     Stated Maturity, upon optional redemption, upon required purchase, upon
     declaration of acceleration or otherwise;

     (3) the failure by the Company to comply with its obligations under "Escrow
     of Proceeds; Special Mandatory Redemption" or "--Certain Covenants--Merger
     and Consolidation" above;

     (4) the failure by the Company or any Subsidiary Guarantor to comply with
     its other agreements contained in the Indenture;

     (5) principal of or interest on any Indebtedness (other than Non-Recourse
     Purchase Money Indebtedness) of the Company, any Subsidiary Guarantor or
     any Significant Subsidiary is not paid within any applicable grace period
     after payment is due, or the principal thereof is accelerated by the
     holders thereof because of a default, and the total principal amount of
     such Indebtedness exceeds $10 million (the "cross acceleration provision"),
     provided, however, that if any such Indebtedness is repaid or any such
     acceleration rescinded, within a period of 10 days beyond the applicable
     grace period or the occurrence of such acceleration, as the case may be,
     such Event of Default and any consequential acceleration of the Notes shall
     be automatically rescinded, so long as such rescission does not conflict
     with any judgment or decree;

     (6) certain events of bankruptcy, insolvency or reorganization of the
     Company, a Subsidiary Guarantor or any Significant Subsidiary (the
     "bankruptcy provisions");

     (7) any judgment or decree for the payment of money in excess of $10
     million above the coverage under applicable insurance policies and
     indemnities as to which the relevant insurer or indemniter has not
     disclaimed responsibility is entered against the Company, a Subsidiary
     Guarantor or any Significant Subsidiary, remains outstanding for a period
     of 60 consecutive days following such judgment and is not discharged,
     waived or stayed (the "judgment default provision"); or

     (8) a Subsidiary Guaranty ceases to be in full force and effect (other than
     in accordance with the terms of such Subsidiary Guaranty) for five days
     after notice or a Subsidiary Guarantor denies or disaffirms its obligations
     under its Subsidiary Guaranty (the "Guaranty Failure Provision").

However, a default under clauses (4) and (8) will not constitute an Event of
Default until the Trustee or the holders of at least 25% in principal amount of
the outstanding Notes notify the Company of the default and the Company does not
cure such default within 90 days after receipt of such notice.

If an Event of Default occurs and is continuing, the Trustee or the holders of
at least 25% in principal amount of the outstanding Notes may declare the
principal of and accrued but unpaid interest on all the Notes to be due and
payable. Upon such a declaration, such principal and interest shall be due and
payable immediately. If an Event of Default relating to certain events of
bankruptcy, insolvency or reorganization of the Company occurs and is
continuing, the principal of and interest on all the Notes will ipso facto
become and be immediately due and payable without any declaration or other act
on the part of the Trustee or any holders of the Notes. Under certain
circumstances, the holders of a

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majority in principal amount of the outstanding Notes may rescind any such
acceleration with respect to the Notes and its consequences.

The accompanying prospectus describes under the caption "Description of Debt
Securities--Events of Default" the remedies of Noteholders for Events of
Default.

AMENDMENTS AND WAIVERS

Subject to certain exceptions, the Indenture may be amended with the consent of
the Holders of a majority in principal amount of the Notes (and the holders of a
majority in principal amount of each other series of our subordinated debt
securities affected by the amendment) then outstanding (including consents
obtained in connection with a tender or exchange offer for the Notes) and any
past default or compliance with any provisions may also be waived with the
consent of the Holders of a majority in principal amount of the Notes then
outstanding. However, without the consent of each Holder of an outstanding Note
affected thereby, an amendment or waiver may not, among other things:

     (1) reduce the amount of Notes whose Holders must consent to an amendment;

     (2) reduce the rate of or extend the time for payment of interest on any
     Note;

     (3) reduce the principal of or extend the Stated Maturity of any Note;

     (4) reduce the amount payable upon the redemption of any Note or change the
     time at which any Note may be redeemed as described under "--Optional
     Redemption" or "--Escrow of Proceeds; Special Mandatory Redemption" above;

     (5) make any Note payable in money other than that stated in the Note;

     (6) impair the right of any Holder of the Notes to receive payment of
     principal of and interest on such Holder's Notes on or after the due dates
     therefor or to institute suit for the enforcement of any payment on or with
     respect to such Holder's Notes;

     (7) make any change in the amendment provisions which require each Holder's
     consent or in the waiver provisions;

     (8) make any change in the ranking or priority of any Note that would
     adversely affect the Noteholders in any material respect; or

     (9) make any change in any Subsidiary Guaranty that would adversely affect
     the Noteholders in any material respect.

Notwithstanding the preceding, the covenant described under the caption
"--Change of Control" may be waived or amended as described in the last
paragraph of the description.

Notwithstanding the preceding, without the consent of any Holder of the Notes,
the Company, the Subsidiary Guarantors and Trustee may amend the Indenture:

     (1) to cure any ambiguity, omission, defect or inconsistency;

     (2) to provide for the assumption by a successor of the obligations of the
     Company or any Subsidiary Guarantor under the Indenture;

     (3) to provide for uncertificated Notes in addition to or in place of
     certificated Notes (provided that the uncertificated Notes are issued in
     registered form for purposes of Section 163(f) of the Code, or in a manner
     such that the uncertificated Notes are described in Section 163(f)(2)(B) of
     the Code);

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     (4) to add Guarantees with respect to the Notes, including any Subsidiary
     Guaranties, or to secure the Notes;

     (5) to add to the covenants of the Company or a Subsidiary Guarantor for
     the benefit of the Holders of the Notes or to surrender any right or power
     conferred upon the Company or a Subsidiary Guarantor;

     (6) to make any change that does not adversely affect the rights of any
     Holder of the Notes in any material respect;

     (7) to make any change in the subordination provisions of the Indenture
     that would limit or terminate the benefits available to any holder of
     Senior Indebtedness of the Company or any Subsidiary Guarantor;

     (8) to make any change in respect of one or more other series of
     subordinated debt securities that is not applicable to the Notes;

     (9) to establish any other series of subordinated debt securities as
     permitted by the Indenture; or

     (10) to provide for a successor Trustee.

However, no amendment may be made to the subordination provisions of the
Indenture that adversely affects the rights of any holder of Senior Indebtedness
of the Company or a Subsidiary Guarantor then outstanding unless such holder of
such Senior Indebtedness (or its Representative) consents to such change or as
otherwise permitted by the notes, debentures, bonds or other similar instruments
evidencing such Senior Indebtedness.

DEFEASANCE

At any time, we may terminate all our obligations under the Notes and the
Indenture ("legal defeasance"), except for certain obligations, including those
respecting the defeasance trust and obligations to register the transfer or
exchange of the Notes, to replace mutilated, destroyed, lost or stolen Notes and
to maintain a registrar and paying agent in respect of the Notes.

In addition, at any time we may terminate our obligations under "--Change of
Control" and under the covenants described under "--Certain Covenants" (other
than the covenant described under "--Merger and Consolidation"), the operation
of the cross acceleration provision, the bankruptcy provisions with respect to
Subsidiary Guarantors and Significant Subsidiaries and the judgment default and
Guaranty Failure Provisions described under "--Defaults" above and the
limitations contained in clause (3) of the first paragraph under "--Certain
Covenants--Merger and Consolidation" above ("covenant defeasance") if we comply
with the conditions described under "Description of Debt
Securities--Defeasance--Defeasance of Certain Covenants" in the accompanying
prospectus.

We may exercise our legal defeasance option notwithstanding our prior exercise
of our covenant defeasance option. If we exercise our legal defeasance option,
payment of the Notes may not be accelerated because of an Event of Default with
respect thereto. If we exercise our covenant defeasance option, payment of the
Notes may not be accelerated because of an Event of Default specified in clause
(4), (5), (6) (with respect only to Significant Subsidiaries and Subsidiary
Guarantors), (7) or (8) under "--Defaults" above or because of the failure of
the Company to comply with clause (3) of the first paragraph under "--Certain
Covenants--Merger and Consolidation" above. If we exercise our legal defeasance
option or our covenant defeasance option, each Subsidiary Guarantor will be
released from all of its obligations with respect to its Subsidiary Guaranty.

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In order to exercise either of our defeasance options, we must comply with the
conditions described under "Description of the Debt
Securities--Defeasance--Defeasance of Certain Covenants" in the accompanying
prospectus.

CERTAIN DEFINITIONS

"Additional Assets" means:

     (1) any property, plant or equipment used in a Related Business;

     (2) the Capital Stock of a Person that becomes a Restricted Subsidiary as a
     result of the acquisition of such Capital Stock by the Company or another
     Restricted Subsidiary; or

     (3) Capital Stock constituting a minority interest in any Person that at
     such time is a Restricted Subsidiary;

provided, however, that any such Restricted Subsidiary described in clause (2)
or (3) above is primarily engaged in a Related Business.

"Adjusted Consolidated Net Tangible Assets" or "ACNTA" means (without
duplication), as of the date of determination:

     (a) the sum of:

     (1) discounted future net revenue from proved crude oil and natural gas
     reserves of the Company and its Restricted Subsidiaries calculated in
     accordance with SEC guidelines before any state or federal income taxes, as
     estimated by the Company's reserve engineers in a reserve report prepared
     as of the end of the fiscal year ending at least 45 days prior to the date
     of determination, as increased by, as of the date of determination, the
     discounted future net revenue calculated in accordance with SEC guidelines
     (utilizing the prices utilized in such year end reserve report) of:

        (A) estimated proved crude oil and natural gas reserves of the Company
        and its Restricted Subsidiaries attributable to acquisitions consummated
        since the date of such reserve report, and

        (B) estimated crude oil and natural gas reserves of the Company and its
        Restricted Subsidiaries attributable to extensions, discoveries and
        other additions and upward determinations of estimates of proved crude
        oil and natural gas reserves (including previously estimated development
        costs incurred during the period and the accretion of discount since the
        prior period end) due to exploration, development or exploitation,
        production or other activities which reserves were not reflected in such
        reserve report which would, in accordance with standard industry
        practice, result in such determinations,

     and decreased by, as of the date of determination, the discounted future
     net revenue calculated in accordance with SEC guidelines (utilizing the
     prices utilized in such year end reserve report) attributable to:

        (C) estimated proved crude oil and natural gas reserves of the Company
        and its Restricted Subsidiaries reflected in such reserve report
        produced or disposed of since the date of such reserve report, and

        (D) reductions in the estimated oil and natural gas reserves of the
        Company and its Restricted Subsidiaries reflected in such reserve report
        since the date of such reserve report attributable to downward
        determinations of estimates of proved crude oil and natural gas reserves
        due to exploration, development or exploitation, production or other
        activities

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        conducted or otherwise occurring since the date of such reserve report
        which would, in accordance with standard industry practice, result in
        such determinations;

     (2) the capitalized costs that are attributable to crude oil and natural
     gas properties of the Company and its Restricted Subsidiaries to which no
     proved crude oil and natural gas reserves are attributed, based on the
     Company's books and records as of a date no earlier than the end of the
     most recent fiscal quarter for which financial statements of the Company
     have been made publicly available prior to the date of determination;

     (3) the Net Working Capital as of the end of the most recent fiscal quarter
     for which financial statements of the Company have been made publicly
     available prior to the date of determination; and

     (4) the greater of (i) the net book value as of a date no earlier than the
     end of the most recent fiscal quarter for which financial statements of the
     Company have been made publicly available prior to the date of
     determination and (ii) the appraised value, as estimated by independent
     appraisers, of other tangible assets of the Company and its Restricted
     Subsidiaries as of a date no earlier than the most recent fiscal year for
     which financial statements of the Company have been made publicly available
     prior to the date of determination (provided that the Company shall not be
     required to obtain such an appraisal of such assets if no such appraisal
     has been performed); minus

(b) to the extent not otherwise taken into account in the immediately preceding
clause (a), the sum of:

     (1) minority interests;

     (2) any natural gas balancing liabilities of the Company and its Restricted
     Subsidiaries reflected in the Company's latest audited consolidated
     financial statements;

     (3) the discounted future net revenue, calculated in accordance with SEC
     guidelines (utilizing the same prices utilized in the Company's year-end
     reserve report), attributable to reserves subject to participation
     interests, overriding royalty interests or other interests of third
     parties, pursuant to participation, partnership, vendor financing or other
     agreements then in effect, or which otherwise are required to be delivered
     to third parties;

     (4) the discounted future net revenue calculated in accordance with SEC
     guidelines (utilizing the same prices utilized in the Company's year-end
     reserve report), attributable to reserves that are required to be delivered
     to third parties to fully satisfy the obligations of the Company and its
     Restricted Subsidiaries with respect to Volumetric Production Payments on
     the schedules specified with respect thereto; and

     (5) the discounted future net revenue calculated in accordance with SEC
     guidelines, attributable to reserves subject to Dollar-Denominated
     Production Payments that, based on the estimates of production included in
     determining the discounted future net revenue specified in the immediately
     preceding clause (a) (1) (utilizing the same prices utilized in the
     Company's yearend reserve report), would be necessary to satisfy fully the
     obligations of the Company and its Restricted Subsidiaries with respect to
     Dollar-Denominated Production Payments on the schedules specified with
     respect thereto.

If the Company changes its method of accounting from the full cost method to the
successful efforts method or a similar method of accounting, "ACNTA" will
continue to be calculated as if the Company were still using the full cost
method of accounting.

"Affiliate" of any specified Person means any other Person, directly or
indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes

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of this definition, "control" when used with respect to any Person means the
power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing. For purposes of the covenants described under
"--Certain Covenants--Limitation on Restricted Payments," "--Certain
Covenants--Limitation on Affiliate Transactions" and "--Certain
Covenants--Limitation on Sales of Assets and Subsidiary Stock" only, "Affiliate"
shall also mean any beneficial owner of Capital Stock representing 10% or more
of the total voting power of the Voting Stock (on a fully diluted basis) of the
Company or of rights or warrants to purchase such Capital Stock (whether or not
currently exercisable) and any Person who would be an Affiliate of any such
beneficial owner pursuant to the first sentence hereof.

"Applicable Premium" means, with respect to a Note at any time, the greater of
(1) 1.0% of the principal amount of such Note at such time and (2) the excess of
(A) the present value at such time of the principal amount of such Note plus any
required interest payments due on such Note from the redemption date to August
15, 2007, computed using a discount rate equal to the Treasury Rate plus 50
basis points, over (B) the principal amount of such Note.

"Asset Disposition" means any sale, lease, transfer or other disposition (or
series of related sales, leases, transfers or dispositions) by the Company or
any Restricted Subsidiary or a Restricted Subsidiary, including any disposition
by means of a merger, consolidation or similar transaction (each referred to for
the purposes of this definition as a "disposition"), of:

     (1) any shares of Capital Stock of a Restricted Subsidiary (other than
     directors' qualifying shares or shares required by applicable law to be
     held by a Person other than the Company or a Restricted Subsidiary);

     (2) all or substantially all the assets of any division or line of business
     of the Company or any Restricted Subsidiary; or

     (3) any other assets of the Company or any Restricted Subsidiary outside of
     the ordinary course of business of the Company or such Restricted
     Subsidiary

other than, in the case of clauses (1), (2) and (3) above,

     (A) a disposition by the Company or a Restricted Subsidiary to the Company
     or a Restricted Subsidiary;

     (B) for purposes of the covenant described under "--Certain
     Covenants--Limitation on Sales of Assets and Subsidiary Stock" only, (x) a
     disposition that constitutes a Restricted Payment permitted by the covenant
     described under "--Certain Covenants--Limitation on Restricted Payments" or
     a Permitted Investment and (y) a disposition of all or substantially all
     the assets of the Company in accordance with the covenant described under
     "--Certain Covenants--Merger and Consolidation;"

     (C) the trade or exchange by the Company or any Restricted Subsidiary of
     any property used in the Oil and Gas Business of the Company or a
     Restricted Subsidiary for any similar property of another Person, including
     any cash or cash equivalents necessary in order to achieve an exchange of
     equivalent value; provided, however, that the value of the property
     received by the Company or any Restricted Subsidiary in such trade or
     exchange (including any cash or cash equivalents) is at least equal to the
     fair market value (as determined in good faith by the Board of Directors,
     an Officer or an officer of such Restricted Subsidiary with responsibility
     for such transaction, which determination shall be conclusive evidence of
     compliance with this provision) of the property (including any cash or cash
     equivalents) so traded or exchanged;

     (D) the creation of a Lien;

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     (E) a disposition of oil and natural gas properties in connection with tax
     credit transactions complying with Section 29 or any successor or analogous
     provisions of the Code;

     (F) a disposition of the Capital Stock of or any Investment in any
     Unrestricted Subsidiary;

     (G) surrender or waiver of contract rights or the settlement, release or
     surrender of contract, tort or other claims of any kind;

     (H) any disposition of defaulted receivables that arose in the ordinary
     course of business for collection;

     (I) the contribution of overriding royalty interests in oil and natural gas
     properties to the Treasure Island Royalty Trust and the disposition of the
     Capital Stock of the Treasure Island Royalty Trust, in each case in
     connection with the Company's acquisition of EEX Corporation by merger; and

     (J) a disposition of assets with a fair market value of less than $5.0
     million.

"Attributable Debt" in respect of a Sale/Leaseback Transaction means, as at the
time of determination, the present value (discounted at the interest rate borne
by the Notes, compounded semiannually) of the total obligations of the lessee
for rental payments during the remaining term of the lease included in such
Sale/Leaseback Transaction (including any period for which such lease has been
extended); provided, however, that if such Sale/Leaseback Transaction results in
a Capital Lease Obligation, the amount of Indebtedness represented thereby will
be determined in accordance with the definition of "Capital Lease Obligation."

"Average Life" means, as of the date of determination, with respect to any
Indebtedness, the quotient obtained by dividing:

     (1) the sum of the products of the numbers of years from the date of
     determination to the dates of each successive scheduled principal payment
     of or redemption or similar payment with respect to such Indebtedness
     multiplied by the amount of such payment by

     (2) the sum of all such payments.

"Bank Indebtedness" means all Obligations pursuant to Credit Facilities.

"Board of Directors" means the board of directors of the Company or any
committee thereof duly authorized to act on behalf of such board.

"Business Day" means each day which is not a Legal Holiday.

"Capital Lease Obligation" means an obligation that is required to be classified
and accounted for as a capital lease for financial reporting purposes in
accordance with GAAP, and the amount of Indebtedness represented by such
obligation shall be the capitalized amount of such obligation determined in
accordance with GAAP; and the Stated Maturity thereof shall be the date of the
last payment of rent or any other amount due under such lease prior to the first
date upon which such lease may be terminated by the lessee without payment of a
penalty.

"Capital Stock" of any Person means any and all shares, units of beneficial
interests, rights to purchase, warrants, options, participations or other
equivalents of or interests in (however designated) equity of such Person,
including any Preferred Stock, but excluding any debt securities convertible
into such equity.

"Code" means the Internal Revenue Code of 1986, as amended.

"Consolidated Coverage Ratio" as of any date of determination means the ratio of
(x) the aggregate amount of EBITDA for the period of the most recent four
consecutive fiscal quarters for which financial information of the Company has
been made publicly available prior to the date of such

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determination to (y) Consolidated Interest Expense for such four fiscal
quarters; provided, however, that:

     (1) if the Company or any Restricted Subsidiary has Incurred any
     Indebtedness since the beginning of such period that remains outstanding or
     if the transaction giving rise to the need to calculate the Consolidated
     Coverage Ratio is an Incurrence of Indebtedness, or both, EBITDA and
     Consolidated Interest Expense for such period shall be calculated after
     giving effect on a pro forma basis to such Indebtedness and the use of
     proceeds thereof as if such Indebtedness had been Incurred on the first day
     of such period and such proceeds had been applied as of such date;

     (2) if the Company or any Restricted Subsidiary has repaid, repurchased,
     defeased or otherwise discharged any Indebtedness since the beginning of
     such period or if any Indebtedness is to be repaid, repurchased, defeased
     or otherwise discharged on the date of the transaction giving rise to the
     need to calculate the Consolidated Coverage Ratio, EBITDA and Consolidated
     Interest Expense for such period shall be calculated on a pro forma basis
     as if such discharge had occurred on the first day of such period and as if
     the Company or such Restricted Subsidiary had not earned the interest
     income actually earned (if any) during such period in respect of cash or
     Temporary Cash Investments used to repay, repurchase, defease or otherwise
     discharge such Indebtedness;

     (3) if since the beginning of such period the Company or any Restricted
     Subsidiary shall have made any Asset Disposition, EBITDA for such period
     shall be reduced by an amount equal to EBITDA (if positive) directly
     attributable to the assets which were the subject of such Asset Disposition
     for such period, or increased by an amount equal to EBITDA (if negative),
     directly attributable thereto for such period and Consolidated Interest
     Expense for such period shall be reduced by an amount equal to the
     Consolidated Interest Expense directly attributable to any Indebtedness of
     the Company or any Restricted Subsidiary repaid, repurchased, defeased or
     otherwise discharged with respect to the Company and its continuing
     Restricted Subsidiaries in connection with such Asset Disposition for such
     period (or, if the Capital Stock of any Restricted Subsidiary is sold, the
     Consolidated Interest Expense for such period directly attributable to the
     Indebtedness of such Restricted Subsidiary to the extent the Company and
     its continuing Restricted Subsidiaries are no longer liable for such
     Indebtedness after such sale);

     (4) if since the beginning of such period the Company or any Restricted
     Subsidiary (by merger or otherwise) shall have made an Investment in any
     Restricted Subsidiary (or any Person which becomes a Restricted Subsidiary)
     or an acquisition of material assets, including any acquisition of assets
     occurring in connection with a transaction requiring a calculation to be
     made under the Indenture, which constitutes all or substantially all of an
     operating unit of a business, EBITDA and Consolidated Interest Expense for
     such period shall be calculated after giving pro forma effect thereto
     (including the Incurrence of any Indebtedness) as if such Investment or
     acquisition occurred on the first day of such period; and

     (5) if since the beginning of such period any Person (that subsequently
     became a Restricted Subsidiary or was merged with or into the Company or
     any Restricted Subsidiary since the beginning of such period) shall have
     made any Asset Disposition, any Investment or acquisition of assets that
     would have required an adjustment pursuant to clause (3) or (4) above if
     made by the Company or a Restricted Subsidiary during such period, EBITDA
     and Consolidated Interest Expense for such period shall be calculated after
     giving pro forma effect thereto as if such Asset Disposition, Investment or
     acquisition occurred on the first day of such period.

For purposes of this definition, whenever pro forma effect is to be given to an
acquisition of assets, the amount of income or earnings relating thereto and the
amount of Consolidated Interest Expense associated with any Indebtedness
Incurred in connection therewith, the pro forma calculations shall be

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determined in good faith by a responsible financial or accounting Officer of the
Company. If any Indebtedness bears a floating rate of interest and is being
given pro forma effect, the interest on such Indebtedness shall be calculated as
if the rate in effect on the date of determination had been the applicable rate
for the entire period (taking into account any Interest Rate Agreement
applicable to such Indebtedness, but if the remaining term of such Interest Rate
Agreement is less than 12 months, then such Interest Rate Agreement shall only
be taken into account for that portion of the period equal to the remaining term
thereof).

The Consolidated Interest Expense attributable to interest on any Indebtedness
under a revolving credit facility, the outstanding principal balance of which is
required to be computed on a pro forma basis in accordance with the foregoing,
shall be computed based upon the average daily balance of such Indebtedness
during the applicable period, provided, that such average daily balance shall
take into account the amount of any repayment of Indebtedness under such
revolving credit facility during the applicable period, to the extent such
repayment permanently reduced the commitments or amounts available to be
borrowed under such facility.

"Consolidated Interest Expense" means, for any period, the total interest
expense of the Company and its consolidated Restricted Subsidiaries, plus, to
the extent not included in such total interest expense, and to the extent
incurred by the Company or its Restricted Subsidiaries, without duplication:

     (1) interest expense attributable to capital leases and the interest
     expense attributable to leases constituting part of a Sale/Leaseback
     Transaction;

     (2) amortization of debt discount and debt issuance cost;

     (3) capitalized interest;

     (4) non-cash interest expense;

     (5) commissions, discounts and other fees and charges owed with respect to
     letters of credit and bankers' acceptance financing;

     (6) net payments pursuant to Interest Rate Agreements;

     (7) Preferred Stock dividends in respect of all Preferred Stock held by
     Persons other than the Company or a Wholly Owned Subsidiary (other than
     dividends payable solely in Capital Stock (other than Disqualified Stock)
     of the Company);

     (8) interest incurred in connection with Investments in discontinued
     operations;

     (9) interest accruing on any Indebtedness of any other Person to the extent
     such Indebtedness is Guaranteed by (or secured by the assets of) the
     Company or any Restricted Subsidiary; and

     (10) the cash contributions to any employee stock ownership plan or similar
     trust to the extent such contributions are used by such plan or trust to
     pay interest or fees to any Person (other than the Company) in connection
     with Indebtedness Incurred by such plan or trust;

minus, to the extent included above, write-off of deferred financing costs and
interest attributable to Dollar-Denominated Production Payments.

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"Consolidated Net Income" means, for any period, the net income of the Company
and its consolidated Subsidiaries; provided, however, that there shall not be
included in such Consolidated Net Income:

     (1) any net income of any Person (other than the Company) if such Person is
     not a Restricted Subsidiary, except that:

        (A) subject to the exclusion contained in clause (4) below, the
        Company's equity in the net income of any such Person for such period
        shall be included in such Consolidated Net Income in an amount equal to
        the aggregate amount of cash actually distributed by such Person during
        such period to the Company or a Restricted Subsidiary as a dividend,
        interest payment or other distribution (subject, in the case of a
        dividend, interest payment or other distribution paid to a Restricted
        Subsidiary, to the limitations contained in clause (3) below); and

        (B) the Company's equity in a net loss of any such Person for such
        period shall not be included in determining such Consolidated Net
        Income, except to the extent of the aggregate cash actually contributed
        to such Person by the Company or a Restricted Subsidiary during such
        period;

     (2) solely for the purposes of determining the aggregate amount available
     for Restricted Payments under clause (a) (3) of the covenant described
     under "Certain Covenants--Limitation on Restricted Payments," any net
     income (or loss) of any Person acquired by the Company or a Subsidiary in a
     pooling of interests transaction for any period prior to the date of such
     acquisition;

     (3) any net income of any Restricted Subsidiary if such Restricted
     Subsidiary is subject to restrictions, directly or indirectly, on the
     payment of dividends or the making of distributions by such Restricted
     Subsidiary, directly or indirectly, to the Company, except that:

        (A) subject to the exclusion contained in clause (4) below, the
        Company's equity in the net income of any such Restricted Subsidiary for
        such period shall be included in such Consolidated Net Income in an
        amount equal to the aggregate amount of cash that could have been
        distributed by such Restricted Subsidiary during such period to the
        Company or another Restricted Subsidiary as a dividend, interest payment
        or other distribution (subject, in the case of a dividend, interest
        payment or other distribution paid to another Restricted Subsidiary, to
        the limitation contained in this clause); and

        (B) the Company's equity in a net loss of any such Restricted Subsidiary
        for such period shall be included in determining such Consolidated Net
        Income;

     (4) any gain or loss, together with any related provision for taxes on such
     gain or loss and all related fees and expenses, realized in connection with
     (A) the sale or other disposition of any assets of the Company, its
     consolidated Subsidiaries or any other Person (including pursuant to any
     Sale/ Leaseback Transaction) which is not sold or otherwise disposed of in
     the ordinary course of business and (B) the disposition of any securities
     of any Person or the extinguishment of any Indebtedness of the Company or
     any of its Subsidiaries;

     (5) extraordinary or non-recurring gains or losses, together with any
     related provision for taxes on such gains or losses and all related fees
     and expenses; and

     (6) the cumulative effect of a change in accounting principles;

     (7) any impairment losses on oil and natural gas properties;

     (8) any unrealized noncash gains or losses or charges in respect of Hedging
     Obligations (including those resulting from the application of SFAS 133);
     and

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     (9) any non-cash compensation charge arising from any grant of stock, stock
     options or other equity-based awards.

Notwithstanding the foregoing, for the purposes of the covenant described under
"--Certain Covenants--Limitation on Restricted Payments" only, there shall be
excluded from Consolidated Net Income any repurchases, repayments or redemptions
of Investments, proceeds realized on the sale of Investments or return of
capital to the Company or a Restricted Subsidiary to the extent such
repurchases, repayments, redemptions, proceeds or returns increase the amount of
Restricted Payments permitted under such covenant pursuant to clause (a) (3) (E)
thereof.

"Consolidated Net Worth" means the total of the amounts shown on the balance
sheet of the Company and its consolidated Subsidiaries, determined on a
consolidated basis in accordance with GAAP, as of the end of the most recent
fiscal quarter of the Company ending at least 45 days prior to the taking of any
action for the purpose of which the determination is being made, as the sum of:

     (1) the par or stated value of all outstanding Capital Stock of the Company
     plus

     (2) paid-in capital or capital surplus relating to such Capital Stock plus

     (3) any retained earnings or earned surplus

less (A) any accumulated deficit and (B) any amounts attributable to
Disqualified Stock.

"Credit Facilities" means, with respect to the Company or any Restricted
Subsidiary, one or more debt facilities (including under the Revolving Credit
Facility) or commercial paper facilities with banks or other lenders providing
revolving credit loans, term loans, Production Payments, receivables financing
(including through the sale of receivables) or letters of credit, in each case,
as amended, restated, modified, renewed, refunded, replaced or refinanced in
whole or in part from time to time.

"Currency Agreement" means in respect of a Person any foreign exchange contract,
currency swap agreement or other similar agreement designed to protect such
Person against fluctuations in currency values.

"Default" means any event which is, or after notice or passage of time or both
would be, an Event of Default.

"Designated Senior Indebtedness," with respect to a Person means:

     (1) the Bank Indebtedness; and

     (2) any other Senior Indebtedness of such Person which, at the date of
     determination, has an aggregate principal amount outstanding of, or under
     which, at the date of determination, the holders thereof are committed to
     lend up to, at least $25.0 million and is specifically designated by such
     Person in the instrument evidencing or governing such Senior Indebtedness
     as "Designated Senior Indebtedness" for purposes of the Indenture.

"Disqualified Stock" means, with respect to any Person, any Capital Stock which
by its terms (or by the terms of any security into which it is convertible or
for which it is exchangeable at the option of the holder) or upon the happening
of any event:

     (1) matures or is mandatorily redeemable (other than redeemable only for
     Capital Stock of such Person which is not itself Disqualified Stock)
     pursuant to a sinking fund obligation or otherwise;

     (2) is convertible or exchangeable at the option of the bolder for
     Indebtedness or Disqualified Stock; or

     (3) is mandatorily redeemable or must be purchased upon the occurrence of
     certain events or otherwise, in whole or in part;

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in each case on or prior to the first anniversary of the Stated Maturity of the
Notes; provided, however, that (A) any Capital Stock that would not constitute
Disqualified Stock but for provisions thereof giving holders thereof the right
to require such Person to purchase or redeem such Capital Stock upon the
occurrence of an "asset sale" or "change of control" shall not constitute
Disqualified Stock if:

     (1) the "asset sale" or "change of control" provisions applicable to such
     Capital Stock are not more favorable, as measured by the purchase or
     redemption price or the breadth of the definition of the event or events
     triggering such purchase or redemption obligation, to the holders of such
     Capital Stock than the terms applicable to the Notes and described under
     "--Certain Covenants Limitation on Sales of Assets and Subsidiary Stock"
     and "--Certain Covenants--Change of Control;" and

     (2) any such requirement only becomes operative after compliance with such
     terms applicable to the Notes, including the purchase of any Notes tendered
     pursuant thereto,

and (B) any Capital Stock that would constitute Disqualified Stock solely
because such Capital Stock is issued pursuant to any plan for the benefit of
employees of the Company or Subsidiaries of the Company or by any such plan to
such employees and may be required to be repurchased by the Company in order to
satisfy applicable statutory or regulatory obligations shall not constitute
Disqualified Stock.

The amount of any Disqualified Stock that does not have a fixed redemption,
repayment or repurchase price will be calculated in accordance with the terms of
such Disqualified Stock as if such Disqualified Stock were redeemed, repaid or
repurchased on any date on which the amount of such Disqualified Stock is to be
determined pursuant to the Indenture; provided, however, that if such
Disqualified Stock could not be required to be redeemed, repaid or repurchased
at the time of such determination, the redemption, repayment or repurchase price
will be the book value of such Disqualified Stock as reflected in the most
recent financial statements of such Person.

"Dollar-Denominated Production Payments" means production payment obligations
recorded as liabilities in accordance with GAAP, together with all undertakings
and obligations in connection therewith.

"EBITDA" for any period means the sum of Consolidated Net Income, plus the
following to the extent deducted in calculating such Consolidated Net Income:

     (1) all income tax expense of the Company and its consolidated Restricted
     Subsidiaries;

     (2) Consolidated Interest Expense;

     (3) depreciation, depletion, exploration and amortization expense of the
     Company and its consolidated Restricted Subsidiaries (excluding
     amortization expense attributable to a prepaid operating activity item that
     was paid in cash in a prior period); and

     (4) all other non-cash charges of the Company and its consolidated
     Restricted Subsidiaries (excluding any such non-cash charge to the extent
     that it represents an accrual of or reserve for cash expenditures in any
     future period);

in each case for such period, and less, to the extent included in calculating
such Consolidated Net Income and in excess of any costs or expenses attributable
thereto and deducted in calculating such Consolidated Net Income, the sum of:

     (A) the amount of deferred revenues that are amortized during such period
     and are attributable to reserves that are subject to Volumetric Production
     Payments; and

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     (B) amounts recorded in accordance with GAAP as repayments of principal and
     interest pursuant to Dollar-Denominated Production Payments.

Notwithstanding the foregoing, the provision for taxes based on the income or
profits of, and the depreciation, depletion, exploration and amortization and
non-cash charges of, a Restricted Subsidiary shall be added to Consolidated Net
Income to compute EBITDA only to the extent (and in the same proportion,
including by reason of minority interests) that the net income of such
Restricted Subsidiary was included in calculating Consolidated Net Income and
only if a corresponding amount would be permitted at the date of determination
to be dividended to the Company by such Restricted Subsidiary without prior
approval (that has not been obtained), pursuant to the terms of its charter and
all agreements, instruments, judgments, decrees, orders, statutes, rules and
governmental regulations applicable to such Restricted Subsidiary or its
stockholders.

"Exchange Act" means the U.S. Securities Exchange Act of 1934, as amended.

"Existing Investments" means assets (including securities) held by the Company
or any of the Restricted Subsidiaries as consideration for an Investment made on
or before the Issue Date or acquired thereafter pursuant to any agreement or
obligation as in effect on the Issue Date.

"Existing Trust Preferred Securities" means the Company-obligated 6 1/2%
Cumulative Quarterly Income Convertible Preferred Securities, Series A issued by
Newfield Financial Trust I, a statutory business trust, on August 13, 1999, in
an aggregate liquidation amount of $148.2 million.

"Finance Person" means a Subsidiary of the Company that is organized as a
business trust or similar entity for the primary purposes of (1) holding
Subordinated Indebtedness of the Company or a Restricted Subsidiary with respect
to which payments of interest can, at the election of the issuer thereof, be
deferred for one or more payment periods, and (2) issuing Qualifying Trust
Preferred Securities, the proceeds of which are lent to the Company or
Restricted Subsidiary.

"GAAP" means generally accepted accounting principles in the United States of
America as in effect from time to time.

"Guarantee" means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Indebtedness of any Person and any
obligation, direct or indirect, contingent or otherwise, of such Person:

     (1) to purchase or pay (or advance or supply funds for the purchase or
     payment of) such Indebtedness of such Person (whether arising by virtue of
     partnership arrangements, or by agreements to keep-well, to purchase
     assets, goods, securities or services, to take-or-pay or to maintain
     financial statement conditions or otherwise); or

     (2) entered into for the purpose of assuring in any other manner the
     obligee of such Indebtedness of the payment thereof or to protect such
     obligee against loss in respect thereof (in whole or in part);

provided, however, that the term "Guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning. The term "Guarantor" shall mean any
Person Guaranteeing any Indebtedness.

"Guaranty Agreement" means a supplemental indenture, substantially in the form
prescribed in the Indenture, pursuant to which a Subsidiary Guarantor guarantees
the Company's obligations with respect to the Notes on the terms provided for in
the Indenture.

"Hedging Obligations" of any Person means the obligations of such Person
pursuant to any Oil and Natural Gas Hedging Contract, Interest Rate Agreement or
Currency Agreement.

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"Holder" or "Noteholder" means the Person in whose name a Note is registered on
the Registrar's books.

"Incur" means issue, assume, Guarantee, incur or otherwise become liable for;
provided, however, that any Indebtedness or Capital Stock of a Person existing
at the time such Person becomes a Restricted Subsidiary (whether by merger,
consolidation, acquisition or otherwise) shall be deemed to be Incurred by such
Person at the time it becomes a Restricted Subsidiary. The term "Incurrence"
when used as a noun shall have a correlative meaning. Solely for purposes of
determining compliance with "--Certain Covenants--Limitation on Indebtedness:"

     (1) amortization of debt discount or the accretion of principal with
     respect to a non-interest bearing or other discount security;

     (2) the payment of regularly scheduled interest in the form of additional
     Indebtedness of the same instrument or the payment of regularly scheduled
     dividends on Capital Stock in the form of additional Capital Stock of the
     same class and with the same terms;

     (3) the obligation to pay a premium in respect of Indebtedness arising in
     connection with the issuance of a notice of redemption or making of a
     mandatory offer to purchase such Indebtedness; and

     (4) unrealized losses or charges in respect of Hedging Obligations
     (including those resulting from the application of SFAS 133)

will not be deemed to be the Incurrence of Indebtedness.

"Indebtedness" means, with respect to any Person on any date of determination
(without duplication):

     (1) the principal in respect of (A) indebtedness of such Person for money
     borrowed and (B) indebtedness evidenced by notes, debentures, bonds or
     other similar instruments for the payment of which such Person is
     responsible or liable, including, in each case, any premium on such
     indebtedness to the extent such premium has become due and payable;

     (2) all Capital Lease Obligations of such Person and all Attributable Debt
     in respect of Sale/ Leaseback Transactions entered into by such Person;

     (3) all obligations of such Person issued or assumed as the deferred
     purchase price of property, all conditional sale obligations of such Person
     and all obligations of such Person under any title retention agreement (but
     excluding trade accounts payable and accrued expenses);

     (4) all obligations of such Person for the reimbursement of any obligor on
     any letter of credit, bankers' acceptance or similar credit transaction
     (other than obligations with respect to letters of credit securing
     obligations (other than obligations described in clauses (1) through (3)
     above) entered into in the ordinary course of business of such Person to
     the extent such letters of credit are not drawn upon or, if and to the
     extent drawn upon, such drawing is reimbursed no later than the tenth
     Business Day following payment on the letter of credit);

     (5) the amount of all obligations of such Person with respect to the
     redemption, repayment or other repurchase of any Disqualified Stock of such
     Person or, with respect to any Preferred Stock of any Restricted Subsidiary
     of such Person the principal amount of such Preferred Stock to be
     determined in accordance with the Indenture (but excluding, in each case,
     any accrued dividends) (and the term "Incur Indebtedness" and similar terms
     include issuances of such Disqualified Stock and Preferred Stock);

     (6) all obligations of the types referred to in clauses (1) through (5) of
     other Persons and all dividends of other Persons for the payment of which,
     in either case, such Person is responsible or

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     liable, directly or indirectly, as obligor, guarantor or otherwise,
     including by means of any Guarantee;

     (7) all obligations of the types referred to in clauses (1) through (6) of
     other Persons secured by any Lien on any property or asset of such Person
     (whether or not such obligation is assumed by such Person), the amount of
     such obligation being deemed to be the lesser of the liquidation value of
     such property or asset and the amount of the obligation so secured;

     (8) to the extent not otherwise included in this definition, Hedging
     Obligations of such Person; and

     (9) any Guarantee by such Person of production or payment with respect to a
     Production Payment,

if and to the extent, in the case of obligations of the types referred to in
clauses (1), (2) and (3) above, such obligations would appear as a liability
upon a balance sheet of such Person prepared in accordance with GAAP.

Except as expressly provided in clause (9) above, Production Payments and
Reserve Sales shall not constitute "Indebtedness." For purposes of the covenant
captioned "--Certain Covenants--Limitation on Indebtedness," Indebtedness shall
not include Qualifying Trust Preferred Securities and debt securities related to
Qualifying Trust Preferred Securities and held by a Finance Person.

Notwithstanding the preceding, in connection with the purchase by the Company or
any Restricted Subsidiary of any business, the term "Indebtedness" will exclude
post-closing payment adjustments to which the seller may become entitled to the
extent such payment is determined by a final closing balance sheet or such
payment depends on the performance of such business after the closing; provided,
however, that, at the time of closing, the amount of any such payment is not
determinable and, to the extent such payment thereafter becomes fixed and
determined, the amount is paid within 30 days thereafter.

The amount of Indebtedness of any Person at any date shall be the outstanding
balance at such date of all unconditional obligations as described above and the
maximum liability, upon the occurrence of the contingency giving rise to the
obligation, of any contingent obligations at such date; provided, however, that
in the case of Indebtedness sold at a discount, the amount of such Indebtedness
at any time will be the accreted value thereof at such time.

"Independent Qualified Party" means an investment banking firm, accounting firm
or appraisal firm of national standing; provided, however, that such firm is not
an Affiliate of the Company.

"Interest Rate Agreement" means in respect of a Person any interest rate swap
agreement, interest rate cap agreement or other financial agreement or
arrangement designed to protect such Person against fluctuations in interest
rates.

"Investment" in any Person means any direct or indirect advance, loan or other
extensions of credit (including by way of Guarantee but excluding any such
extension of credit made in the ordinary course of business to any customer or
supplier) or capital contribution to (by means of any transfer of cash or other
property to others or any payment for property or services for the account or
use of others), or any purchase or acquisition for value of Capital Stock,
Indebtedness or other similar instruments issued by such Person. Except as
otherwise provided for in the Indenture, the amount of an Investment shall be
its fair value at the time the Investment is made and without giving effect to
subsequent changes in value.

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For purposes of the definition of "Unrestricted Subsidiary," the definition of
"Restricted Payment" and the covenant described under "--Certain
Covenants--Limitation on Restricted Payments:"

     (1) "Investment" shall include the portion (proportionate to the Company's
     equity interest in such Subsidiary) of the fair market value of the net
     assets of any Subsidiary of the Company at the time that such Subsidiary is
     designated an Unrestricted Subsidiary; and

     (2) any property transferred to or from an Unrestricted Subsidiary shall be
     valued at its fair market value at the time of such transfer, in each case
     as determined in good faith by the Board of Directors.

"Issue Date" means August 13, 2002.

"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions are not required to be open in the State of New York.

"Lien" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including any conditional sale or other title retention
agreement or lease in the nature thereof).

"Moody's" means Moody's Investors Service, Inc., and any successor to its credit
rating business.

"Net Available Cash" from an Asset Disposition means cash payments received
therefrom (including any cash payments received by way of deferred payment of
principal pursuant to a note or installment receivable or otherwise and proceeds
from the sale or other disposition of any securities received as consideration,
but only as and when received, but excluding any other consideration received in
the form of assumption by the acquiring Person of Indebtedness or other
obligations relating to such properties or assets or received in any other
non-cash form), in each case net of:

     (1) all accounting, engineering, investment banking, brokerage, legal,
     title and recording tax expenses, commissions and other fees and expenses
     incurred, and all Federal, state, provincial, foreign and local and other
     taxes required to be accrued as a liability under GAAP, as a consequence of
     such Asset Disposition, and any relocation expenses incurred or assumed in
     connection with such Asset Disposition;

     (2) all payments made on any Indebtedness which is secured by any assets
     subject to such Asset Disposition, in accordance with the terms of any Lien
     upon or other security agreement of any kind with respect to such assets,
     or which must by its terms, or in order to obtain a necessary consent to
     such Asset Disposition, or by applicable law, be repaid out of the proceeds
     from such Asset Disposition;

     (3) all distributions and other payments required to be made to minority
     interest holders in Restricted Subsidiaries as a result of such Asset
     Disposition; and

     (4) the deduction of appropriate amounts provided by the seller as a
     reserve for adjustment in respect of the sale price of the assets that were
     the subject of such Asset Disposition or as a reserve, in accordance with
     GAAP, against any liabilities associated with the assets disposed in such
     Asset Disposition and retained by the Company or any Restricted Subsidiary
     after such Asset Disposition.

"Net Cash Proceeds," with respect to any issuance or sale of Capital Stock or
Indebtedness, means the cash proceeds of such issuance or sale net of attorneys'
fees, accountants' fees, underwriters' or placement agents' fees, discounts or
commissions and brokerage, consultant and other fees actually incurred in
connection with such issuance or sale and net of taxes paid or payable as a
result thereof.

"Net Present Value" means, with respect to any proved oil and natural gas
reserves, the discounted future net cash flows associated with such reserves,
determined in accordance with the rules and

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regulations (including interpretations thereof) of the SEC in effect on the date
of this Prospectus Supplement.

"Net Working Capital" means:

     (1) all current assets of the Company and its Restricted Subsidiaries,
     except current assets from commodity price risk management activities
     arising in the ordinary course of business; minus

     (2) all current liabilities of the Company and its Restricted Subsidiaries,
     except current liabilities included in Indebtedness and current liabilities
     from commodity price risk management activities arising in the ordinary
     course of business,

determined in accordance with GAAP.

"Non-Recourse Purchase Money Indebtedness" means (1) Indebtedness (other than
Capital Lease Obligations) of the Company or any Restricted Subsidiary incurred
in connection with the acquisition by the Company or such Restricted Subsidiary
in the ordinary course of business of fixed assets used in the Oil and Gas
Business (including office buildings and other real property used by the Company
or such Restricted Subsidiary in conducting its operations) and (2) any renewals
and refinancings of such Indebtedness; provided, however, that the holders of
such Indebtedness described in clauses (1) and (2) agree that they will look
solely to the fixed assets so acquired which secure such Indebtedness (subject
to customary exceptions such as indemnifications for environmental and title
matters and fraud) for payment on or in respect of such Indebtedness and no
default with respect to such Indebtedness would permit (after notice or passage
of time or both), according to the terms of any other Indebtedness of the
Company or a Restricted Subsidiary, any holder of such other Indebtedness to
declare a default under such other Indebtedness or cause the payment of such
other Indebtedness to be accelerated or payable prior to its Stated Maturity.

"Obligations" means, with respect to any Indebtedness, all obligations for
principal, premium, interest, penalties, fees, indemnifications, reimbursements,
and other amounts payable pursuant to the documentation governing such
Indebtedness.

"Officer" means the Chairman of the Board, the President, any Vice President,
the Treasurer or the Secretary of the Company.

"Officers' Certificate" means a certificate signed by two Officers.

"Oil and Gas Business" means:

     (1) the acquisition, exploration, exploitation, development, operation and
     disposition of interests in oil, natural gas, other hydrocarbon and mineral
     properties;

     (2) the gathering, marketing, distribution, treating, processing, storage,
     refining, selling and transporting of any production from such interests or
     properties and the marketing of oil, natural gas, other hydrocarbons and
     minerals obtained from unrelated Persons;

     (3) any business relating to or arising from exploration for or
     exploitation, development, production, treatment, processing, storage,
     refining, transportation, gathering or marketing of oil, natural gas, other
     hydrocarbons and minerals and products produced in association therewith;
     and

     (4) any activity necessary, appropriate or incidental to the activities
     described in the preceding clauses (1) through (3) of this definition.

"Oil and Natural Gas Hedging Contract" means any oil and natural gas hedging
agreement and any other agreement or arrangement designed to protect the Company
or any Restricted Subsidiary against fluctuations in oil and natural gas prices.

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"Opinion of Counsel" means a written opinion from legal counsel who is
acceptable to the Trustee. The counsel may be an employee of or counsel to the
Company or the Trustee.

"Permitted Business Investments" means Investments and expenditures made in the
ordinary course of, and of a nature that is or shall have become customary in,
the Oil and Gas Business as means of actively exploiting, exploring for,
acquiring, developing, processing, gathering, marketing or transporting oil,
natural gas, other hydrocarbons and minerals through agreements, transactions,
interests or arrangements that permit one to share risks or costs, comply with
regulatory requirements regarding local ownership or satisfy other objectives
customarily achieved through the conduct of the Oil and Gas Business jointly
with third parties, including:

     (1) ownership interests in oil, natural gas, other hydrocarbon and mineral
     properties or gathering, transportation, processing, storage or related
     systems; and

     (2) entry into, and Investments and expenditures in the form of or pursuant
     to, operating agreements, working interests, royalty interests, mineral
     leases, processing agreements, farm-in agreements, farm-out agreements,
     contracts for the sale, transportation or exchange of oil, natural gas,
     other hydrocarbons and minerals, production sharing agreements, development
     agreements, area of mutual interest agreements, unitization agreements,
     pooling arrangements, joint bidding agreements, service contracts, joint
     venture agreements, partnership agreements (whether general or limited),
     limited liability company agreements, subscription agreements, stock
     purchase agreements, stockholder agreements and other similar agreements
     with third parties (including Unrestricted Subsidiaries).

"Permitted Investment" means an Investment by the Company or any Restricted
Subsidiary in:

     (1) the Company, a Restricted Subsidiary or a Person that will, upon the
     making of such Investment, become a Restricted Subsidiary; provided,
     however, that the primary business of such Restricted Subsidiary is a
     Related Business;

     (2) cash and Temporary Cash Investments;

     (3) receivables owing to the Company or any Restricted Subsidiary if
     created or acquired in the ordinary course of business and payable or
     dischargeable in accordance with customary trade terms; provided, however,
     that such trade terms may include such concessionary trade terms as the
     Company or any such Restricted Subsidiary deems reasonable under the
     circumstances;

     (4) payroll, travel and similar advances to cover matters that are expected
     at the time of such advances ultimately to be treated as expenses for
     accounting purposes and that are made in the ordinary course of business;

     (5) loans or advances to officers, directors and employees made in the
     ordinary course of business consistent with past practices of the Company
     or such Restricted Subsidiary;

     (6) Capital Stock, obligations or securities received in settlement of
     debts created in the ordinary course of business and owing to the Company
     or any Restricted Subsidiary or in satisfaction of judgments;

     (7) any Person to the extent such Investment represents the non-cash
     portion of the consideration received for an Asset Disposition as permitted
     pursuant to the covenant described under "--Certain Covenants--Limitation
     on Sales of Assets and Subsidiary Stock" or consideration received for a
     disposition not constituting an Asset Disposition;

     (8) any Person where such Investment was acquired by the Company or any of
     its Restricted Subsidiaries (a) in exchange for any other Investment or
     accounts receivable held by the Company or any such Restricted Subsidiary
     in connection with or as a result of a bankruptcy, workout,

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     reorganization or recapitalization of the issuer of such other Investment
     or accounts receivable or (b) as a result of a foreclosure by the Company
     or any of its Restricted Subsidiaries with respect to any secured
     Investment or other transfer of title with respect to any secured
     Investment in default;

     (9) any acquisitions of Capital Stock solely in exchange for Capital Stock
     (other than Disqualified Stock) of the Company; provided, however, that the
     fair market value of such Capital Stock, when taken together with all other
     Capital Stock acquired pursuant to this clause (9) and at the time owned by
     the Company or its Restricted Subsidiaries, does not exceed $10.0 million;

     (10) Hedging Obligations;

     (11) obligations of one or more officers, directors or employees of the
     Company or any of its Restricted Subsidiaries in connection with such
     individual's acquisition of shares of Capital Stock of the Company (and
     refinancings of the principal thereof and accrued interest thereon) so long
     as no net cash or other assets of the Company and its Restricted
     Subsidiaries are paid by the Company or any of its Restricted Subsidiaries
     to such individuals in connection with the acquisition of any such
     obligations;

     (12) Existing Investments and any Investments made with the proceeds of any
     dispositions thereof;

     (13) Permitted Business Investments;

     (14) Guarantees of performance or other obligations (other than
     Indebtedness) arising in the ordinary course in the Oil and Gas Business,
     including obligations under oil and natural gas exploration, development,
     joint operating, and related agreements and licenses or concessions related
     to the Oil and Gas Business;

     (15) Investments in prepaid expenses, negotiable instruments held for
     collection or deposit and lease, utility and workers compensation,
     performance and similar deposits entered into as a result of the operations
     of the business in the ordinary course of business; and

     (16) any Person, not otherwise permitted to be made pursuant to clause (1)
     through (15), in an aggregate amount, which when taken together with all
     other Investments made on or after the Issue Date pursuant to this clause,
     does not exceed $50 million at any one time outstanding, measured as of the
     date such Investments are made without giving effect to any subsequent
     changes in value (which Investments shall be deemed no longer outstanding
     only upon the return of capital thereof).

"Permitted Liens" means the following types of Liens:

     (1) Liens securing Senior Indebtedness;

     (2) Liens in favor of the Company or a Restricted Subsidiary;

     (3) Liens securing the Notes;

     (4) Liens existing as of the Issue Date; and

     (5) Liens arising from the deposit of funds or securities in trust for the
     purpose of decreasing or defeasing Indebtedness so long as such deposit of
     funds or securities and such decreasing or defeasing of Indebtedness are
     permitted under the covenant described under "Certain Covenants--Limitation
     on Restricted Payments."

In each case set forth above, notwithstanding any stated limitation on the
assets that may be subject to such Lien, a Permitted Lien on a specified asset
or group or type of assets may include Liens on all

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                                                                           S- 77

DESCRIPTION OF THE NOTES
--------------------------------------------------------------------------------

improvements, additions and accessions thereto and all products and proceeds
thereof (including, without limitation, dividends, distributions and increases
in respect thereof).

"Person" means any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization, government or any agency or political subdivision thereof or any
other entity.

"Preferred Stock," as applied to the Capital Stock of any Person, means Capital
Stock of any class or classes (however designated) which is preferred as to the
payment of dividends or distributions, or as to the distribution of assets upon
any voluntary or involuntary liquidation or dissolution of such Person, over
shares of Capital Stock of any other class of such Person.

"Principal" of a Note means the principal of the Note plus the premium, if any,
payable on the Note which is due or overdue or is to become due at the relevant
time.

"Production Payments" means, collectively, Dollar-Denominated Production
Payments and Volumetric Production Payments.

"Production Payments and Reserve Sales" means the grant or transfer to any
Person of a Dollar-Denominated Production Payment, Volumetric Production
Payment, royalty, overriding royalty, net profits interest, master limited
partnership interest or other interest in oil and natural gas properties,
reserves or the right to receive all or a portion of the production or the
proceeds from the sale of production attributable to such properties.

"Public Equity Offering" means an underwritten primary public offering of common
stock of the Company pursuant to an effective registration statement under the
Securities Act.

"Public Market" exists at any time with respect to the common stock of the
Company if it is then (1) registered with the SEC pursuant to Section 12(b) or
12(g) of the Exchange Act and (2) traded either on a national securities
exchange or on the Nasdaq Stock Market.

"Qualified Redemption Transaction" means redemption of any Capital Stock or
Subordinated Obligation (including any Subordinated Indebtedness accounted for
as a minority interest of the Company that is held by a Finance Person) that by
its terms is convertible into common stock of the Company if on the date of
notice of call for such redemption (1) a Public Market exists in the shares of
common stock of the Company and (2) the average closing price on the Public
Market for shares of common stock of the Company for the 20 trading days
immediately preceding the date of notice exceeds the product of (x) the
redemption price expressed as a percentage of the stated value or amount of the
item being redeemed and (y) 120% of the conversion price per share of common
stock of the Company issuable upon conversion of the Capital Stock or
Subordinated Obligation called for redemption.

"Qualifying Trust Preferred Securities" means preferred trust securities or
similar securities issued by a Finance Person after the Issue Date.

"Refinance" means, in respect of any Indebtedness, to refinance, extend, renew,
refund or to issue other Indebtedness in exchange or replacement for, such
Indebtedness. "Refinanced" and "Refinancing" shall have correlative meanings.

"Refinancing Indebtedness" means Indebtedness that Refinances any Indebtedness
of the Company or any Restricted Subsidiary existing on the Issue Date or
Incurred in compliance with the Indenture, including Indebtedness that
Refinances Refinancing Indebtedness; provided, however, that:

     (1) such Refinancing Indebtedness has a Stated Maturity no earlier than the
     Stated Maturity of the Indebtedness being Refinanced;

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S- 78

DESCRIPTION OF THE NOTES
--------------------------------------------------------------------------------

     (2) such Refinancing Indebtedness has an Average Life at the time such
     Refinancing Indebtedness is Incurred that is equal to or greater than the
     Average Life of the Indebtedness being Refinanced; and

     (3) such Refinancing Indebtedness has an aggregate principal amount (or if
     Incurred with original issue discount, an aggregate issue price) that is
     equal to or less than the aggregate principal amount (or if Incurred with
     original issue discount, the aggregate accreted value) then outstanding or
     committed (plus accrued interest thereon and fees and expenses, including
     any premium and defeasance costs) under the Indebtedness being Refinanced;

provided further, however, that Refinancing Indebtedness shall not include (A)
Indebtedness of a Restricted Subsidiary that is not a Subsidiary Guarantor that
Refinances Indebtedness of the Company or (B) Indebtedness of the Company or a
Restricted Subsidiary that Refinances Indebtedness of an Unrestricted
Subsidiary.

"Related Business" means the Oil and Gas Business and any other business in
which the Company or a Subsidiary was engaged on the Issue Date and any business
related, ancillary or complementary thereto.

"Representative" means, with respect to a Person, any trustee, agent or
representative (if any) for an issue of Senior Indebtedness of such Person.

"Restricted Payment" with respect to any Person means:

     (1) the declaration or payment of any dividends or any other distributions
     of any sort in respect of its Capital Stock (including any payment in
     connection with any merger or consolidation involving such Person) or
     similar payment to the direct or indirect holders of its Capital Stock
     (other than dividends or distributions payable solely in its Capital Stock
     (other than Disqualified Stock) and dividends or distributions payable
     solely to the Company or a Restricted Subsidiary, and dividends or other
     distributions made by a subsidiary to the holders of any class of its
     Capital Stock on a pro rata basis);

     (2) the purchase, redemption or other acquisition or retirement for value
     of any Capital Stock of the Company held by any Person (other than a
     Restricted Subsidiary) or of any Capital Stock of a Restricted Subsidiary
     held by any Affiliate of the Company (other than the Company or a
     Restricted Subsidiary), including in connection with any merger or
     consolidation and including the exercise of any option to exchange any
     Capital Stock (other than into Capital Stock of the Company that is not
     Disqualified Stock);

     (3) the purchase, repurchase, redemption, defeasance or other acquisition
     or retirement for value, prior to scheduled maturity, scheduled repayment
     or scheduled sinking fund payment of any Subordinated Obligations of such
     Person (other than the purchase, repurchase, redemption, defeasance or
     other acquisition of Subordinated Obligations or retirement for value in
     anticipation of satisfying a sinking fund obligation, principal installment
     or final maturity, in each case due within one year of the date of such
     purchase, repurchase, redemption, defeasance or other acquisition or
     retirement for value); or

     (4) the making of any Investment (other than a Permitted Investment) in any
     Person.

"Restricted Subsidiary" means any Subsidiary of the Company that is not an
Unrestricted Subsidiary.

"Revolving Credit Facility" means the Credit Agreement dated as of January 23,
2001, among the Company, JPMorgan Chase Bank, as Agent, and the banks signatory
thereto, as amended from time to time.

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                                                                           S- 79

DESCRIPTION OF THE NOTES
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"S&P" means Standard and Poor's Ratings Services, a division of The McGraw-Hill
Companies, Inc., and any successor to its credit rating business.

"Sale/Leaseback Transaction" means an arrangement relating to property owned by
the Company or a Restricted Subsidiary on the Issue Date or thereafter acquired
by the Company or a Restricted Subsidiary whereby the Company or a Restricted
Subsidiary transfers such property to a Person and the Company or a Restricted
Subsidiary leases it from such Person.

"SEC" means the U.S. Securities and Exchange Commission.

"Secured Indebtedness" means any Indebtedness of the Company secured by a Lien.

"Securities Act" means the U.S. Securities Act of 1933, as amended.

"Senior Indebtedness" means with respect to any Person:

     (1) Indebtedness of such Person, whether outstanding on the Issue Date or
     thereafter Incurred; and

     (2) all other Obligations of such Person (including interest accruing on or
     after the filing of any petition in bankruptcy or for reorganization
     relating to such Person whether or not post-filing interest is allowed in
     such proceeding) in respect of Indebtedness described in clause (1) above;

unless, in the case of clauses (1) and (2), in the instrument creating or
evidencing the same or pursuant to which the same is outstanding, it is provided
that such Indebtedness or other Obligations are subordinate or pari passu in
right of payment to the Notes or the Subsidiary Guaranty of such Person, as the
case may be; provided, however, that Senior Indebtedness shall not include:

     (1) any Obligation of such Person to any Subsidiary;

     (2) any Disqualified Stock;

     (3) any Indebtedness or other Obligation (and any accrued and unpaid
     interest in respect thereof) of such Person which is subordinate or junior
     in any respect to any other Indebtedness or other Obligation of such
     Person; or

     (4) that portion of any Indebtedness which at the time of Incurrence is
     Incurred in violation of the Indenture.

"Senior Subordinated Indebtedness" means, with respect to a Person, the Notes
(in the case of the Company), a Subsidiary Guaranty (in the case of a Subsidiary
Guarantor) and any other Indebtedness of such Person that specifically provides
that such Indebtedness is to rank pari passu with the Notes or such Subsidiary
Guaranty, as the case may be, in right of payment and is not subordinated by its
terms in right of payment to any Indebtedness or other obligation of such Person
which is not Senior Indebtedness of such Person.

"Significant Subsidiary" means any Restricted Subsidiary that would be a
"Significant Subsidiary" of the Company within the meaning of Rule 1-02 under
Regulation S-X promulgated by the SEC.

"Stated Maturity" means, with respect to any security, the date specified in
such security as the fixed date on which the final payment of principal of such
security is due and payable, including pursuant to any mandatory redemption
provision (but excluding any provision providing for the repurchase of such
security at the option of the holder thereof upon the happening of any
contingency unless such contingency has occurred).

"Subordinated Obligation" means, with respect to a Person, any Indebtedness of
such Person (whether outstanding on the Issue Date or thereafter Incurred) which
is subordinate or junior in right of

--------------------------------------------------------------------------------
S- 80

DESCRIPTION OF THE NOTES
--------------------------------------------------------------------------------

payment to the Notes or a Subsidiary Guaranty of such Person, as the case may
be, pursuant to a written agreement to that effect.

"Subsidiary" means, with respect to any Person, any corporation, association,
partnership or other business entity of which more than 50% of the total voting
power of shares of Voting Stock is at the time owned or controlled, directly or
indirectly, by:

     (1) such Person;

     (2) such Person and one or more Subsidiaries of such Person; or

     (3) one or more Subsidiaries of such Person.

Unless otherwise specified, "Subsidiary" means a Subsidiary of the Company.

"Subsidiary Guarantor" means each Subsidiary of the Company that guarantees the
Notes pursuant to the terms of the Indenture, in each case unless and until such
Subsidiary is released from its obligations under its Subsidiary Guaranty
pursuant to the terms of the Indenture.

"Subsidiary Guaranty" means a Guarantee by a Subsidiary Guarantor of the
Company's obligations with respect to the Notes.

"Temporary Cash Investments" means any of the following:

     (1) any investment in direct obligations of the United States of America or
     any agency thereof or obligations guaranteed by the United States of
     America or any agency thereof;

     (2) investments in demand accounts and time deposit accounts, bankers'
     acceptances, overnight bank deposits, certificates of deposit and money
     market deposits maturing within twelve months of the date of acquisition
     thereof issued by a bank or trust company which is organized under the laws
     of the United States of America, any State thereof or any foreign country
     recognized by the United States of America, and which bank or trust company
     has capital, surplus and undivided profits aggregating in excess of $50.0
     million (or the foreign currency equivalent thereof) and has outstanding
     debt which is rated "A" (or such similar equivalent rating) or higher by at
     least one nationally recognized statistical rating organization (as defined
     in Rule 436 under the Securities Act) or any money-market fund sponsored by
     a registered broker dealer or mutual fund distributor;

     (3) investments in deposits available for withdrawal on demand with any
     commercial bank that is organized under the laws of any country in which
     the Company or any Restricted Subsidiary maintains an office or is engaged
     in the Oil and Gas Business, provided that (i) all such deposits have been
     made in such accounts in the ordinary course of business and (ii) such
     deposits do not at any one time exceed $10.0 million in the aggregate;

     (4) repurchase (or reverse repurchase) obligations with a term of not more
     than 30 days for underlying securities of the types described in clause (1)
     above entered into with a bank meeting the qualifications described in
     clause (2) above;

     (5) investments in commercial paper, maturing not more than 90 days after
     the date of acquisition, issued by a corporation (other than an Affiliate
     of the Company) organized and in existence under the laws of the United
     States of America or any foreign country recognized by the United States of
     America with a rating at the time as of which any investment therein is
     made of "P-l" (or higher) according to Moody's or "A-l" (or higher)
     according to S&P; and

     (6) investments in securities with maturities of six months or less from
     the date of acquisition issued or fully guaranteed by any state,
     commonwealth or territory of the United States of

--------------------------------------------------------------------------------
                                                                           S- 81

DESCRIPTION OF THE NOTES
--------------------------------------------------------------------------------

     America, or by any political subdivision or taxing authority thereof, and
     rated at least "A" by S&P or "A" by Moody's.

"Treasury Rate" means the yield to maturity at the time of computation of United
States Treasury securities with a constant maturity (as compiled and published
in the most recent Federal Reserve Statistical Release H.15(519) which has
become publicly available at least two Business Days prior to the date fixed for
redemption or, in the case of defeasance, prior to the date of deposit (or, if
such Statistical Release is no longer published, any publicly available source
of similar market data)) most nearly equal to the then remaining average life to
August 15, 2007 or, in the case of defeasance, to maturity; provided, however,
that if the average life to August 15, 2007 or maturity, as the case may be, of
the Notes is not equal to the constant maturity of a United States Treasury
security for which a weekly average yield is given, the Treasury Rate shall be
obtained by linear interpolation (calculated to the nearest one-twelfth of a
year) from the weekly average yields of United States Treasury securities for
which such yields are given, except that if the average life to August 15, 2007
or maturity, as the case may be, of the Notes is less than one year, the weekly
average yield on actually traded United States Treasury securities adjusted to a
constant maturity of one year shall be used.

"Trustee" means Wachovia Bank, National Association until a successor replaces
it and, thereafter, means the successor.

"Trust Indenture Act" means the Trust Indenture Act of 1939 (15 U.S.C.
sec.sec. 77aaa-77bbbb) as in effect on the Issue Date.

"Unrestricted Subsidiary" means:

     (1) any Subsidiary of the Company that at the time of determination shall
     be designated an Unrestricted Subsidiary by the Board of Directors in the
     manner provided below; and

     (2) any Subsidiary of an Unrestricted Subsidiary.

The Board of Directors may designate any Subsidiary of the Company (including
any newly acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary
unless such Subsidiary or any of its Subsidiaries owns any Capital Stock or
Indebtedness of, or holds any Lien on any property of, the Company or any other
Subsidiary of the Company that is not a Subsidiary of the Subsidiary to be so
designated; provided, however, that either (A) the Subsidiary to be so
designated has total assets of $1,000 or less or (B) if such Subsidiary has
assets greater than $1,000, such designation would be permitted under the
covenant described under "--Certain Covenants--Limitation on Restricted
Payments."

The Board of Directors may designate any Unrestricted Subsidiary to be a
Restricted Subsidiary; provided, however, that immediately after giving effect
to such designation (A) the Company could Incur $1.00 of additional Indebtedness
under paragraph (a) of the covenant described under "--Certain
Covenants--Limitation on Indebtedness" and (B) no Default shall have occurred
and be continuing. Any such designation by the Board of Directors shall be
evidenced to the Trustee by promptly filing with the Trustee a copy of the
resolution of the Board of Directors giving effect to such designation and an
Officers' Certificate certifying that such designation complied with the
foregoing provisions.

"U.S. Government Obligations" means direct obligations (or certificates
representing an ownership interest in such obligations) of the United States of
America (including any agency or instrumentality thereof) for the payment of
which the full faith and credit of the United States of America is pledged and
which are not callable at the issuer's option.

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S- 82

DESCRIPTION OF THE NOTES
--------------------------------------------------------------------------------

"Volumetric Production Payments" means production payment obligations recorded
as deferred revenue in accordance with GAAP, together with all undertakings and
obligations in connection therewith.

"Voting Stock" of a Person means all classes of Capital Stock of such Person
then outstanding and normally entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof.

"Wholly Owned Subsidiary" means any Restricted Subsidiary if

     (1) all of the Capital Stock of such Restricted Subsidiary, other than any
     directors' qualifying shares and, in the case of Newfield China, LDC, its
     preferred shares that are outstanding on the Issue Date, is owned directly
     or indirectly by the Company or

     (2) such Restricted Subsidiary is organized in a foreign jurisdiction and
     is required by the applicable laws and regulations of such foreign
     jurisdiction to be partially owned by the government of such foreign
     jurisdiction or individual or corporate citizens of such foreign
     jurisdiction in order for such Restricted Subsidiary to transact business
     in such foreign jurisdiction, provided that the Company, directly or
     indirectly, owns the remaining Capital Stock of such Restricted Subsidiary
     and, by contract or otherwise, controls the management and business of such
     Restricted Subsidiary and derives the economic benefits of ownership of
     such Restricted Subsidiary to substantially the same extent as if such
     Restricted Subsidiary were a wholly owned Subsidiary.

--------------------------------------------------------------------------------
                                                                           S- 83


--------------------------------------------------------------------------------

Underwriting

We are selling the notes to the underwriters named in the table below pursuant
to an underwriting agreement dated the date of this prospectus supplement. We
have agreed to sell to each of the underwriters, and each of the underwriters
has severally agreed to purchase, the principal amount of notes set forth
opposite that underwriter's name in the table below:



                                                                      PRINCIPAL
UNDERWRITER                                                     AMOUNT OF NOTES
-------------------------------------------------------------------------------
                                                             
UBS Warburg LLC.............................................     $150,000,000
J.P. Morgan Securities Inc. ................................       68,750,000
Wachovia Securities, Inc. ..................................       12,500,000
BNY Capital Markets, Inc. ..................................        6,250,000
Credit Lyonnais Securities (USA) Inc. ......................        6,250,000
Fleet Securities, Inc. .....................................        6,250,000
                                                                 ------------
          Total.............................................     $250,000,000
                                                                 ============


Under the terms and conditions of the underwriting agreement, the underwriters
must buy all of the notes if they buy any of them. The underwriting agreement
provides that the obligations of the underwriters pursuant thereto are subject
to certain conditions. In the event of a default by an underwriter, the
underwriting agreement provides that, in certain circumstances, the purchase
commitments of the non-defaulting underwriters may be increased or the
underwriting agreement may be terminated. The underwriters will sell the notes
to the public when and if the underwriters buy the notes from us.

The notes sold by the underwriters to the public will initially be offered at
the initial public offering price set forth on the cover of this prospectus
supplement. Any notes sold by the underwriters to securities dealers may be sold
at a discount from the initial public offering price of up to 0.50% of the
principal amount of notes. Any such securities dealers may resell any notes
purchased from the underwriters to certain other brokers or dealers at a
discount from the initial public offering price of up to 0.25% of the principal
amount of notes. If all of the notes are not sold at the initial offering price,
the underwriters may change the offering price and other selling terms.

We have been advised by the underwriters that they intend to make a market in
the notes but they are not obligated to do so and may stop their market making
at any time. Liquidity of the trading market for the notes cannot be assured.

In order to facilitate the offering of the notes, the underwriters may engage in
transactions that stabilize, maintain or otherwise affect the price of the
notes. Specifically, the underwriters may over-allot in connection with the
offering, creating a short position in the notes for their own accounts. In
addition, to cover over-allotments or to stabilize the price of the notes, the
underwriters may bid for, and purchase, the notes in the open market. Finally,
the underwriters may reclaim selling concessions allowed to a particular
underwriter or dealer for distributing the notes in the offering if the
underwriter or dealer repurchases previously distributed notes in transactions
to cover short positions, in stabilization transactions or otherwise. Any of
these activities may stabilize or maintain the market price of the notes above
independent market levels. The underwriters are not required to engage in these
activities and may end any of these activities at any time. These transactions
may be effected in the over-the-counter market or otherwise.

--------------------------------------------------------------------------------
S- 84

UNDERWRITING
--------------------------------------------------------------------------------

We estimate that our expenses in connection with the sale of the notes, other
than underwriting discounts, will be approximately $0.5 million. In the event of
a special mandatory redemption of the notes, the underwriters have agreed to
refund a portion of the underwriting discount to us.

We have agreed to indemnify the underwriters against certain liabilities,
including liabilities under the Securities Act of 1933.

Upon our acquisition of EEX, we will use the net proceeds of this offering to
repay the EEX debt under its credit facility that will become due at the closing
of the acquisition and to pay a portion of the transaction costs of the EEX
acquisition. Except for Wachovia Securities, Inc. and Fleet Securities, Inc.,
each of the underwriters is affiliated with a commercial bank that is a lender
under the EEX credit facility. Our transaction costs for the EEX acquisition
include payment of fees to financial advisors to EEX, including J.P. Morgan
Securities Inc. Because more than 10% of the proceeds of this offering, not
including underwriting discounts, may be received by entities who are affiliated
with National Association of Securities Dealers, Inc. members who are
participating in this offering, this offering is being conducted in compliance
with National Association of Securities Dealers Conduct Rule 2710(c)(8).
Pursuant to this rule, the yield of a debt security can be no lower than that
recommended by a qualified independent underwriter ("QIU") which has
participated in the preparation of this prospectus supplement and performed its
usual standard of due diligence with respect to this prospectus supplement. In
accordance with this requirement, Wachovia Securities, Inc. has agreed to act as
QIU with respect to the offering, and the yield of the notes will be no lower
than that recommended by Wachovia Securities, Inc. Wachovia Securities, Inc. has
performed due diligence investigations and reviewed and participated in the
preparation of this prospectus supplement.

UBS Warburg LLC, J.P. Morgan Securities Inc. and their respective affiliates
have engaged, and may in the future engage, in commercial banking and investment
banking transactions with us and our affiliates and provide other advisory
services to us and our affiliates. They have received, and will continue to
receive, customary compensation for these transactions and services. Commercial
bank affiliates of J.P. Morgan Securities Inc., Wachovia Securities, Inc., BNY
Capital Markets, Inc., Fleet Securities, Inc. and Credit Lyonnais Securities
(USA) Inc. are participants in our credit facility. Affiliates of J.P. Morgan
Securities Inc. and Credit Lyonnais Securities (USA) Inc. are also
counterparties to some of our hedging contracts. By letter dated May 29, 2002,
UBS Warburg LLC and its affiliates have committed to provide, structure, arrange
and syndicate a $325 million senior secured bridge loan facility, the proceeds
of which would be used, if necessary, to refinance the existing credit facility
of EEX and to unwind a forward gas sale of EEX. The Trustee, Wachovia Bank,
National Association, is an affiliate of Wachovia Securities, Inc.

--------------------------------------------------------------------------------
                                                                           S- 85


--------------------------------------------------------------------------------

Legal Matters

Vinson & Elkins L.L.P., Houston, Texas will pass upon the validity of the notes
for us. Baker Botts L.L.P., Houston, Texas will pass upon certain legal matters
for the underwriters. Baker Botts L.L.P. has in the past represented us in
matters unrelated to this offering.

Experts

The consolidated financial statements of Newfield Exploration Company
incorporated in the accompanying prospectus by reference to the Annual Report on
Form 10-K for the year ended December 31, 2001 have been so incorporated in
reliance on the report (which contains an explanatory paragraph relating to
Newfield's change in accounting method for its derivatives and hedging
activities and its crude oil inventories as described in Note 1 to the
consolidated financial statements) of PricewaterhouseCoopers LLP, independent
accountants, given on the authority of said firm as experts in auditing and
accounting.

The consolidated financial statements of EEX Corporation appearing in EEX
Corporation's Annual Report (Form 10-K) for the year ended December 31, 2001
incorporated by reference in the accompanying prospectus have been audited by
Ernst & Young LLP, independent auditors, as set forth in their report thereon
(which contains an explanatory paragraph describing conditions that raise
substantial doubt about EEX's ability to continue as a going concern as
described in Note 2 to the consolidated financial statements) included therein
and incorporated by reference in the accompanying prospectus. Such consolidated
financial statements are incorporated by reference in the accompanying
prospectus in reliance upon such report given on the authority of such firm as
experts in accounting and auditing.

--------------------------------------------------------------------------------
S- 86

PROSPECTUS

                          NEWFIELD EXPLORATION COMPANY
            DEBT SECURITIES, COMMON STOCK, STOCK PURCHASE CONTRACTS,
          STOCK PURCHASE UNITS, PREFERRED STOCK, DEPOSITARY SHARES AND
                               SECURITIES WARRANTS

                                   ----------

     We may offer and sell from time to time:

     o    debt securities;

     o    shares of common stock;

     o    stock purchase contracts;

     o    stock purchase units;

     o    shares of preferred stock, which may be issued in the form of
          depositary shares evidenced by depositary receipts; and

     o    securities warrants to purchase debt securities, common stock,
          preferred stock, depositary shares or other securities.

     The aggregate initial offering price of the securities that may be sold
pursuant to this prospectus will not exceed $575,000,000.

     This prospectus provides you with a general description of the securities
that may be offered. Each time securities are sold, we will provide one or more
supplements to this prospectus that contain more specific information about the
offering and the terms of the securities. The supplements may also add, update
or change information contained in this prospectus. You should carefully read
this prospectus and any accompanying prospectus supplement before you invest in
any of our securities.

     Our common stock is listed on the New York Stock Exchange under the symbol
"NFX."

     YOU SHOULD CAREFULLY CONSIDER THE RISK FACTORS BEGINNING ON PAGE 3 OF THIS
PROSPECTUS BEFORE YOU MAKE AN INVESTMENT IN OUR SECURITIES.

                                   ----------

     NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

                                   ----------

                   THIS PROSPECTUS IS DATED DECEMBER 13, 2001







                                TABLE OF CONTENTS


                                                                            
ABOUT THIS PROSPECTUS...........................................................1
WHERE YOU CAN FIND MORE INFORMATION.............................................1
FORWARD-LOOKING STATEMENTS......................................................2
ABOUT OUR COMPANY...............................................................3
RISK FACTORS....................................................................3
USE OF PROCEEDS.................................................................9
RATIOS OF EARNINGS TO FIXED CHARGES.............................................9
DESCRIPTION OF DEBT SECURITIES..................................................9
DESCRIPTION OF COMMON STOCK AND PREFERRED STOCK................................23
DESCRIPTION OF DEPOSITARY SHARES...............................................28
DESCRIPTION OF SECURITIES WARRANTS.............................................30
DESCRIPTION OF STOCK PURCHASE CONTRACTS AND STOCK PURCHASE UNITS...............32
PLAN OF DISTRIBUTION...........................................................32
LEGAL MATTERS..................................................................33
EXPERTS........................................................................33


                                   ----------

     You should rely only on the information incorporated by reference or
provided in this prospectus and any accompanying prospectus supplement. We have
not authorized any dealer, salesman or other person to provide you with
additional or different information. This prospectus and any accompanying
prospectus supplement are not an offer to sell or the solicitation of an offer
to buy any securities other than the securities to which they relate and are not
an offer to sell or the solicitation of an offer to buy securities in any
jurisdiction to any person to whom it is unlawful to make an offer or
solicitation in that jurisdiction. You should not assume that the information in
this prospectus or any accompanying prospectus supplement or in any document
incorporated by reference in this prospectus or any accompanying prospectus
supplement is accurate as of any date other than the date of the document
containing the information.

                                       i



                              ABOUT THIS PROSPECTUS

     This prospectus is part of a registration statement on Form S-3 that we
filed with the Securities and Exchange Commission, which we refer to as the
"SEC," using a "shelf" registration process. Under this shelf process, we may,
over time, sell any combination of the securities described in this prospectus
and another prospectus included as part of the registration statement in one or
more offerings up to a total dollar amount of $575 million. This prospectus
provides you with a general description of the securities we may offer pursuant
to this prospectus. Each time we sell securities, we will provide one or more
prospectus supplements that will contain specific information about the terms of
that offering. This prospectus does not contain all of the information included
in the registration statement. For a complete understanding of the offering of
securities, you should refer to the registration statement relating to this
prospectus, including its exhibits. A prospectus supplement may also add, update
or change information contained in this prospectus. You should read both this
prospectus and any accompanying prospectus supplement together with the
additional information described under the heading "Where You Can Find More
Information."

     Unless the context requires otherwise or unless otherwise noted, all
references in this prospectus or any accompanying prospectus supplement to
"Newfield," "we," "us" or "our" are to Newfield Exploration Company and its
subsidiaries.

                       WHERE YOU CAN FIND MORE INFORMATION

     We file annual, quarterly and current reports, proxy statements and other
information with the SEC. Our SEC filings are available to the public over the
Internet at the SEC's web site at http://www.sec.gov. You may also read and copy
any document we file at the SEC's public reference room at 450 Fifth Street,
N.W., Washington, D.C. 20549. You may obtain information on the operation of the
SEC's public reference room by calling the SEC at 1-800-SEC-0330.

     Our common stock is listed on the New York Stock Exchange under the symbol
"NFX." Our reports, proxy statements and other information may be read and
copied at the New York Stock Exchange at 30 Broad Street, New York, New York
10005.

     The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus, and information that we file later with
the SEC will automatically update and supersede this information. We incorporate
by reference the documents listed below and any future filings made with the SEC
under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934
until we sell all of the securities or until we terminate this offering:

     o    our annual report on Form 10-K for the year ended December 31, 2000;

     o    our quarterly reports on Form 10-Q for the quarters ended March 31,
          2001, June 30, 2001 and September 30, 2001;

     o    our current reports on Form 8-K filed on January 8, 2001; February 7,
          2001; February 16, 2001; February 28, 2001; May 17, 2001; October 4,
          2001 and October 9, 2001 and our amended current report on Form 8-K/A
          filed on February 13, 2001;

     o    the description of our common stock contained in our Form 8-A
          registration statement filed on November 4, 1993; and



     o    the description of our preferred share purchase rights contained in
          our Form 8-A registration statement filed on February 18, 1999.

     You may request a copy of these filings, at no cost, by writing us at the
following address or telephoning us at the following number:

                          Newfield Exploration Company
                        Attention: Stockholder Relations
                         363 N. Sam Houston Parkway E.,
                                   Suite 2020
                              Houston, Texas 77060
                                 (281) 847-6000

                           FORWARD-LOOKING STATEMENTS

     This prospectus, any accompanying prospectus supplement and the documents
we incorporate by reference herein may include "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934. All statements other than statements of
historical facts included in this prospectus, any accompanying prospectus
supplement and the documents we incorporate by reference herein, including
statements regarding estimated or anticipated operating and financial data,
production targets, anticipated production rates, planned capital expenditures,
the availability of capital resources to fund capital expenditures, estimates of
proved reserves, wells planned to be drilled in the future, our financial
position, business strategy and other plans and objectives for future
operations, are forward-looking statements. Although we believe that the
expectations reflected in these forward-looking statements are reasonable, these
statements are based upon assumptions and anticipated results that are subject
to numerous uncertainties. Actual results may very significantly from those
anticipated due to many factors, including:

     o    drilling results;

     o    oil and gas prices;

     o    industry conditions;

     o    the prices of goods and services;

     o    the availability of drilling rigs and other support services; and

     o    the availability of capital resources.

     The information contained in this prospectus and the documents incorporated
by reference into this prospectus identify additional factors that could affect
our operating results and performance. We urge you to carefully consider these
factors.

     All forward-looking statements attributable to our company are expressly
qualified in their entirety by this cautionary statement.




                                       2




                                ABOUT OUR COMPANY

     We are an independent oil and gas company engaged in the exploration,
development and acquisition of crude oil and natural gas properties. We were
founded in 1989 and acquired our first oil and gas reserves in 1990. Since that
time, we have grown rapidly. Our initial focus area was the Gulf of Mexico. Over
the last several years we have expanded our areas of operation to include the
U.S. onshore Gulf Coast, the Anadarko and Permian Basins, offshore Australia and
China's Bohai Bay.

     Our executive offices are located at 363 N. Sam Houston Parkway E., Suite
2020, Houston, Texas 77060, and our telephone number is (281) 847-6000. We
maintain a website on the Internet at http://www.newfld.com.

                                  RISK FACTORS

         Your investment in our securities will involve risks. You should
carefully consider, in addition to the other information contained in, or
incorporated by reference into, this prospectus and any accompanying prospectus
supplement, the risks described below before deciding whether an investment in
our securities is appropriate for you.

RISKS ASSOCIATED WITH OUR DEBT SECURITIES

     OUR DEBT SECURITIES WILL BE EFFECTIVELY SUBORDINATED TO OBLIGATIONS OF OUR
SUBSIDIARIES. All of our international and U.S. mid-continent properties are
owned and operated by our subsidiaries. As a result, distributions or advances
from these subsidiaries may be necessary to meet our debt service obligations.
Contractual provisions or laws, as well as our subsidiaries' financial condition
and operating requirements, may limit our ability to obtain cash from our
subsidiaries to pay our debt service obligations, including payments on debt
securities. Debt securities will be structurally subordinated to all obligations
of our subsidiaries, including trade payables. This means that holders of debt
securities will have a junior position to the claims of creditors of our
subsidiaries on their assets and earnings.

     UNLESS OTHERWISE INDICATED IN AN ACCOMPANYING PROSPECTUS SUPPLEMENT, THERE
WILL BE NO PUBLIC MARKET FOR DEBT SECURITIES. We do not plan to list any debt
securities on any securities exchange. While the underwriters of a particular
offering of debt securities may advise us that they intend to make a market in
those debt securities, the underwriters will not obligated to do so and may stop
their market making at any time. No assurance can be given:

     o    that a market for any series of debt securities will develop or
          continue;

     o    as to the liquidity of any market that does develop; or

     o    as to your ability to sell any debt securities you may own or the
          price at which you may be able to sell your debt securities.

RISKS ASSOCIATED WITH OUR COMMON STOCK

     WE DO NOT INTEND TO PAY, AND ARE RESTRICTED IN OUR ABILITY TO PAY,
DIVIDENDS ON OUR COMMON STOCK. We have not paid cash dividends in the past and
do not intend to pay dividends on our common stock in the foreseeable future. We
currently intend to retain any earnings for the future operation and development
of our business. Our ability to make dividend payments in the future will depend
on our future performance and liquidity. In addition, our credit facility
contains restrictions on our ability to pay cash dividends on our capital stock,
including our common stock.


                                       3


     OUR CERTIFICATE OF INCORPORATION, STOCKHOLDERS RIGHTS AGREEMENT AND BYLAWS
CONTAIN PROVISIONS THAT COULD DISCOURAGE AN ACQUISITION OR CHANGE OF CONTROL OF
OUR COMPANY. Our stockholders rights agreement, together with certain provisions
of our certificate of incorporation and bylaws, may make it more difficult to
effect a change in control of our company, to acquire us or to replace incumbent
management. These provisions could potentially deprive our stockholders of
opportunities to sell shares of our stock at above-market prices.

RISKS ASSOCIATED WITH OUR OPERATIONS

     OIL AND GAS PRICES FLUCTUATE WIDELY, AND LOW PRICES FOR AN EXTENDED PERIOD
OF TIME ARE LIKELY TO HAVE A MATERIAL ADVERSE IMPACT ON OUR BUSINESS. Our
revenues, profitability and future growth depend substantially on prevailing
prices for oil and gas. These prices also affect the amount of cash flow
available for capital expenditures and our ability to borrow and raise
additional capital. The amount we can borrow under our credit facility is
subject to periodic redeterminations based in part on changing expectations of
future prices. Lower prices may also reduce the amount of oil and gas that we
can economically produce.

     Prices for oil and gas fluctuate widely. Among the factors that can cause
fluctuations are:

     o    the domestic and foreign supply of oil and natural gas;

     o    weather conditions;

     o    the price of foreign imports;

     o    world-wide economic conditions;

     o    political conditions in oil and gas producing regions;

     o    the level of consumer demand;

     o    domestic and foreign governmental regulations; and

     o    the price and availability of alternative fuels.

     OUR USE OF HEDGING TRANSACTIONS FOR A PORTION OF OUR OIL AND GAS PRODUCTION
INVOLVES CREDIT RISK AND MAY LIMIT FUTURE REVENUES FROM PRICE INCREASES AND
RESULT IN SIGNIFICANT FLUCTUATIONS IN OUR NET INCOME AND STOCKHOLDERS' EQUITY.
We use hedging transactions with respect to a portion of our oil and gas
production to achieve more predictable cash flow and to reduce our exposure to
price fluctuations. While the use of hedging transactions limits the downside
risk of price declines, their use may also limit future revenues from price
increases. Hedging transactions also involve the risk that the counterparty may
be unable to satisfy its obligations.

     We adopted Statement of Financial Accounting Standards (SFAS) No. 133 as of
January 1, 2001. SFAS No. 133 generally requires us to record each derivative
instrument as an asset or liability measured at its fair value. Each quarter we
must record changes in the value of our hedges, which could result in
significant fluctuations in our net income and stockholders' equity from period
to period.

     OUR FUTURE SUCCESS DEPENDS ON OUR ABILITY TO REPLACE RESERVES THAT WE
PRODUCE. Our future success depends on our ability to find, develop and acquire
oil and gas reserves that are economically recoverable. As is generally the
case, our producing properties in the Gulf Coast region often have high initial



                                       4


production rates, followed by steep declines. As a result, we must locate and
develop or acquire new oil and gas reserves to replace those being depleted by
production. We must do this even during periods of low oil and gas prices when
it may be difficult to raise the capital necessary to finance these activities.
Without successful exploration or acquisition activities, our reserves,
production and revenues will decline rapidly. We cannot assure you that we will
be able to find and develop or acquire additional reserves at an acceptable
cost.

     SUBSTANTIAL CAPITAL IS REQUIRED TO REPLACE AND GROW RESERVES We make, and
will continue to make, substantial expenditures to find, develop, acquire and
produce oil and gas reserves. If, however, lower oil and gas prices or operating
difficulties result in our cash flow from operations being less than expected or
limit our ability to borrow under our credit facility, we may be unable to
expend the capital necessary to undertake or complete our drilling program
unless we raise additional funds through debt or equity financings. We cannot
assure you that debt or equity financing, cash generated by operations or
borrowing capacity will be available to meet these requirements.

     RESERVE ESTIMATES ARE INHERENTLY UNCERTAIN AND DEPEND ON MANY ASSUMPTIONS
THAT MAY TURN OUT TO BE INACCURATE. Estimating accumulations of oil and gas is
complex and is not exact because of the numerous uncertainties inherent in the
process. The process relies on interpretations of available geologic, geophysic,
engineering and production data. The extent, quality and reliability of this
data can vary. The process also requires certain economic assumptions, some of
which are mandated by the SEC, such as oil and gas prices, drilling and
operating expenses, capital expenditures, taxes and availability of funds. The
accuracy of a reserve estimate is a function of:

     o    the quality and quantity of available data;

     o    the interpretation of that data;

     o    the accuracy of various mandated economic assumptions; and

     o    the judgment of the persons preparing the estimate.

     The proved reserve information we report is based on estimates we prepared.
Estimates prepared by others might differ materially from our estimates.

     Actual future production, oil and gas prices, revenues, taxes, development
expenditures, operating expenses and quantities of recoverable oil and gas
reserves most likely will vary from our estimates. Any significant variance
could materially affect the quantities and present value of our reserves. In
addition, we may adjust estimates of proved reserves to reflect production
history, results of exploration and development and prevailing oil and gas
prices. Our reserves may also be susceptible to drainage by operators on
adjacent properties.

     You should not assume that the present value of future net cash flows is
the current market value of our estimated proved oil and gas reserves. In
accordance with SEC requirements, we generally base the estimated discounted
future net cash flows from proved reserves on prices and costs on the date of
the estimate. Actual future prices and costs may be materially higher or lower
than the prices and costs as of the date of the estimate.

     IF OIL AND GAS PRICES DECREASE, WE MAY BE REQUIRED TO TAKE WRITEDOWNS.
There is a risk that we will be required to writedown the carrying value of our
oil and gas properties when oil and gas prices are low or if we have substantial
downward adjustments to our estimated proved reserves, increases in our
estimates of development costs or deterioration in our exploration results.



                                       5


     We capitalize the costs to acquire, find and develop our oil and gas
properties. Under the full cost accounting method, the net capitalized costs of
our oil and gas properties may not exceed the present value of estimated future
net cash flows from proved reserves, using period end oil and gas prices and a
10% discount factor, plus the lower of cost or fair market value of unproved
properties. If net capitalized costs of our oil and gas properties exceed this
limit, we must charge the amount of the excess to earnings. This type of charge
will not affect our cash flow from operating activities, but it will reduce the
book value of our stockholders' equity. We review the carrying value of our
properties quarterly, based on prices in effect as of the end of each quarter or
as of the time of reporting our results. The carrying value of oil and gas
properties is computed on a country-by-country basis. Therefore, while our
properties in one country may be subject to a writedown, our properties in other
countries could be unaffected. Once incurred, a writedown of oil and gas
properties is not reversible at a later date even if oil and gas prices
increase.

     WE MAY BE SUBJECT TO RISKS IN CONNECTION WITH ACQUISITIONS. The successful
acquisition of producing properties requires an assessment of several factors,
including:

     o    recoverable reserves;

     o    future oil and gas prices;

     o    operating costs; and

     o    potential environmental and other liabilities.

     The accuracy of these assessments is inherently uncertain. In connection
with these assessments, we perform a review of the subject properties that we
believe to be generally consistent with industry practices. Our review will not
reveal all existing or potential problems nor will it permit us to become
sufficiently familiar with the properties to fully assess their deficiencies and
capabilities. Inspections may not always be performed on every platform or well,
and structural and environmental problems are not necessarily observable even
when an inspection is undertaken. Even when problems are identified, the seller
may be unwilling or unable to provide effective contractual protection against
all or part of the problems. We are often not entitled to contractual
indemnification for environmental liabilities and acquire properties on an "as
is" basis.

     COMPETITIVE INDUSTRY CONDITIONS MAY NEGATIVELY AFFECT OUR ABILITY TO
CONDUCT OPERATIONS. Competition in the oil and gas industry is intense,
particularly with respect to the acquisition of producing properties and proved
undeveloped acreage. Major and independent oil and gas companies actively bid
for desirable oil and gas properties, as well as for the equipment and labor
required to operate and develop their properties. Many of our competitors have
financial resources that are substantially greater than ours, which may
adversely affect our ability to compete with these companies.

     DRILLING IS A HIGH-RISK ACTIVITY. Our future success will depend on the
success of our drilling program. In addition to the numerous operating risks
described in more detail below, these activities involve the risk that no
commercially productive oil or gas reservoirs will be discovered. In addition,
we often are uncertain as to the future cost or timing of drilling, completing
and producing wells.

     Furthermore, our drilling operations may be curtailed, delayed or canceled
as a result of a variety of factors, including:

     o    unexpected drilling conditions;


                                       6


     o    pressure or irregularities in formations;

     o    equipment failures or accidents;

     o    adverse weather conditions;

     o    compliance with governmental requirements; and

     o    shortages or delays in the availability of drilling rigs and the
          delivery of equipment.

     THE OIL AND GAS BUSINESS INVOLVES MANY OPERATING RISKS THAT CAN CAUSE
SUBSTANTIAL LOSSES; INSURANCE MAY NOT PROTECT US AGAINST ALL THESE RISKS. These
risks include:

     o    fires;

     o    explosions;

     o    blow-outs;

     o    uncontrollable flows of oil, gas, formation water or drilling fluids;

     o    natural disasters;

     o    pipe or cement failures;

     o    casing collapses;

     o    embedded oilfield drilling and service tools;

     o    abnormally pressured formations; and

     o    environmental hazards such as oil spills, natural gas leaks, pipeline
          ruptures and discharges of toxic gases.

     If any of these events occur, we could incur substantial losses as a result
of:

     o    injury or loss of life;

     o    severe damage to or destruction of property, natural resources and
          equipment;

     o    pollution and other environmental damage;

     o    clean-up responsibilities;

     o    regulatory investigation and penalties;

     o    suspension of our operations; and

     o    repairs to resume operations.

If we experience any of these problems, our ability to conduct operations could
be adversely affected.


                                       7


     Offshore operations are subject to a variety of operating risks peculiar to
the marine environment, such as capsizing, collisions and damage or loss from
hurricanes or other adverse weather conditions. These conditions can cause
substantial damage to facilities and interrupt production. As a result, we could
incur substantial liabilities that could reduce or eliminate the funds available
for our drilling and development programs and acquisitions, or result in the
loss of properties.

     We maintain insurance against some, but not all, of these potential risks.
We may elect not to obtain insurance if we believe that the cost of available
insurance is excessive relative to the risks presented. In addition, pollution
and environmental risks generally are not fully insurable. If a significant
accident or other event occurs and is not fully covered by insurance, it could
adversely affect us.

     WE HAVE RISKS ASSOCIATED WITH OUR FOREIGN OPERATIONS. We continue to
evaluate and pursue new opportunities for international expansion in areas where
we can use our core competencies. To date, we have expanded our operations to
Australia and China.

     Ownership of property interests and production operations in areas outside
the United States are subject to the various risks inherent in foreign
operations. These risks may include:

     o    currency restrictions and exchange rate fluctuations;

     o    loss of revenue, property and equipment as a result of expropriation,
          nationalization, war or insurrection;

     o    increases in taxes and governmental royalties;

     o    renegotiation of contracts with governmental entities and
          quasi-governmental agencies;

     o    changes in laws and policies governing operations of foreign-based
          companies;

     o    labor problems; and

     o    other uncertainties arising out of foreign government sovereignty over
          our international operations.

     Our international operations may also be adversely affected by laws and
policies of the United States affecting foreign trade, taxation and investment.
In addition, if a dispute arises from foreign operations, we may be subject to
the exclusive jurisdiction of foreign courts or may not be successful in
subjecting foreign persons to the jurisdiction of the courts of the United
States.

     OTHER INDEPENDENT OIL AND GAS COMPANIES' LIMITED ACCESS TO CAPITAL MAY
CHANGE OUR EXPLORATION AND DEVELOPMENT PLANS. Many independent oil and gas
companies have limited access to the capital necessary to finance their
activities. As a result, some of the other working interest owners of our wells
may be unwilling or unable to pay their share of the costs of projects as they
become due. These problems could cause us to change, suspend or terminate our
drilling and development plans with respect to the affected project.

     WE ARE SUBJECT TO COMPLEX LAWS THAT CAN AFFECT THE COST, MANNER OR
FEASIBILITY OF DOING BUSINESS. Exploration, development, production and sale of
oil and gas are subject to extensive federal, state, local and international
regulation. We may be required to make large expenditures to comply with
environmental and other governmental regulations. Matters subject to regulation
include:


                                       8


     o    discharge permits for drilling operations;

     o    drilling bonds;

     o    reports concerning operations;

     o    the spacing of wells;

     o    unitization and pooling of properties; and

     o    taxation.

     Under these laws, we could be liable for personal injuries, property
damage, oil spills, discharge of hazardous materials, remediation and clean-up
costs and other environmental damages. Failure to comply with these laws also
may result in the suspension or termination of our operations and subject us to
administrative, civil and criminal penalties. Moreover, these laws could change
in ways that substantially increase our costs.

                                 USE OF PROCEEDS

     Except as may otherwise be described in an accompanying prospectus
supplement, the net proceeds from the sale of the securities offered pursuant to
this prospectus and any accompanying prospectus supplement will be used for
general corporate purposes. Any specific allocation of the net proceeds of an
offering of securities to a specific purpose will be determined at the time of
the offering and will be described in an accompanying prospectus supplement.

                       RATIOS OF EARNING TO FIXED CHARGES

     We have calculated our ratios of earnings to fixed charges as follows:



                                                       NINE MONTHS
                                                          ENDED
                   YEAR ENDED DECEMBER 31,             SEPTEMBER 30,
         -----------------------------------------     -------------
           1996     1997     1998    1999    2000          2001
         -------   ------   ------  ------  ------     -------------
                                        
          28.4x     9.5x       (1)   3.7x     8.9x         9.6x


----------
     (1) We had a loss for the year ended December 31, 1998 for purposes of
         computing these ratios. Earnings for such year were insufficient to
         cover fixed charges by approximately $92.7 million.

     For purposes of computing the consolidated ratios of earnings to fixed
charges, earnings consist of income before income taxes plus fixed charges
(excluding capitalized interest) and fixed charges consist of interest (both
expensed and capitalized), distributions on our convertible trust preferred
securities and the estimated interest component of rent expense.

                         DESCRIPTION OF DEBT SECURITIES

     Any debt securities issued using this prospectus will be our direct
unsecured general obligations. The debt securities may be issued from time to
time in one or more series. The particular terms of each series that is offered
will be described in one or more prospectus supplements accompanying this
prospectus. The debt securities will be either senior debt securities or
subordinated debt securities. Any senior debt securities will be issued under
the senior indenture dated as of February 28, 2001 between us and First



                                       9


Union National Bank, as trustee. Subordinated debt securities will be issued
under the subordinated indenture dated as of December 10, 2001 between us and
First Union National Bank, as trustee. We have filed the senior indenture and
the subordinated indenture as exhibits to the registration statement. We have
summarized selected provisions of these indentures below. The summary is not
complete. You should read the indentures for provisions that may be important to
you.

GENERAL

     The indentures provide that debt securities in separate series may be
issued from time to time without limitation as to aggregate principal amount. We
may specify a maximum aggregate principal amount for any series of debt
securities. We will determine the terms and conditions of any series of debt
securities, including the maturity, principal and interest, but those terms must
be consistent with the applicable indenture. The terms and conditions of a
particular series of debt securities will be set forth in a supplemental
indenture or in a resolution of our board of directors.

     Senior debt securities will rank equally with all of our other senior
unsecured and unsubordinated debt. Subordinated debt securities will be
subordinated in right of payment to the prior payment in full of all or some of
our senior debt as described under "--Subordinated Debt Securities."

     A prospectus supplement relating to any series of debt securities being
offered will include specific terms related to that offering, including the
price or prices at which the debt securities will be issued. These terms will
include some or all of the following:

     o    the title of the debt securities;

     o    with respect to subordinated debt securities, any addition to or
          change in the subordination provisions set forth in the subordinated
          indenture;

     o    the total principal amount of the debt securities;

     o    the dates on which the principal of the debt securities will be
          payable;

     o    the interest rate and interest payment dates for the debt securities;

     o    any change in (including the elimination of the applicability of) the
          provisions set forth in the applicable indenture that provide the
          terms upon which the debt securities may be redeemed at our option;

     o    any sinking fund or other provisions that would obligate us to
          repurchase or otherwise redeem the debt securities;

     o    any change in (including the elimination of the applicability of) the
          defeasance provisions set forth in the applicable indenture;

     o    any addition to or change in the events of default set forth in the
          applicable indenture;

     o    if convertible into our common stock or any of our other securities,
          the terms upon which such debt securities are convertible;

     o    any addition to or change in the covenants set forth in the applicable
          indenture;



                                       10


     o    any other terms of the debt securities.

     If so provided in an applicable prospectus supplement, we may issue debt
securities at a discount below their principal amount and may pay less than the
entire principal amount of debt securities upon declaration of acceleration of
their maturity. An applicable prospectus supplement will describe all material
U.S. federal income tax, accounting and other considerations applicable to debt
securities issued with original issue discount.

SENIOR DEBT SECURITIES

     Senior debt securities will be our unsecured and unsubordinated obligations
and will rank equally with all of our existing and future unsecured and
unsubordinated debt. Senior debt securities will, however, be subordinated in
right of payment to all our secured indebtedness to the extent of the value of
the assets securing such indebtedness. Unless otherwise specified in an
applicable prospectus supplement, there will be no limit on:

     o    the amount of additional indebtedness that may rank equally with the
          senior debt securities; or

     o    on the amount of indebtedness, secured or otherwise, that may be
          incurred, or preferred stock that may be issued, by any of our
          subsidiaries.

SUBORDINATED DEBT SECURITIES

     Under the subordinated indenture, payment of the principal of and interest
and any premium on subordinated debt securities will generally be subordinated
in right of payment to the prior payment in full of all of our senior debt,
including any senior debt securities. A prospectus supplement relating to a
particular series of subordinated debt securities will summarize the
subordination provisions applicable to that series, including:

     o    the applicability and effect of such provisions to and on any payment
          or distribution of our assets to creditors upon any liquidation,
          bankruptcy, insolvency or similar proceedings;

     o    the applicability and effect of such provisions upon specified
          defaults with respect to senior debt, including the circumstances
          under which and the periods in which we will be prohibited from making
          payments on subordinated debt securities; and

     o    the definition of "senior debt" applicable to the subordinated debt
          securities of that series.

     The failure to make any payment on any of the subordinated debt securities
because of the subordination provisions of the subordinated indenture will not
prevent the occurrence of an event of default under the subordinated debt
securities.

OPTIONAL REDEMPTION

     Unless otherwise specified in a prospectus supplement applicable to a
series of debt securities, a series of debt securities will be redeemable, at
our option, at any time in whole, or from time to time in part, at a price equal
to the greater of:

     o    100% of the principal amount of the debt securities to be redeemed; or


                                       11


     o    the sum of the present values of the remaining scheduled payments of
          principal and interest (at the rate in effect on the date of
          calculation of the redemption price) on the debt securities (exclusive
          of interest accrued to the date of redemption) discounted to the date
          of redemption on a semi-annual basis (assuming a 360-day year
          consisting of twelve 30-day months) at the applicable treasury yield,
          plus 50 basis points;

     o    plus, in either case, accrued interest to the date of redemption.

     Debt securities called for redemption become due on the date fixed for
redemption. Notices of redemption will be mailed at least 30, but not more than
60, days before the redemption date to each holder of record of the debt
securities to be redeemed at its registered address. The notice of redemption
for the debt securities will state, among other things, the amount of debt
securities to be redeemed, the redemption date, the redemption price and the
place(s) that payment will be made upon presentation and surrender of debt
securities to be redeemed. Unless we default in payment of the redemption price,
interest will cease to accrue on any debt securities that have been called for
redemption at the redemption date. If less than all the debt securities of a
series are redeemed at any time, the trustee will select the debt securities to
be redeemed on a pro rata basis or by any other method the trustee deems fair
and appropriate.

     For purposes of determining the optional redemption price, the following
definitions are applicable:

     "APPLICABLE TREASURY YIELD" means, with respect to any redemption date
applicable to a series of debt securities, the rate per annum equal to the
semi-annual equivalent yield to maturity (computed as of the third business day
immediately preceding the redemption date) of the comparable treasury issue,
assuming a price for the comparable treasury issue (expressed as a percentage of
its principal amount) equal to the applicable comparable treasury price for the
redemption date.

     "COMPARABLE TREASURY ISSUE" means the United States Treasury security
selected by an independent investment banker as having a maturity comparable to
the remaining term of debt securities that would be utilized, at the time of
selection and in accordance with customary financial practice, in pricing new
issues of corporate debt securities of comparable maturity to the remaining
terms of the debt securities to be redeemed.

     "COMPARABLE TREASURY PRICE" means, with respect to any redemption date:

     o    the bid price for the comparable treasury issue (expressed as a
          percentage of its principal amount) at 4:00 p.m. on the third business
          day preceding the redemption date as set forth on "Telerate Page 500"
          (or such other page as may replace Telerate Page 500); or

     o    if such page (or any successor page) is not displayed or does not
          contain such bid prices at such time:

          o    the average of the reference treasury dealer quotations obtained
               by the trustee for the redemption date, after excluding the
               highest and lowest of all reference treasury dealer quotations
               obtained; or

          o    if the trustee obtains fewer than four such reference treasury
               dealer quotations, the average of all reference treasury dealer
               quotations obtained by the trustee.


                                       12


     "INDEPENDENT INVESTMENT BANKER" means the investment banking firm that
acted as lead managing underwriter for the offering of the series of debt
securities or that we name in an accompanying prospectus supplement, or, if such
firm is unwilling or unable to select the applicable comparable treasury issue,
an independent investment banking institution of national standing appointed by
the trustee and reasonably acceptable to us.

     "REFERENCE TREASURY DEALER" means any primary U.S. government securities
dealer in New York City named in an accompanying prospectus supplement or
selected by us.

     "REFERENCE TREASURY DEALER QUOTATIONS" means, with respect to each
reference treasury dealer and any redemption date applicable to a series of debt
securities, an average, as determined by the trustee, of the bid and asked
prices for the comparable treasury issue for the series of debt securities
(expressed in each case as a percentage of its principal amount) quoted in
writing to the trustee by the reference treasury dealer at 5:00 p.m., New York
City time, on the third business day preceding such redemption date.

DEFEASANCE

     Unless otherwise provided in a prospectus supplement relating to a
particular series of debt securities, we may elect, at our option at any time,
to have the provisions of the applicable indenture relating to defeasance and
discharge of indebtedness and to defeasance of certain restrictive covenants
applied to such series of debt securities, or to any specified part of such
series.

     DEFEASANCE AND DISCHARGE. The indentures provide that, upon the exercise of
our option, we will be discharged from all our obligations with respect to the
applicable debt securities upon the deposit in trust for the benefit of the
holders of such debt securities of money or U.S. government obligations, or
both, which, through the payment of principal and interest in respect thereof in
accordance with their terms, will provide money in an amount sufficient to pay
the principal of and any premium and interest on such debt securities on the
respective stated maturities in accordance with the terms of the applicable
Indenture and such debt securities.

     DEFEASANCE OF CERTAIN COVENANTS. The indentures provide that, upon the
exercise of our option, we may omit to comply with certain restrictive covenants
described in this prospectus, including those described below under "--Certain
Covenants" (if such covenants are applicable to a series of debt securities), or
an applicable prospectus supplement, the occurrence of certain events of default
as described in this prospectus or an applicable prospectus supplement will not
be deemed to either be or result in an event of default and, if such debt
securities are subordinated debt securities of such series, the provisions of
the subordinated indenture relating to subordination will cease to be effective,
in each case with respect to such debt securities. In order to exercise such
option, we must deposit, in trust for the benefit of the holders of debt
securities of such series, money or U.S. government obligations, or both, which,
through the payment of principal and interest in respect thereof in accordance
with their terms, will provide money in an amount sufficient to pay the
principal of and any premium and interest on such debt securities on the
respective stated maturities in accordance with the terms of the applicable
indenture and such debt securities.

     In order to exercise either defeasance option, we must comply with certain
other conditions, including that no default has occurred and is continuing after
the deposit in trust and the delivery to the trustee of an opinion of counsel to
the effect that holders of the series of debt securities will not recognize
income, gain or loss for U.S. federal income tax purposes as a result of such
defeasance and will be subject to U.S. federal income tax on the same amount and
in the same manner and at the same times as would have been the case if such
deposit in trust and defeasance had not occurred. In the case of legal
defeasance only,



                                       13


such opinion of counsel must be based on a ruling of the Internal Revenue
Service or other change in applicable U.S. federal income tax law.

CERTAIN COVENANTS

     LIMITATION ON LIENS. Nothing in the indentures in any way limits the amount
of indebtedness or securities that we or any of our subsidiaries may incur or
issue. Unless otherwise specified in an accompanying prospectus supplement, we
may not, and may not permit any restricted subsidiary to, issue, assume or
guarantee any indebtedness for borrowed money secured by any lien on any
property or asset now owned or hereafter acquired by us or such restricted
subsidiary without making effective provision whereby any and all debt
securities of such series then or thereafter outstanding will be secured by a
lien equally and ratably with any and all other obligations thereby secured for
so long as any such obligations shall be so secured.

     Unless otherwise stated in a prospectus supplement applicable to a series
of debt securities, the foregoing restriction will not, however, apply to:

     o    liens existing on the date on which the series of debt securities was
          originally issued or provided for under the terms of agreements
          existing on such date;

     o    liens on properties securing:

          o    all or any portion of the cost of exploration, drilling or
               development of such properties;

          o    all or any portion of the cost of acquiring, constructing,
               altering, improving or repairing any properties or assets used or
               to be used in connection with such properties; or

          o    indebtedness incurred by us or any restricted subsidiary to
               provide funds for the activities set forth in the two bullet
               points immediately above with respect to such properties;

     o    liens securing indebtedness owed by a restricted subsidiary to us or
          to any other restricted subsidiary;

     o    liens on property existing at the time of acquisition of such property
          by us or a subsidiary or liens on the property of any corporation or
          other entity existing at the time such corporation or other entity
          becomes a restricted subsidiary or is merged with us in compliance
          with the applicable indenture and in either case not incurred in
          connection with the acquisition of such property or such corporation
          or other entity becoming a restricted subsidiary or being merged with
          us, provided that such liens do not cover any property or assets of
          ours or any of our restricted subsidiaries other than the property so
          acquired;

     o    liens on any property securing:

          o    indebtedness incurred in connection with the construction,
               installation or financing of pollution control or abatement
               facilities or other forms of industrial revenue bond financing;
               or

          o    indebtedness issued or guaranteed by the United States or any
               state thereof;


                                       14


     o    any lien extending, renewing or replacing (or successive extensions,
          renewals or replacements of) any lien of any type permitted under any
          bullet point above, provided that such lien extends to or covers only
          the property that is subject to the lien being extended, renewed or
          replaced;

     o    certain liens arising in the ordinary course of our business or that
          of our restricted subsidiaries;

     o    any lien resulting from the deposit of moneys or evidences of
          indebtedness in trust for the purpose of defeasing indebtedness of
          ours or any restricted subsidiary; or

     o    liens (exclusive of any lien of any type otherwise permitted under any
          bullet point above) securing our indebtedness or that of any
          restricted subsidiary in an aggregate principal amount which, together
          with the aggregate amount of attributable indebtedness deemed to be
          outstanding in respect of all sale/leaseback transactions permitted
          pursuant to the first bullet point under "--Limitation on
          Sale/Leaseback Transactions" below (exclusive of any such
          sale/leaseback transactions otherwise permitted under any bullet point
          above), does not at the time such indebtedness is incurred exceed 7.5%
          of our consolidated net tangible assets (as shown in the most recent
          published quarterly or year-end consolidated balance sheet of our
          company and its subsidiaries).

     Unless otherwise specified in any prospectus supplement applicable to a
particular series of debt securities, the following types of transactions will
not be prohibited or otherwise limited by the foregoing covenant:

     o    the sale, granting of liens with respect to, or other transfer of,
          crude oil, natural gas or other petroleum hydrocarbons in place for a
          period of time until, or in an amount such that, the transferee will
          realize therefrom a specified amount (however determined) of money or
          of such crude oil, natural gas or other petroleum hydrocarbons;

     o    the sale or other transfer of any other interest in property of the
          character commonly referred to as a production payment, overriding
          royalty, forward sale or similar interest;

     o    the entering into of currency hedge obligations, interest rate hedging
          agreements or oil and gas hedging contracts, although liens securing
          any indebtedness for borrowed money that is the subject of any such
          obligation shall not be permitted hereby unless permitted under the
          provisions described above; and

     o    the granting of liens required by any contract or statute in order to
          permit us or any restricted subsidiary to perform any contract or
          subcontract made by it with or at the request of the United States or
          any state thereof, or to secure partial, progress, advance or other
          payments to us or any restricted subsidiary by such governmental unit
          pursuant to the provisions of any contract or statute.

     LIMITATION ON SALE/LEASEBACK TRANSACTIONS. Unless otherwise stated in an
accompanying prospectus supplement, we will not, and will not permit any
restricted subsidiary to, enter into any sale/leaseback transaction with any
person (other than us or a restricted subsidiary) unless:

     o    we or such restricted subsidiary would be entitled to incur
          indebtedness, in a principal amount equal to the attributable
          indebtedness with respect to such sale/leaseback transaction, secured
          by a lien on the property subject to such sale/leaseback transaction
          pursuant to the covenant described in the last bullet point of the
          second paragraph under "--Limitation on Liens" above without equally
          and ratably securing such series of debt securities pursuant to such
          covenant;



                                       15


     o    after the date on which the series of debt securities is originally
          issued and within a period commencing six months prior to the
          consummation of such sale/leaseback transaction and ending six months
          after the consummation thereof, we or such restricted subsidiary will
          have expended for property used or to be used in the ordinary course
          of our business or that of our restricted subsidiaries (including
          amounts expended for the exploration, drilling or development thereof,
          and for additions, alterations, repairs and improvements thereto) an
          amount equal to all or a portion of the net proceeds of such
          sale/leaseback transaction and we elect to designate such amount
          pursuant to this bullet point with respect to such sale/leaseback
          transaction (with any such amount not being so designated and not
          permitted under the immediately preceding bullet point to be applied
          as set forth in the bullet point that immediately follows); or

     o    we, during the 12-month period after the effective date of such
          sale/leaseback transaction, apply to the voluntary defeasance or
          retirement of debt securities of such series or any pari passu
          indebtedness an amount equal to the greater of the net proceeds of the
          sale or transfer of the property leased in such sale/leaseback
          transaction and the fair value, as determined by the our board of
          directors, of such property at the time of entering into such
          sale/leaseback transaction (in either case adjusted to reflect the
          remaining term of the lease and any amount designated by us as set
          forth in the immediately preceding bullet point), less an amount equal
          to the principal amount of such series of securities and pari passu
          indebtedness voluntarily defeased or retired by us within such
          12-month period and not designated with respect to any other
          sale/leaseback transaction entered into by us or any restricted
          subsidiary during such period.

     SUBSIDIARY GUARANTORS. Initially, no series of debt securities will be
guaranteed by any of our subsidiaries. However, unless otherwise provided in an
accompanying prospectus supplement, if any of our subsidiaries guarantees any of
our funded indebtedness at any time in the future, then we will cause such
series of debt securities to be equally and ratably guaranteed by such
subsidiary.

     OTHER COVENANTS. A series of debt securities may provide for other
covenants applicable to us and our subsidiaries. A description of any such
affirmative and negative covenants will be contained in a prospectus supplement
applicable to such series.

CERTAIN DEFINITIONS

     "ATTRIBUTABLE INDEBTEDNESS," when used with respect to any sale/leaseback
transaction, means the present value (discounted at a rate equivalent to our
then current weighted average cost of funds for borrowed money, compounded on a
semi-annual basis) of the total obligations of the lessee for rental payments
during the remaining term of the lease included in such sale/leaseback
transaction (including any period for which such lease can be extended).

     "CAPITALIZED LEASE OBLIGATION" means any obligation to pay rent or other
amounts under a lease of property that is required to be capitalized for
financial reporting purposes in accordance with generally accepted accounting
principles; and the amount of such obligation shall be the capitalized amount
thereof determined in accordance with generally accepted accounting principles.

     "CONSOLIDATED NET TANGIBLE ASSETS" means, for us and our restricted
subsidiaries on a consolidated basis determined in accordance with generally
accepted accounting principles, the aggregate amounts of assets (less
depreciation and valuation reserves and other reserves and items deductible from
gross book value of specific asset accounts under generally accepted accounting
principles) that would be included on a balance sheet after deducting therefrom
(a) all liability items except deferred income taxes, funded indebtedness and
other long-term liabilities and (b) all goodwill, trade names, trademarks,
patents, unamortized debt discount and expense and other like intangibles.


                                       16


     "CURRENCY HEDGE OBLIGATIONS" means obligations incurred in the ordinary
course of business pursuant to any foreign currency exchange agreement, option
or futures contract or other similar agreement or arrangement designed to
protect against or manage exposure to fluctuations in foreign currency exchange
rates.

     "FUNDED INDEBTEDNESS" means all indebtedness that matures by its terms, or
that is renewable at the option of any obligor thereon to a date, more than one
year after the date on which such indebtedness is originally incurred.

     "INDEBTEDNESS" means:

     o    all indebtedness for borrowed money (whether or not the recourse of
          the lender is to the whole of the assets of the borrower or only to a
          portion thereof);

     o    all obligations evidenced by bonds, debentures, notes or other similar
          instruments;

     o    all obligations in respect of letters of credit or other similar
          instruments (or reimbursement obligations with respect thereto), other
          than standby letters of credit incurred in the ordinary course of
          business;

     o    all obligations to pay the deferred and unpaid purchase price of
          property or services, except trade payables and accrued expenses
          incurred in the ordinary course of business;

     o    all capitalized lease obligations;

     o    all indebtedness of others secured by a lien on any asset of the
          relevant entity, whether or not such indebtedness is assumed by such
          entity;

     o    all indebtedness of others guaranteed by the relevant entity to the
          extent of such guarantee; and

     o    all obligations in respect of currency hedge obligations, interest
          rate hedging agreements and oil and gas hedging contracts.

     "INTEREST RATE HEDGING AGREEMENTS" means obligations under:

     o    interest rate swap agreements, interest rate cap agreements and
          interest rate collar agreements; and

     o    other agreements or arrangements designed to protect the relevant
          entity or any of its subsidiaries against fluctuations in interest
          rates.

     "LIEN" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset
(including, any production payment, advance payment or similar arrangement with
respect to minerals in place), whether or not filed, recorded or otherwise
perfected under applicable law. For the purposes of the indentures, we or any
restricted subsidiary will be deemed to own subject to a lien any asset that we
or it has acquired or holds subject to the interest of a vendor or lessor under
any conditional sale agreement, capitalized lease obligation (other than any
capitalized lease obligation relating to property used or to be used in the
ordinary course of our business or that of any restricted subsidiary) or other
title retention agreement relating to such asset.


                                       17


     "OIL AND GAS HEDGING CONTRACTS" means any oil and gas purchase or hedging
agreement or other agreement or arrangement that is designed to provide
protection against oil and gas price fluctuations.

     "PARI PASSU INDEBTEDNESS" means, with respect to any series of debt
securities, any indebtedness of ours, whether outstanding on the date on which
the series of debt securities were originally issued or thereafter incurred or
assumed, unless, in the case of any particular indebtedness, the instrument
governing the indebtedness expressly provides that such indebtedness shall be
subordinated in right of payment to such series of debt securities.

     "RESTRICTED SUBSIDIARY" means any subsidiary the principal business of
which is carried on in, or the majority of the operating assets of which are
located in, the United States (including areas subject to its jurisdiction).

     "SALE/LEASEBACK TRANSACTION" means any arrangement with another person
providing for the leasing by us or any restricted subsidiary, for a period of
more than three years, of any property that has been or is to be sold or
transferred by us or such restricted subsidiary to such other person in
contemplation of such leasing.

EVENTS OF DEFAULT

     Unless otherwise specified in an accompanying prospectus supplement, each
of the following will constitute an event of default under the indentures with
respect to a series of debt securities:

     o    default by us for 30 days in payment when due of any interest on any
          debt securities of such series;

     o    default by us in any payment when due of principal of or premium, if
          any, on any debt securities of such series;

     o    default by us in performance of any other covenant or agreement
          applicable to such series of debt securities that has not been
          remedied within 90 days after written notice by the trustee or by the
          holders of at least 25% in principal amount of the series of debt
          securities then outstanding;

     o    the acceleration of the maturity of any of our indebtedness or that of
          any restricted subsidiary (other than such series of debt securities)
          (provided that such acceleration is not rescinded within a period of
          10 days from the occurrence of such acceleration) having an
          outstanding principal amount of $10 million or more individually or in
          the aggregate, or a default in the payment of any principal of or
          interest on any of our indebtedness or that of any restricted
          subsidiary (other than such series of debt securities) having an
          outstanding principal amount of $10 million or more individually or in
          the aggregate and such default shall be continuing for a period of 30
          days without us or such restricted subsidiary curing such default;

     o    failure by us or any restricted subsidiary to pay final,
          non-appealable judgments aggregating in excess of $10 million, which
          judgments are not paid, discharged or stayed for a period of 60 days;

     o    certain events involving bankruptcy, insolvency or reorganization of
          us or any restricted subsidiary; or

     o    any other event of default described in an accompanying prospectus
          supplement.

                                       18


     If an event of default (other than as a result of bankruptcy, insolvency or
reorganization) for any series of debt securities occurs and continues, the
trustee or the holders of at least 25% in aggregate principal amount of the
outstanding debt securities of that series may declare the principal amount of
the debt securities of that series (or such portion of the principal amount of
such debt securities as may be specified in an accompanying prospectus
supplement) to be due and payable immediately. If an event of default results
from bankruptcy, insolvency or reorganization, the principal amount of all the
debt securities of a series (or such portion of the principal amount of such
debt securities as may be specified in an accompanying prospectus supplement)
will automatically become immediately due and payable. If an acceleration
occurs, subject to certain conditions, the holders of a majority of the
aggregate principal amount of the debt securities of that series can rescind the
acceleration.

     Other than its duties in case of an event of default, a trustee is not
obligated to exercise any of its rights or powers under the applicable indenture
at the request of any of the holders, unless the holders offer the trustee
reasonable indemnity and certain other conditions are satisfied. Subject to
indemnification of the trustee and the satisfaction of certain other conditions,
the holders of a majority in aggregate principal amount of the outstanding debt
securities of any series may direct the time, method and place of conducting any
proceeding for any remedy available to the trustee or exercising any trust or
power conferred on the trustee with respect to the debt securities of that
series.

     The holders of debt securities of any series will not have any right to
institute any proceeding with respect to the applicable indenture, unless:

     o    the holder has given written notice to the trustee of an event of
          default;

     o    the holders of at least 25% in aggregate principal amount of the
          outstanding debt securities of that series have made written request,
          and such holder or holders have offered reasonable indemnity to the
          trustee to institute such proceeding as trustee; and

     o    the trustee fails to institute such proceeding, and has not received
          from the holders of a majority in aggregate principal amount of the
          outstanding debt securities of that series a direction inconsistent
          with such request, within 60 days after such notice, request and
          offer.

     Such limitations do not apply, however, to a suit instituted by a holder of
a debt security for the enforcement of payment of the principal of and interest
or premium on such debt security on or after the applicable due date specified
in such debt security.

     Pursuant to each indenture, we are or will be required to furnish to the
trustee annually within 120 days of the end of each fiscal year a statement by
certain of our officers as to whether or not we are in default in the
performance of any of the terms of the applicable indenture.

CONVERSION RIGHTS

     Unless otherwise specified in an accompanying prospectus supplement, debt
securities will not be convertible into other securities. If a particular series
of debt securities may be converted into other securities, such conversion will
be according to the terms and conditions contained in an accompanying prospectus
supplement. Such terms will include the conversion price, the conversion period,
provisions as to whether conversion will be mandatory, at the option of the
holders of such series of debt securities or at our option, the events requiring
an adjustment of the conversion price and provisions affecting conversion if
such series of debt securities is called for redemption.



                                       19


PAYMENT AND TRANSFER

     Unless otherwise indicated in an accompanying prospectus supplement, the
debt securities of each series initially will be issued only in book-entry form
represented by one or more global notes initially registered in the name of Cede
& Co., as nominee of The Depository Trust Company (often referred to as DTC), or
such other name as may be requested by an authorized representative of DTC, and
deposited with DTC. Unless otherwise indicated in an accompanying prospectus
supplement, debt securities will be issued in denominations of $1,000 each or
multiples thereof.

     Unless otherwise indicated in an accompanying prospectus supplement,
beneficial interests in debt securities in global form will be shown on, and
transfers of interests in debt securities in global form will be made only
through, records maintained by DTC and its participants. Debt securities in
definitive form, if any, may be registered, exchanged or transferred at the
office or agency maintained by us for such purpose (which initially will be the
corporate trust office of the trustee located at 5847 San Felipe, Suite 1050,
Houston, Texas 77057).

     Unless otherwise indicated in an accompanying prospectus supplement, no
global security may be exchanged in whole or in part for debt securities
registered in the name of any person other than the depositary for such global
security or any nominee of such depositary unless:

     o    the depositary is unwilling or unable to continue as depositary;

     o    an event of default has occurred and is continuing; or

     o    as otherwise provided in an accompanying prospectus supplement.

     Unless otherwise indicated in an accompanying prospectus supplement,
payment of principal of and premium, if any, and interest on debt securities in
global form registered in the name of or held by DTC or its nominee will be made
in immediately available funds to DTC or its nominee, as the case may be, as the
registered holder of such global debt security. However, if any of the debt
securities of such series are no longer represented by global debt securities,
payment of interest on such debt securities in definitive form may, at our
option, be made at the corporate trust office of the trustee or by check mailed
directly to registered holders at their registered addresses or by wire transfer
to an account designated by a registered holder.

     No service charge will apply to any registration of transfer or exchange of
debt securities, but we may require payment of a sum sufficient to cover any
applicable transfer tax or other similar governmental charge. We are not
required to transfer or exchange any debt security selected for redemption for a
period of 15 days prior to the selection of the debt securities to be redeemed.

BOOK-ENTRY SYSTEM

     DTC has advised us as follows:

     o    DTC is a limited-purpose trust company organized under the New York
          Banking Law, a "banking organization" within the meaning of the New
          York Banking Law, a member of the Federal Reserve System, a "clearing
          corporation" within the meaning of the New York Uniform Commercial
          Code, and a "clearing agency" registered pursuant to the provisions of
          Section 17A of the Securities Exchange Act.


                                       20


     o    DTC holds securities that its participants deposit with DTC and
          facilitates the settlement among direct participants of securities
          transactions, such as transfers and pledges, in deposited securities,
          through electronic computerized book-entry changes in direct
          participants' accounts, thereby eliminating the need for physical
          movement of securities certificates.

     o    Direct participants include securities brokers and dealers, banks,
          trust companies, clearing corporations and certain other
          organizations.

     o    DTC is owned by a number of its direct participants and by the New
          York Stock Exchange, the American Stock Exchange and the National
          Association of Securities Dealers.

     o    Access to the DTC system is also available to others such as
          securities brokers and dealers, banks, and trust companies that clear
          through or maintain a custodial relationship with a direct
          participant, either directly or indirectly.

     o    The rules applicable to DTC and its direct and indirect participants
          are on file with the SEC.

     Purchases of debt securities under the DTC system must be made by or
through direct participants, which will receive a credit for the debt securities
on DTC's records. The ownership interest of each actual purchaser of debt
securities is in turn to be recorded on the direct and indirect participants'
records. Beneficial owners of debt securities will not receive written
confirmation from DTC of their purchase, but beneficial owners are expected to
receive written confirmations providing details of the transaction, as well as
periodic statements of their holdings, from the direct or indirect participants
through which the beneficial owner entered into the transaction. Transfers of
ownership interests in debt securities are to be accomplished by entries made on
the books of direct and indirect participants acting on behalf of beneficial
owners. Beneficial owners will not receive certificates representing their
ownership interests in debt securities unless use of the book-entry system for
such series of debt securities is discontinued.

     To facilitate subsequent transfers, all debt securities of a series
deposited by direct participants with DTC are registered in the name of DTC's
partnership nominee, Cede & Co., or such other name as may be requested by DTC.
The deposit of the debt securities with DTC and their registration in the name
of Cede & Co. or such other nominee do not effect any change in beneficial
ownership. DTC has no knowledge of the actual beneficial owners of a series of
debt securities; DTC's records reflect only the identity of the direct
participants to whose accounts such debt securities are credited, which may or
may not be the beneficial owners. The direct and indirect participants will
remain responsible for keeping account of their holdings on behalf of their
customers.

     Conveyance of notices and other communications by DTC to direct
participants, by direct participants to indirect participants and by direct
participants and indirect participants to beneficial owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.

     Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote
with respect to debt securities in global form. Under its usual procedures, DTC
mails an omnibus proxy to the issuer as soon as possible after the record date.
The omnibus proxy assigns Cede & Co.'s consenting or voting rights to those
direct participants to whose accounts the debt securities are credited on the
record date (identified in the listing attached to the omnibus proxy).

     All payments on the debt securities in global form will be made to Cede &
Co., or such other nominee as may be requested by an authorized representative
of DTC. DTC's practice is to credit direct participants' accounts upon DTC's
receipt of funds and corresponding detail information from us or the



                                       21


trustee on payment dates in accordance with their respective holdings shown on
DTC's records. Payments by participants to beneficial owners will be governed by
standing instructions and customary practices, as is the case with securities
held for the accounts of customers in bearer form or registered in "street
name," and will be the responsibility of such participant and not of DTC, us or
the Trustee, subject to any statutory or regulatory requirements as may be in
effect from time to time.

     Payment of principal and interest to Cede & Co. (or such other nominee as
may be requested by an authorized representative of DTC) shall be the
responsibility of us or the trustee. Disbursement of such payments to direct
participants shall be the responsibility of DTC, and disbursement of such
payments to the beneficial owners shall be the responsibility of direct and
indirect participants.

     DTC may discontinue providing its service as securities depositary with
respect to a series of debt securities at any time by giving reasonable notice
to us or the trustee. In addition, we may decide to discontinue use of the
system of book-entry transfers through DTC (or a successor securities
depositary). Under such circumstances, in the event that a successor securities
depositary is not obtained, debt security certificates in fully registered form
are required to be printed and delivered to beneficial owners of the debt
securities previously held in global form representing such debt securities.

     The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that we believe to be reliable (including DTC),
but we take no responsibility for its accuracy.

     Neither we, the trustee nor any underwriters applicable to a series of debt
securities will have any responsibility or obligation to direct participants, or
the persons for whom they act as nominees, with respect to the accuracy of the
records of DTC, its nominee or any direct participant with respect to any
ownership interest in debt securities, or payments to, or the providing of
notice to direct participants or beneficial owners.

     So long as debt securities are in DTC's book-entry system, secondary market
trading activity in the notes will settle in immediately available funds. All
applicable payments on debt securities issued in global form will be made by us
in immediately available funds.

CONSOLIDATION, MERGER AND SALE OF ASSETS

     We may consolidate with or merge into, or sell or lease substantially all
of our properties to any person if:

     o    the successor person (if any) is a corporation, partnership, trust or
          other entity organized and validly existing under the laws of any
          domestic jurisdiction and assumes our obligations on the debt
          securities and under the applicable indenture;

     o    immediately after giving effect to the transaction, no event of
          default, and no event which, after notice or lapse of time or both,
          would become an event of default, will have occurred and be
          continuing; and

     o    any other conditions (if any) specified in an accompanying prospectus
          supplement are met.

MODIFICATION AND WAIVER

     Under each indenture, our rights and obligations and the rights of holders
may be modified with the consent of the holders of a majority in aggregate
principal amount of the outstanding debt securities of



                                       22


each series affected by the modification. No modification of the principal or
interest payment terms, and no modification reducing the percentage required for
modifications, is effective against any holder without its consent.

NOTICES

     Notices to holders of debt securities will be given by mail to the
addresses of such holders as they may appear in the security register.

TITLE

     We, the trustee and any agent of ours or of the trustee may treat the
person in whose name a debt security is registered as the absolute owner of the
debt security, whether or not such debt security may be overdue, for the purpose
of making payment and for all other purposes.

GOVERNING LAW

     The indentures and the debt securities will be governed by, and construed
in accordance with, the law of the State of New York.

INFORMATION CONCERNING THE TRUSTEE

     First Union National Bank:

     o    serves as trustee under the indenture governing our 7.45% Senior Notes
          due 2007;

     o    serves as trustee under our senior indenture pursuant to which we have
          issued $175 million in principal amount of our 7 5/8% Senior Notes due
          2011 and may issue additional senior debt securities;

     o    serves as trustee under our subordinated indenture pursuant to which
          we may issue subordinated debt securities;

     o    provides us with a $15 million money market line of credit; and

     o    is a lender under our $425 million credit facility.

     Neither the senior indenture nor the subordinated indenture places a limit
on the principal amount of debt securities that may be issued thereunder.

                 DESCRIPTION OF COMMON STOCK AND PREFFERED STOCK

     Pursuant to our certificate of incorporation, our authorized capital stock
consists of 100,000,000 shares of common stock and 5,000,000 shares of preferred
stock. As of December 10, 2001, we had 44,039,796 shares of common stock
outstanding, and no shares of preferred stock outstanding.

COMMON STOCK

     Our common stockholders are entitled to one vote per share in the election
of directors and on all other matters submitted to a vote of our common
stockholders. Our common stockholders do not have cumulative voting rights.


                                       23


     Our common stockholders are entitled to receive ratably any dividends
declared by our board of directors out of funds legally available for the
payment of dividends. Dividends on our common stock are, however, subject to any
preferential dividend rights of outstanding preferred stock. We do not intend to
pay cash dividends on our common stock in the foreseeable future. Upon our
liquidation, dissolution or winding up, our common stockholders are entitled to
receive ratably our net assets available after payment of all of our debts and
other liabilities. Any payment is, however, subject to the prior rights of any
outstanding preferred stock. Our common stockholders do not have any preemptive,
subscription, redemption or conversion rights.

PREFERRED STOCK

     The following summary describes certain general terms of our authorized
preferred stock. If we offer preferred stock, a description will be filed with
the SEC and the specific terms of the preferred stock will be described in an
accompanying prospectus supplement, including the following terms:

     o    the series, the number of shares offered and the liquidation value of
          the preferred stock;

     o    the price at which the preferred stock will be issued;

     o    the dividend rate, the dates on which the dividends will be payable
          and other terms relating to the payment of dividends on the preferred
          stock;

     o    the liquidation preference of the preferred stock;

     o    the voting rights of the preferred stock;

     o    whether the preferred stock is redeemable or subject to a sinking
          fund, and the terms of any such redemption or sinking fund;

     o    whether the preferred stock is convertible or exchangeable for any
          other securities, and the terms of any such conversion; and

     o    any additional rights, preferences, qualifications, limitations and
          restrictions of the preferred stock.

     Our certificate of incorporation allows our board of directors to issue
preferred stock from time to time in one or more series, without any action
being taken by our stockholders. Subject to the provisions of our certificate of
incorporation and limitations prescribed by law, our board of directors may
adopt resolutions to issue shares of a series of our preferred stock, and
establish their terms. These terms may include:

     o    voting powers;

     o    designations;

     o    preferences;

     o    dividend rights;

     o    dividend rates;


                                       24


     o    terms of redemption;

     o    redemption process;

     o    conversion rights; and

     o    any other terms permitted to be established by our certificate of
          incorporation and by applicable law.

     The preferred stock will, when issued, be fully paid and non-assessable.

ANTI-TAKEOVER PROVISIONS

     Certain provisions in our certificate of incorporation and bylaws may
encourage persons considering unsolicited tender offers or other unilateral
takeover proposals to negotiate with our board of directors rather than pursue
non-negotiated takeover attempts.

     STOCKHOLDER ACTION BY WRITTEN CONSENT. Under the Delaware General
Corporation Law, unless the certificate of incorporation of a corporation
specifies otherwise, any action that could be taken by stockholders at an annual
or special meeting may be taken without a meeting and without notice to or a
vote of other stockholders if a consent in writing is signed by the holders of
outstanding stock having voting power that would be sufficient to take such
action at a meeting at which all outstanding shares were present and voted. Our
certificate of incorporation and bylaws provide that stockholder action may be
taken in writing by the consent of holders of not less than 66 2/3% of the
outstanding shares entitled to vote at a meeting of stockholders. As a result,
stockholders may not act upon any matter except at a duly called meeting or by
the written consent of holders of 66 2/3% or more of the outstanding shares
entitled to vote.

     SUPERMAJORITY VOTE REQUIRED FOR CERTAIN TRANSACTIONS. The affirmative vote
of the holders of at least 66 2/3% of the outstanding shares of common stock is
required to approve any merger or consolidation of our company or any sale or
transfer of all or substantially all of our assets.

     BLANK CHECK PREFERRED STOCK. Our certificate of incorporation authorizes
blank check preferred stock. Our board of directors can set the voting,
redemption, conversion and other rights relating to such preferred stock and can
issue such stock in either a private or public transaction. The issuance of
preferred stock, while providing desired flexibility in connection with possible
acquisitions and other corporate purposes, could adversely affect the voting
power of holders of common stock and the likelihood that holders will receive
dividend payments and payments upon liquidation and could have the effect of
delaying, deferring or preventing a change in control of our company.

     BUSINESS COMBINATIONS UNDER DELAWARE LAW. We are a Delaware corporation and
are subject to Section 203 of the Delaware General Corporation Law. Section 203
prevents an interested stockholder (i.e., a person who owns 15% or more of our
outstanding voting stock) from engaging in certain business combinations with
our company for three years following the date that the person became an
interested stockholder. These restrictions do not apply if:

     o    before the person became an interested stockholder, our board of
          directors approved either the business combination or the transaction
          that resulted in the interested stockholder becoming an interested
          stockholder;



                                       25


     o    upon completion of the transaction that resulted in the stockholder
          becoming an interested stockholder, the interested stockholder owned
          at least 85% of our outstanding voting stock at the time the
          transaction commenced; or

     o    following the transaction in which the person became an interested
          stockholder, the business combination is approved by both our board of
          directors and the holders of at least two-thirds of our outstanding
          voting stock not owned by the interested stockholder.

     These restrictions do not apply to certain business combinations proposed
by an interested stockholder following the announcement of certain extraordinary
transactions involving our company and a person who was not an interested
stockholder during the previous three years or who became an interested
stockholder with the approval of a majority of our directors, if that
extraordinary transaction is approved or goes unopposed by a majority of our
directors who were directors before any person became an interested stockholder
in the previous three years or who were recommended for election or elected to
succeed such directors by a majority of directors then in office.

     STOCKHOLDER RIGHTS AGREEMENT. Our board of directors has adopted a
stockholder rights agreement. Under the rights agreement, each right entitles
the registered holder under the circumstances described below to purchase from
our company one one-thousandth of a share of our Junior Participating Preferred
Stock, par value $0.01 per share (the "preferred shares"), at a price of $85 per
one one-thousandth of a preferred share, subject to adjustment. The following is
a summary of certain terms of the rights agreement. The rights agreement is an
exhibit to the registration statement of which this prospectus is a part, and
this summary is qualified by reference to the specific terms of the rights
agreement.

     Until the distribution date, the rights attach to all common stock
certificates representing outstanding shares. No separate right certificate will
be distributed. A right is issued for each share of common stock issued. The
rights will separate from the common stock and a distribution date will occur
upon the earlier of:

     o    10 business days following a public announcement that a person or
          group of affiliated or associated persons has acquired beneficial
          ownership of 20% or more of our outstanding voting stock; or

     o    10 business days following the commencement or announcement of an
          intention to commence a tender offer or exchange offer the completion
          of which would result in the beneficial ownership by a person or group
          of 20% or more of our outstanding voting stock.

     Until the distribution date or the earlier of redemption or expiration of
the rights, the rights will be evidenced by the certificates representing the
common stock. As soon as practicable following the distribution date, separate
certificates evidencing the rights will be mailed to holders of record of our
common stock as of the close of business on the distribution date and such
separate rights certificates alone will thereafter evidence the rights.

     The rights are not exercisable until the distribution date. The rights will
expire on February 22, 2009, unless the expiration date is extended or the
rights are earlier redeemed or exchanged.

     If a person or group acquires 20% or more of our voting stock, each right
then outstanding, other than rights beneficially owned by the acquiring persons,
which would become null and void, becomes a right to buy that number of shares
of common stock, or under certain circumstances, the equivalent number of one
one-thousandths of a preferred share, that at the time of such acquisition has a
market value of two times the purchase price of the right.



                                       26


     If we are acquired in a merger or other business combination transaction or
assets constituting more than 50% of our consolidated assets or producing more
than 50% of our earning power or cash flow are sold, proper provision will be
made so that each holder of a right will thereafter have the right to receive,
upon the exercise thereof at the then current purchase price of the right, that
number of shares of common stock of the acquiring company that at the time of
such transaction has a market value of two times the purchase price of the
right.

     The dividend and liquidation rights, and the non-redemption feature, of the
preferred shares are designed so that the value of one one-thousandth of a
preferred share purchasable upon exercise of each right will approximate the
value of one share of common stock. The preferred shares issuable upon exercise
of the rights will be non-redeemable and rank junior to all other series of our
preferred stock. Each whole preferred share will be entitled to receive a
quarterly preferential dividend in an amount per share equal to the greater of
(a) $1.00 in cash or (b) 1,000 times the aggregate per share dividend declared
on the common stock. In the event of liquidation, the holders of preferred
shares will be entitled to receive a preferential liquidation payment per whole
share equal to the greater of (a) $1,000 per share or (b) 1,000 times the
aggregate amount to be distributed per share of common stock. In the event of
any merger, consolidation or other transaction in which the shares of common
stock are exchanged for or changed into other stock or securities, cash or other
property, each whole preferred share will be entitled to 1,000 times the amount
received per share of common stock. Each whole preferred share will be entitled
to 1,000 votes on all matters submitted to a vote of our stockholders, and
preferred shares will generally vote together as one class with the common stock
and any other capital stock on all matters submitted to a vote of our
stockholders.

     The purchase price and the number of one one-thousandths of a preferred
share or other securities or property issuable upon exercise of the rights may
be adjusted from time to time to prevent dilution.

     At any time after a person or group of affiliated or associated persons
acquires beneficial ownership of 20% or more of our outstanding voting stock and
before a person or group acquires beneficial ownership of 50% or more of our
outstanding voting stock, our board of directors may, at its option, issue
common stock in mandatory redemption of, and in exchange for, all or part of the
then outstanding exercisable rights, other than rights owned by such person or
group, which would become null and void, at an exchange ratio of one share of
common stock, or one one-thousandth of a preferred share, for each two shares of
common stock for which each right is then exercisable, subject to adjustment.

     At any time prior to the first public announcement that a person or group
has become the beneficial owner of 20% or more of our outstanding voting stock,
our board of directors may redeem all, but not less than all, of the then
outstanding rights at a price of $0.01 per right. The redemption of the rights
may be made effective at such time, on such basis and with such conditions as
our board of directors in its sole discretion may establish. Immediately upon
the action of our board of directors ordering redemption of the rights, the
right to exercise the rights will terminate and the only right of the holders of
rights will be to receive the redemption price.

LIMITATION OF LIABILITY OF OFFICERS AND DIRECTORS

     Delaware law authorizes corporations to limit or eliminate the personal
liability of officers and directors to corporations and their stockholders for
monetary damages for breach of officers' and directors' fiduciary duty of care.
The duty of care requires that, when acting on behalf of the corporation,
officers and directors must exercise an informed business judgment based on all
material information reasonably available to them. Absent the limitations
authorized by Delaware law, officers and directors are accountable to
corporations and their stockholders for monetary damages for conduct
constituting



                                       27


gross negligence in the exercise of their duty of care. Delaware law enables
corporations to limit available relief to equitable remedies such as injunction
or rescission.

     Our certificate of incorporation limits the liability of our officers and
directors to our company and our stockholders to the fullest extent permitted by
Delaware law. Specifically, our officers and directors will not be personally
liable for monetary damages for breach of an officer's or director's fiduciary
duty in such capacity, except for liability

     o    for any breach of the officer's or director's duty of loyalty to our
          company or our stockholders;

     o    for acts or omissions not in good faith or which involve intentional
          misconduct or a knowing violation of law;

     o    for unlawful payments of dividends or unlawful stock repurchases or
          redemptions as provided in Section 174 of the Delaware General
          Corporation law; or

     o    for any transaction from which the officer or director derived an
          improper personal benefit.

     The inclusion of this provision in our certificate of incorporation may
reduce the likelihood of derivative litigation against our officers and
directors, and may discourage or deter stockholders or management from bringing
a lawsuit against our officers and directors for breach of their duty of care,
even though such an action, if successful, might have otherwise benefitted our
company and our stockholders. Both our certificate of incorporation and bylaws
provide indemnification to our officers and directors and certain other persons
with respect to certain matters to the maximum extent allowed by Delaware law as
it exists now or may hereafter be amended. These provisions do not alter the
liability of officers and directors under federal securities laws and do not
affect the right to sue, nor to recover monetary damages, under federal
securities laws for violations thereof.

TRANSFER AGENT AND REGISTRAR

     Our transfer agent and registrar for the common stock is Mellon Investor
Services.

                        DESCRIPTION OF DEPOSITARY SHARES

GENERAL

     We may offer fractional shares of preferred stock, rather than full shares
of preferred stock. If we decide to offer fractional shares of preferred stock,
we will issue receipts for depositary shares. Each depositary share will
represent a fraction of a share of a particular series of preferred stock. An
accompanying prospectus supplement will indicate that fraction. The shares of
preferred stock represented by depositary shares will be deposited under a
deposit agreement between us and a depositary that is a bank or trust company
that meets certain requirements and is selected by us. Each owner of a
depositary share will be entitled to all of the rights and preferences of the
preferred stock represented by the depositary share. The depositary shares will
be evidenced by depositary receipts issued pursuant to the deposit agreement.
Depositary receipts will be distributed to those persons purchasing the
fractional shares of preferred stock in accordance with the terms of the
offering.

     We have summarized selected provisions of the deposit agreement and the
depositary receipts.



                                       28


DIVIDENDS AND OTHER DISTRIBUTIONS

     If we pay a cash distribution or dividend on a series of preferred stock
represented by depositary shares, the depositary will distribute such dividends
to the record holders of such depositary shares. If the distributions are in
property other than cash, the depositary will distribute the property to the
record holders of the depositary shares. If, however, the depositary determines
that it is not feasible to make the distribution of property, the depositary
may, with our approval, sell such property and distribute the net proceeds from
such sale to the holders of the preferred stock.

REDEMPTION OF DEPOSITARY SHARES

     If we redeem a series of preferred stock represented by depositary shares,
the depositary will redeem the depositary shares from the proceeds received by
the depositary in connection with the redemption. The redemption price per
depositary share will equal the applicable fraction of the redemption price per
share of the preferred stock. If fewer than all the depositary shares are
redeemed, the depositary shares to be redeemed will be selected by lot or pro
rata as the depositary may determine.

VOTING THE PREFERRED STOCK

     Upon receipt of notice of any meeting at which the holders of the preferred
stock represented by depositary shares are entitled to vote, the depositary will
mail the notice to the record holders of the depositary shares relating to such
preferred stock. Each record holder of these depositary shares on the record
date, which will be the same date as the record date for the preferred stock,
may instruct the depositary as to how to vote the preferred stock represented by
such holder's depositary shares. The depositary will endeavor, insofar as
practicable, to vote the amount of the preferred stock represented by such
depositary shares in accordance with such instructions, and we will take all
action that the depositary deems necessary in order to enable the depositary to
do so. The depositary will abstain from voting shares of the preferred stock to
the extent it does not receive specific instructions from the holders of
depositary shares representing such preferred stock.

AMENDMENT AND TERMINATION OF THE DEPOSITARY AGREEMENT

     The form of depositary receipt evidencing the depositary shares and any
provision of the deposit agreement may be amended by agreement between the
depositary and us. Any amendment that materially and adversely alters the rights
of the holders of depositary shares will not, however, be effective unless such
amendment has been approved by the holders of at least a majority of the
depositary shares then outstanding. The deposit agreement may be terminated by
the depositary or us only if (a) all outstanding depositary shares have been
redeemed or (b) there has been a final distribution in respect of the preferred
stock in connection with any liquidation, dissolution or winding up of our
company and such distribution has been distributed to the holders of depositary
receipts.

CHARGES OF DEPOSITARY

     We will pay all transfer and other taxes and governmental charges arising
solely from the existence of the depositary arrangements. We will pay charges of
the depositary in connection with the initial deposit of the preferred stock and
any redemption of the preferred stock. Holders of depositary receipts will pay
other transfer and other taxes and governmental charges and any other charges,
including a fee for the withdrawal of shares of preferred stock upon surrender
of depositary receipts, as are expressly provided in the deposit agreement to be
for their accounts.


                                       29


WITHDRAWAL OF PREFERRED STOCK

     Upon surrender of depositary receipts at the principal office of the
depositary, subject to the terms of the deposit agreement, the owner of the
depositary shares may demand delivery of the number of whole shares of preferred
stock and all money and other property, if any, represented by those depositary
shares. Partial shares of preferred stock will not be issued. If the depositary
receipts delivered by the holder evidence a number of depositary shares in
excess of the number of depositary shares representing the number of whole
shares of preferred stock to be withdrawn, the depositary will deliver to such
holder at the same time a new depositary receipt evidencing the excess number of
depositary shares. Holders of preferred stock thus withdrawn may not thereafter
deposit those shares under the deposit agreement or receive depositary receipts
evidencing depositary shares therefor.

MISCELLANEOUS

     The depositary will forward to holders of depositary receipts all reports
and communications from us that are delivered to the depositary and that we are
required to furnish to the holders of the preferred stock.

     Neither we nor the depositary will be liable if we are prevented or delayed
by law or any circumstance beyond our control in performing our obligations
under the deposit agreement. The obligations of the depositary and us under the
deposit agreement will be limited to performance in good faith of our duties
thereunder, and we will not be obligated to prosecute or defend any legal
proceeding in respect of any depositary shares or preferred stock unless
satisfactory indemnity is furnished. We may rely upon written advice of counsel
or accountants, or upon information provided by persons presenting preferred
stock for deposit, holders of depositary receipts or other persons believed to
be competent and on documents believed to be genuine.

RESIGNATION AND REMOVAL OF DEPOSITARY

     The depositary may resign at any time by delivering notice to us of its
election to do so, and we may at any time remove the depositary. Any such
resignation or removal will take effect upon the appointment of a successor
depositary and its acceptance of such appointment. Such successor depositary
must be appointed within 60 days after delivery of the notice of resignation or
removal and must be a bank or trust company having its principal office in the
United States and having a combined capital and surplus of at least
$100,000,000.

                       DESCRIPTION OF SECURITIES WARRANTS

     We may issue securities warrants for the purchase of debt securities,
preferred stock, depositary shares, common stock or other securities. Securities
warrants may be issued independently or together with debt securities, preferred
stock, depositary shares or common stock offered by any prospectus supplement
and may be attached to or separate from any such offered securities. Each series
of securities warrants will be issued under a separate warrant agreement to be
entered into between us and a bank or trust company, as warrant agent, all as
set forth in a prospectus supplement relating to the particular issue of
securities warrants. The securities warrant agent will act solely as our agent
in connection with the securities warrants and will not assume any obligation or
relationship of agency or trust for or with any holders of securities warrants
or beneficial owners of securities warrants.

     We have summarized selected provisions of the securities warrant
agreements. A prospectus supplement relating to a particular issue of securities
warrants will contain the terms of and information relating to that issue of
securities warrants, including, where applicable:


                                       30


     o    the designation, aggregate principal amount, currencies, denominations
          and terms of the series of debt securities purchasable upon exercise
          of securities warrants to purchase debt securities and the price at
          which such debt securities may be purchased upon such exercise;

     o    the number of shares of common stock purchasable upon the exercise of
          securities warrants to purchase common stock and the price at which
          such number of shares of common stock may be purchased upon such
          exercise;

     o    the number of shares and series of preferred stock or depositary
          shares purchasable upon the exercise of securities warrants to
          purchase preferred stock or depositary shares and the price at which
          such number of shares of such series of preferred stock or depositary
          shares may be purchased upon such exercise;

     o    the designation and number of units of other securities purchasable
          upon the exercise of securities warrants to purchase other securities
          and the price at which such number of units of such other securities
          may be purchased upon such exercise;

     o    the date on which the right to exercise such securities warrants shall
          commence and the date on which such right shall expire;

     o    United States federal income tax consequences applicable to such
          securities warrants;

     o    the amount of securities warrants outstanding as of the most recent
          practicable date; and

     o    any other terms of such securities warrants.

Securities warrants will be issued in registered form only. The exercise price
for securities warrants will be subject to adjustment in accordance with a
prospectus supplement relating to the particular issue of securities warranties.

     Each securities warrant will entitle the holder thereof to purchase such
principal amount of debt securities or such number of shares of common stock,
preferred stock, depositary shares or other securities at such exercise price as
shall in each case be set forth in, or calculable from, a prospectus supplement
relating to the securities warrants, which exercise price may be subject to
adjustment upon the occurrence of certain events as set forth in such prospectus
supplement. After the close of business on the expiration date, or such later
date to which such expiration date may be extended by us, unexercised securities
warrants will become void. The place or places where, and the manner in which,
securities warrants may be exercised shall be specified in a prospectus
supplement relating to such securities warrants.

     Prior to the exercise of any securities warrants to purchase debt
securities, common stock, preferred stock, depositary shares or other
securities, holders of such securities warrants will not have any of the rights
of holders of debt securities, common stock, preferred stock, depositary shares
or other securities, as the case may be, purchasable upon such exercise,
including the right to receive payments of principal of, premium, if any, or
interest, if any, on the debt securities purchasable upon such exercise or to
enforce covenants in any applicable indenture, or to receive payments of
dividends, if any, on the common stock, preferred stock or depositary shares
purchasable upon such exercise, or to exercise any applicable right to vote.



                                       31


        DESCRIPTION OF STOCK PURCHASE CONTRACTS AND STOCK PURCHASE UNITS

     We may issue stock purchase contracts, including contracts obligating
holders to purchase from us, and obligating us to sell to holders, a specified
number of shares of common stock or other securities at a future date or dates,
which we refer to in this prospectus as "stock purchase contracts." The price
per share of the securities and the number of shares of the securities may be
fixed at the time the stock purchase contracts are issued or may be determined
by reference to a specific formula set forth in the stock purchase contracts.
The stock purchase contracts may be issued separately or as part of units
consisting of a stock purchase contract and debt securities, preferred
securities, warrants or debt obligations of third parties, including U.S.
treasury securities, securing the holders' obligations to purchase the
securities under the stock purchase contracts, which we refer to herein as
"stock purchase units." The stock purchase contracts may require holders to
secure their obligations under the stock purchase contracts in a specified
manner. The stock purchase contracts also may require us to make periodic
payments to the holders of the stock purchase units or vice versa, and those
payments may be unsecured or refunded on some basis.

     An accompanying prospectus supplement will describe the terms of the stock
purchase contracts or stock purchase units and, if applicable, collateral or
depositary arrangements relating to the stock purchase contracts or stock
purchase units. Material United States federal income tax considerations
applicable to the stock purchase units and the stock purchase contracts will
also be discussed in the applicable prospectus supplement.

                              PLAN OF DISTRIBUTION

     We may sell the offered securities:

     o    through underwriters or dealers;

     o    through agents; or

     o    directly to one or more purchasers, including existing stockholders in
          a rights offering.

BY UNDERWRITERS

     If underwriters are used in the sale, the offered securities will be
acquired by the underwriters for their own account. The underwriters may resell
the securities in one or more transactions, including negotiated transactions,
at a fixed public offering price or at varying prices determined at the time of
sale. The obligations of the underwriters to purchase the securities will be
subject to certain conditions. Unless indicated in an accompanying prospectus
supplement, the underwriters must purchase all the securities offered if any of
the securities are purchased. Any initial public offering price and any
discounts or concessions allowed or re- allowed or paid to dealers may be
changed from time to time.

BY AGENTS

     Offered securities may also be sold through agents designated by us. Unless
indicated in an accompanying prospectus supplement, any such agent is acting on
a best efforts basis for the period of its appointment.



                                       32


DIRECT SALES; RIGHTS OFFERINGS

     Offered securities may also be sold directly by us. In this case, no
underwriters or agents would be involved. We may sell offered securities upon
the exercise of rights that may be issued to our securityholders.

DELAYED DELIVERY ARRANGEMENTS

     We may authorize agents, underwriters or dealers to solicit offers by
certain institutional investors to purchase offered securities providing for
payment and delivery on a future date specified in an accompanying prospectus
supplement. Institutional investors to which such offers may be made, when
authorized, include commercial and savings banks, insurance companies, pension
funds, investment companies, education and charitable institutions and such
other institutions as may be approved by us. The obligations of any such
purchasers under such delayed delivery and payment arrangements will be subject
to the condition that the purchase of the offered securities will not at the
time of delivery be prohibited under applicable law. The underwriters and such
agents will not have any responsibility with respect to the validity or
performance of such contracts.

GENERAL INFORMATION

     Underwriters, dealers and agents that participate in the distribution of
offered securities may be underwriters as defined in the Securities Act of 1933
and any discounts or commissions received by them from us and any profit on the
resale of the offered securities by them may be treated as underwriting
discounts and commissions under the Securities Act. Any underwriters or agents
will be identified and their compensation described in an accompanying
prospectus supplement.

     We may have agreements with the underwriters, dealers and agents to
indemnify them against certain civil liabilities, including liabilities under
the Securities Act, or to contribute with respect to payments that the
underwriters, dealers or agents may be required to make.

     Underwriters, dealers and agents may engage in transactions with, or
perform services for, us or our subsidiaries in the ordinary course of their
businesses.

                                  LEGAL MATTERS

     The validity of securities will be passed upon for us by Vinson & Elkins
L.L.P., Houston, Texas. Legal counsel to any underwriters may pass upon legal
matters for such underwriters.

                                     EXPERTS

     The consolidated financial statements incorporated in this prospectus by
reference to our Current Report on Form 8-K filed with the SEC on October 4,
2001 have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
that firm as experts in accounting and auditing.

     The consolidated financial statements of Lariat Petroleum, Inc. as of
December 31, 1999 and 2000, and for the years then ended, incorporated by
reference in this prospectus, have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their reports with respect
thereto, and are included herein in reliance upon the authority of that firm as
experts in accounting and auditing in giving such reports.



                                       33


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                                  $250,000,000

                      [NEWFIELD EXPLORATION COMPANY LOGO]

                          NEWFIELD EXPLORATION COMPANY

                   8 3/8% Senior Subordinated Notes due 2012

                            ------------------------

                             PROSPECTUS SUPPLEMENT

                                 August 8, 2002

                            ------------------------

                          Joint Book-Running Managers

                          UBS WARBURG        JPMORGAN

                            ------------------------

                              WACHOVIA SECURITIES
                           BNY CAPITAL MARKETS, INC.
                           CREDIT LYONNAIS SECURITIES
                             FLEET SECURITIES, INC.

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