Several speakers at the 16th annual Pacesetters Energy Conference hosted by John S. Herold Inc. claimed to have a lock on how to spend money wisely to create value. Each strategy was different, proving there is more than one way to succeed.

A specific basin focus is the key for some. Tracy Krohn, chief executive of Houston-based W&T Offshore Inc. told attendees, "The Gulf of Mexico gets little or no credit for its high-quality probables and possible reserves versus onshore companies. Why is the Gulf a superior basin? There is only one metric we follow: How much money do you get back for every dollar spent?

"We think free cash flow is the only metric and the Gulf gives us that. And, I'd like to thank Newfield for recently leaving the Gulf-they were a formidable competitor."

Krohn said W&T has enjoyed adjusted EBITDA margins of 40% or more since 2000, and those margins were 80% in 2006 when gas prices soared.

Smart technology use in shale is the key for Newfield Exploration Co., Houston. It will transition in 2008 to some pad drilling in the Woodford shale play in southeastern Oklahoma. This will boost efficiency and save as much as $600,000 per well, according to Sam Langford, president of Newfield Mid-Continent Inc., a division based in Tulsa. He said there may be 3.5 trillion cubic feet of gas equivalent net to Newfield in this play, or roughly twice the size of the existing company's reserve base.

There are few barriers to entry in the Barnett shale now, according to Chip Johnson, CEO of Carrizo Oil & Gas Inc., Houston. Dayrates are down 25% and water-disposal costs are down about 20% since their peak last year, he said.

"F&D in the core area is about $1 to $1.50 per Mcf so it is very profitable, and on the west side, like in Erath County, F&D is running about $1.75, so at $4.50 gas you get your money back and at $6 it is profitable."

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