Earthstone Energy intends to enhance shareholder wealth by focusing on the fundamental value of the Company, i.e. reserve growth and profitability. While we have a three-pronged strategy to grow our pool of oil and gas reserves, our primary emphasis is exploration drilling.

The three components of our growth strategy are:

• Cost effective implementation of internally and externally generated exploration and development drilling projects.
  
  
• Identification and acquisition of strategic producing properties; strategic and significant in that they are either synergistic to our existing production or will provide a dramatic increase to the Company's existing production base.
  
  
• Boosting cash flows from existing oil and gas production through a combination of cost control and the exploitation of behind-pipe potential.
  
  

Our exploration and development drilling emphasis was adopted in March 2002, following a decade of pursuing a property acquisition strategy.  Earthstone Energy’s primary exploration focus is in the Montana and North Dakota portions of the Williston basin and we have been active there since the early 1980’s.  As such, the Company has significant understanding of and exposure to both geology and operations in the area.  However, both the Williston basin and the Company’s south Texas waterfloods are primarily oil productive.  Sensitive to the need to increase its natural gas output and balance its product base, our efforts in other areas, notably Colorado and on-shore portions of the Gulf Coast, are simply to increase the Company’s exposure to natural gas projects.