Plains Petroleum Company and Subsidiaries - Page 19




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                    4.   Market Conditions During 1986                                
               During 1986, oil and gas prices were on the decline.16  At             
          the same time, the cost of drilling for oil and gas was on the              
          rise.  As a result, many oil and gas companies cut back their               


          16   The posted per-barrel price for West Texas Intermediate                
          Crude as of the beginning of each month during 1986 was as                  
          follows:                                                                    
                               Month          Price                                   
                             Jan.           $25.00                                   
                              Feb.           23.00                                    
                              Mar.           18.75                                    
                              Apr.           15.00                                    
                              May            13.25                                    
                              June           14.00                                    
                              July           14.00                                    
                              Aug.           12.25                                    
                              Sept.          14.25                                    
                              Oct.           14.25                                    
                              Nov.           14.25                                    
                              Dec.           14.25                                    
               The posted per-Mcf price for gas as of the beginning of each           
          month during 1986 was as follows:                                           
                               Month             Price                                
                             Jan.           $2.00-2.25                               
                              Feb.           1.90-2.20                                
                              Mar.           1.80-2.15                                
                              Apr.           1.55-1.95                                
                              May            1.35-1.70                                
                              June           1.35-1.50                                
                              July           1.35-1.55                                
                              Aug.           1.40-1.55                                
                              Sept.          1.35-1.50                                
                              Oct.           1.25-1.45                                
                              Nov.           1.30-1.50                                
                              Dec.           1.35-1.50                                




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