I am highly honored to have been asked to participate in your National SPE meeting and to have the opportunity of discussing with you some of the factors which we in Wall Street feel influence the attitudes of investors toward petroleum equities. The securities of your companies vie with those of companies in other industries and their investment appeal is influenced in many ways.

Your committee chose the title for this paper because it felt that a discussion of management goals with equity valuation as a basis of orientation might be particularly useful and timely. The fact that oil securities are selling at 12 to 15 times earnings compared with 19 times for the Dow Jones Industrial Average shows the decline in investor favor in recent years. I believe, nevertheless, that you represent an investment group which offers the same outstanding values and opportunities today as it has in the past. The question is what causes this undervaluation of your industry and what can be done about it.

I have asked many widely-recognized senior petroleum analysts both in Wall Street and in institutions such as mutual funds, insurance companies and banks how they would approach this subject of management goals to satisfy investors. It was almost amazing how similar were the replies. Everyone said: "They should pay higher dividends." These replies were not as facetious or superficial as some may think, although I don't believe higher dividends is the only or the most important way to look at this subject.

Now, irrespective of what final position we may take, there is a broad fertile area we may explore in attempting to more precisely satisfy investors. To do this, each of you must first determine what kind of stockholders you wish to attract and satisfy. There are decidedly different methods of appealing to institutional investors, the individual sophisticated investor and the small stockholder. Since there is insufficient time, however, to discuss the desires of each type of investor, it may be best to proceed in a general sense.

First, we should examine the aspects of the petroleum industry which are of particular concern to investors in general. Second, we could briefly examine the fundamental position and prospects of the industry itself. Third and lastly, knowing what is of concern and what there is to work with, we may be able to develop some constructive thinking on management goals which may satisfy investors.

I believe there are eight major areas of concern to investors and it may be helpful at this point to review them briefly.

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