Fueled by momentum investors seeking ideas, attendance grew 50% at the 10th annual Oil and Gas Investment Symposium (OGIS) sponsored by the Independent Petroleum Association of America (IPAA) this spring. Some 80 public companies presented their stories to more than 1,200 attendees in New York. As at the Howard Weil investment conference earlier, it was clear that the major themes revolved around the strong financial position most companies have right now, and what to do with that cash flow. The main worry of executives is finding more natural gas and maintaining corporate reserve growth. "One of the biggest challenges to our industry is reinvestment risk, or where to invest excess cash flow now that debt has been repaid," said one. Many speakers referenced the premiums being paid by recent buyers Kerr-McGee and EnCana for Westport Resources and Tom Brown Inc. respectively, both gas-rich Rockies producers. Observers also said that today, buyers are apt to be searching for companies and assets not just for the production and cash flow. Increasingly they are putting more emphasis-and are willing to pay for-undeveloped acreage and drilling inventory. "Successful buyers are paying for upside like never before," Ken Olive, head of The Oil & Gas Asset Clearinghouse in Houston, told attendees at a private capital forum that preceded OGIS. "Buyers have given in to high commodity prices and finally believe in them, so they are using higher price decks, and they are hedging as far forward as they can." Indeed, many buyers are looking for margin, so they are willing to pay a premium for production, such as $8 per barrel of oil equivalent (BOE), which is high by historical standards. They can hedge that production for two or three years at $30 per BOE or more, locking in a good margin. Many presenters mentioned they want scale and repeatability in their E&P operations, traits found in good gas plays that they describe as "gas mining" or "manufacturing." "We have an exploration budget of $230 million, larger than last year, and that includes lease acquisition and seismic, plus gas mining in the Midcontinent," said Terry Rathert, chief financial officer of Newfield Exploration. "We seek low-risk, underexploited, 'marginal' resources that may have lower IPs [initial potential]. "Our keys to success are longer-lived reserves. That means scale, repeatability, innovation, cost control and hedging to assure good returns." Cimarex Energy, a drillbit company, grew its exploration staff 45% in the first year of its existence (2002) following the merger of the old Key Production Co. in Denver with the E&P unit of Tulsa's Helmerich & Payne, according to Tom Jordan, Cimarex executive vice president of exploration. "We are geologically and geophysically intense," he said. "We plan to generate, not buy, our drilling inventory. We are willing to take geologic risk. If we see something we like, we get it drilled, because it is not our style to carry [proved undeveloped reserves]." Cimarex invested $160 million last year in seismic and land acquisition, and drilling. This was 73% of internal cash flow. Employees are incentivized on rate of return, he added.