Evergreen Resources Inc., one of the coalbed-methane specialists in the Rocky Mountain region, held onto its position as the independent boasting the lowest finding and development (F&D) costs through the drillbit during the past five years. But the Denver-based independent was surpassed by two of its local competitors (also based in the Mile High City), Patina Oil & Gas Corp. and Western Gas Resources Inc., in keeping five-year F&D costs from all sources (drilling, reserve revisions and acquisitions) down. These results are part of the annual reserve and finding-cost study that was released last month by Howard Weil. Analysts from the New Orleans-based energy investment-banking firm examined results for 48 independents that range from large-caps such as Anadarko Petroleum, Unocal and Burlington Resources, to small-caps such as Brigham Exploration, Energy Partners Ltd. and PetroQuest Energy. Patina's all-sources F&D cost from 1997 through 2001 averaged $2.81 per barrel of oil equivalent (BOE), followed by $2.83 for Western Gas, $2.86 for Evergreen and $2.92 for Houston independent Plains Resources Inc. Patina, Western Gas and Evergreen are almost entirely gas-oriented producers, but Plains' reserves and production are mostly oil. There seems to be no rule of thumb with regard to whether oil- or gas-oriented firms have the lowest F&D costs, so other corporate factors must come into play. Berry Petroleum Co., which focuses largely on California oil exploitation, came in fifth, posting a five-year average all-sources F&D cost of $4.32 per BOE. It was followed by oil- and gas-oriented Vintage Petroleum at $3.32, gas-dominated firms XTO Energy Inc. at $4.33 and EOG Resources Inc. at $4.60, oil-dominated Nuevo Energy Co. at $4.96 and Occidental Petroleum Corp. at $4.99. The lattermost is now the largest oil producer in Texas. Reserve-replacement stars Evergreen led in all-sources reserve replacement, with a five-year average rate of 1,227%. This is all the more noteworthy because such a stellar record was achieved by sticking to its knitting-drilling for gas-rather than by making a string of acquisitions. Pure Resources Inc. was second at 544%, but it did make some acquisitions and also, it merged its Permian Basin assets with those of Unocal. It was followed by 3-Tec Energy Corp. at 505%, Brigham Exploration Co. at 503%, and Anadarko Petroleum Corp. at 496%. Pure's and 3-Tec's strong results for all-sources reserve replacement stemmed from their coming in first and second in reserve replacement from acquisitions (with five-year averages of 508% and 437%, respectively). Both companies completed large deals last year. Mission Resources Corp. ranked third with a five-year reserve-replacement average of 386% from acquisitions, followed by Energy Partners with a 355% annual average and Westport Resources with a 350% annual average. As with finding costs, it was Evergreen's drillbit performance that made it a leader in five-year average reserve-replacement rates (953% annually). It was followed by Brigham at 574%, Western Gas Resources at 447%, Prima Energy at 398% and Callon Petroleum at 375%. Not too surprisingly, larger independents led in total costs incurred in oil and gas activities last year, according to Howard Weil. Devon Energy Corp. led with $6.04 billion of outlays, primarily from its purchases of Anderson Exploration in Calgary and Mitchell Energy & Development of The Woodlands, Texas. Oklahoma City-based Devon dislodged Anadarko as the group's spending leader, as the latter cut total outlays nearly in half year-to-year (to $4.3 billion in 2001 from $8.2 billion in 2000, when it was on an acquisition spree of its own, merging with UPR). Acquisitions clearly played a substantial role for other large independents' 2001 total outlays. Burlington Resources was third with $3.08 billion of expenditures, followed by Kerr-McGee Corp. with $3.06 billion and Unocal Corp. with $2.6 billion. Who has grown the most by reserve acquisition? 3-Tec Energy and Range Resources Corp. tied for first with 70% of their total costs incurred going for acquisitions, based on their five-year average. Their heaviest outlays occurred before 2001, however. Mission Resources had the highest reserve-acquisition share of total costs last year at 84% as it merged with privately held Bargo Energy and made some smaller acquisitions as well. Spending vs. netbacks Spinnaker Exploration Co. spent the highest percentage of total outlays for exploration during the five-year period (62%) and the second-highest percentage in 2001 (64%), as it ramped up its Gulf of Mexico activity and pushed into ever-deeper water. Callon Petroleum's exploration action took the largest share of its total costs last year (67%) as it also participated in several deepwater wells. Meridian Resource came in third at 60% as it pursued deeper-gas plays onshore south Louisiana. Spinnaker led in 2001 cash flow netbacks with $21.67 per barrel, followed by Houston Exploration Co., which received $21.63. Stone Energy Corp. recorded $21.21; Occidental, $19.15; and Chesapeake Energy Corp., $19.01. -Nick Snow