THE HOUSTON EXPLORATION COMPANYTHE HOUSTON EXPLORATION COMPANY

IPAAApril 20, 2004

IPAAApril 20, 2004

THXTHX

THXTHX Houston Exploration ProfileHouston Exploration Profile

North American natural gas producer

Founded in 1986; public in 1996; traded on NYSE

Current market capitalization of +$1.3 billion

‑ Enterprise value of +$1.6 billion

2003 Highlights:

‑ Proved reserves: 755 Bcfe (67% onshore, 33% offshore)

‑ Daily production: 295 MMcfe/d (93% natural gas)

‑ Net income: $131 MM ($4.20/sh)

‑ Closed two acquisitions: TEPI and EnerVest

‑ YE debt-to-cap: 29%

North American natural gas producer

Founded in 1986; public in 1996; traded on NYSE

Current market capitalization of +$1.3 billion

‑ Enterprise value of +$1.6 billion

2003 Highlights:

‑ Proved reserves: 755 Bcfe (67% onshore, 33% offshore)

‑ Daily production: 295 MMcfe/d (93% natural gas)

‑ Net income: $131 MM ($4.20/sh)

‑ Closed two acquisitions: TEPI and EnerVest

‑ YE debt-to-cap: 29%

THXTHX Business StrategyBusiness Strategy

Manage volatility Manage volatility through hedging through hedging

programprogram

Replace 100+% of Replace 100+% of production through production through low-risk exploitationlow-risk exploitation

Provide significant Provide significant upside through upside through

offshore explorationoffshore exploration

Maintain Maintain flexibility through flexibility through

fiscal responsibility fiscal responsibility and conservative and conservative

debt levelsdebt levelsPursue selective Pursue selective acquisitions that acquisitions that

provide attractive RORprovide attractive ROR

Build Shareholder Build Shareholder ValueValue

Focus on core Focus on core areas with high areas with high

operational controloperational controland working interestand working interest

Focus on the BasicsFocus on the Basics

THXTHX Growth with Financial DisciplineGrowth with Financial Discipline

0

200

400

600

800

1998 1999 2000 2001 2002 2003

Res

erve

s: B

cfe

0.30

0.40

0.50

0.60

0.70

0.80

0.90

Deb

t: $/Mcfe

Reserves Debt/Total Proved

0

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800

1998 1999 2000 2001 2002 2003

Res

erve

s: B

cfe

0.30

0.40

0.50

0.60

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0.90

Deb

t: $/Mcfe

Reserves Debt/Total Proved

Debt:Cap 62% 56% 38% 30% 30% 29%Debt:Cap 62% 56% 38% 30% 30% 29%

THXTHX Operating AreasOperating Areas

South Texas: 140 MMcfe/dProved Reserves: 315 Bcfe (42%)South Texas: 140 MMcfe/dProved Reserves: 315 Bcfe (42%)

Gulf of Mexico: 122 MMcfe/dProved Reserves: 247 Bcfe (33%)Gulf of Mexico: 122 MMcfe/dProved Reserves: 247 Bcfe (33%)

Arkoma: 23 MMcfe/dProved Reserves: 111 Bcfe (15%)Arkoma: 23 MMcfe/dProved Reserves: 111 Bcfe (15%)

Total 2003 Avg. Production: 295 MMcfe/dTotal 2003 Avg. Production: 295 MMcfe/d

THXTHX Balanced PortfolioBalanced Portfolio

HighHigh

LowLow

Ris

kR

isk

Production ImpactProduction Impact

Offshore Deep Shelf Expl.

Offshore Deep Shelf Expl.

Replace ProductionReplace Production

Predictable UpsidePredictable Upside

Significant UpsideSignificant Upside

WVWVArkansasArkansas

S. TexasS. Texas

Offshore Dev.Offshore Dev.

RockiesRockies

THXTHX Capital ProgramCapital Program

2004E Capex$315 MM

2004E Capex$315 MM

52%Onshore

52%Onshore

41%Offshore

41%Offshore

7%Other

7%Other

2003 Capex$460 MM*

2003 Capex$460 MM*

36%Onshore

36%Onshore

59%Offshore

59%Offshore

5%Other

5%Other

* Includes acquisition capexof $149 MM for TEPI& $28 MM for EnerVest

* Includes acquisition capexof $149 MM for TEPI& $28 MM for EnerVest

THXTHX 2004 Onshore Plans2004 Onshore Plans

South Texas‑ Continue 6 rig program‑ Add opportunities to maintain production and reserves

Arkoma‑ Implement 80-acre spacing‑ 2 to 3 rig program

Rockies‑ 1+ rig(s) all year, test 3+ basins and add reserves‑ Begin to “narrow” Rockies focus

Appalachia‑ Assimilate West Virginia acquisition‑ Drill 2 wells & make plans for undeveloped acreage

South Texas‑ Continue 6 rig program‑ Add opportunities to maintain production and reserves

Arkoma‑ Implement 80-acre spacing‑ 2 to 3 rig program

Rockies‑ 1+ rig(s) all year, test 3+ basins and add reserves‑ Begin to “narrow” Rockies focus

Appalachia‑ Assimilate West Virginia acquisition‑ Drill 2 wells & make plans for undeveloped acreage

THXTHX

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Onshore: Why We’re HereOnshore: Why We’re Here

Source: PGC 2002 DataSource: PGC 2002 Data

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Onshore Basins Have 74% of Near-Term US Gas PotentialOnshore Basins Have 74% of Near-Term US Gas Potential

Top 10 Producing BasinsTop 10 Producing Basins

THXTHX

THXTHX

2004 capex $113 MM

Active rigs 6

Well cost $1.1 - $2.5 MM

Reserves/well 1 – 2 Bcf

Avg. well depth 8,000’ – 12,500’

Producing sands Wilcox/Lobo

3-D seismic 1,200 sq. miles

2003 Stats:Production 140 MMcfe/dOperated wells 476Net acres 65,000

2004 capex $113 MM

Active rigs 6

Well cost $1.1 - $2.5 MM

Reserves/well 1 – 2 Bcf

Avg. well depth 8,000’ – 12,500’

Producing sands Wilcox/Lobo

3-D seismic 1,200 sq. miles

2003 Stats:Production 140 MMcfe/dOperated wells 476Net acres 65,000

South Texas OperationsSouth Texas Operations

THX Acreage

3D Seismic Area

THXTHX Arkoma Basin OperationsArkoma Basin Operations

2004 capex $23 MM

Active rigs 2-3

Well cost $450 - $650 M

Reserves/well .5 – 1.0 Bcf

Avg. well depth 5,500’

Producing sand Atoka

2003 Stats:Production 23 MMcfe/dOperated wells 170Net acres 35,000

2004 capex $23 MM

Active rigs 2-3

Well cost $450 - $650 M

Reserves/well .5 – 1.0 Bcf

Avg. well depth 5,500’

Producing sand Atoka

2003 Stats:Production 23 MMcfe/dOperated wells 170Net acres 35,000

THXTHX Rocky Mountain OperationsRocky Mountain Operations

Why the Rockies? Large gas potential

Low F&D ($1/Mcfe or less)

Similar targets to otherTHX onshore operations

High level of managementexperience in area

What we’ve done so far: 200,000 acres in five states

2004 capex of $20 MM

12 wells planned for 2004

Already success at Uinta Basin

Why the Rockies? Large gas potential

Low F&D ($1/Mcfe or less)

Similar targets to otherTHX onshore operations

High level of managementexperience in area

What we’ve done so far: 200,000 acres in five states

2004 capex of $20 MM

12 wells planned for 2004

Already success at Uinta Basin

MontanaMontana

WyomingWyoming

UtahUtah

N. DakotaN. Dakota

S. DakotaS. Dakota

UintaBasin

GreenRiverBasin

Big HornBasin

WillistonBasin

WillistonBasin

THXTHX 2004 Offshore Plans2004 Offshore Plans

Add reserves and production from the TEPI acquisition

‑ Exploration and development opportunities

Exploit the potential of the deep-shelf prospects

‑ Drill first THX operated deep-shelf test

Apply appropriate technology to reduce the risk

and uncertainty for exploration

Develop new, operated, high-impact prospects

‑ Participate in offshore lease sales

Add reserves and production from the TEPI acquisition

‑ Exploration and development opportunities

Exploit the potential of the deep-shelf prospects

‑ Drill first THX operated deep-shelf test

Apply appropriate technology to reduce the risk

and uncertainty for exploration

Develop new, operated, high-impact prospects

‑ Participate in offshore lease sales

THXTHX 2004 Drilling Program2004 Drilling Program

THX LeaseTHX Lease

Exploration WellExploration Well

TEPI Acquisition LeaseTEPI Acquisition Lease

Development WellDevelopment Well

EC 160

72% WI

WC 9640% WI

ST 27850% WI

GA 19167% WI

HI 26250% WI

BA 39933% WI

EI 3312 Wells

100% WI

HI A2833 Wells

70% WI

WC 2692 Wells

100% WI

WC 77MARG A 25% WI

WC 7725% WI

EC 3350% WI

2004 Capex = $128 MM2004 Capex = $128 MM

YE03 Gulf PositionBlocks: 127 (69 Dev)THX Operated: 32Platforms: 80

THXTHX High Island A-283High Island A-283

A-283A-283

B-1

A-4 ST2

A-2

1

A-3

A-5

A-1

ProposedA-6

ProposedA-4 ST3

ProposedA-7

ProposedA-3 ST

THXTHXA-1 STA-1 ST

A-1 STA-1 ST

L-9

L-7A

L-4

2004 New Well Productionat HI A-283: 15 MMcf/d

2004 New Well Productionat HI A-283: 15 MMcf/d

THXTHX THX’s Gulf of Mexico PotentialTHX’s Gulf of Mexico Potential

Total Unrisked Potential2,587 Bcfe

Total Unrisked Potential2,587 Bcfe

1,405

247186

749

Proved

Probable/Possible

Shallow Exploration

Deep Exploration

1,405

247186

749

Proved

Probable/Possible

Shallow Exploration

Deep Exploration

THXTHX 2003 Costs Are Competitive2003 Costs Are Competitive

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Total Cash Costs DD&A and Exploration

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Total Cash Costs DD&A and Exploration

Full-Cycle Average $3.37Full-Cycle Average $3.37

Source: Company reportsSource: Company reports

THXTHX

.49 .51 .68

.29

1.56

3.312.44

3.45

.46

.27.35.25

.15.15.17.13

$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

1997 2001 2002 2003

$/M

cfe

Cash Lifting Cost G&A Interest Cash Flow

.49 .51 .68

.29

1.56

3.312.44

3.45

.46

.27.35.25

.15.15.17.13

$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

1997 2001 2002 2003

$/M

cfe

Cash Lifting Cost G&A Interest Cash Flow

High Cash Margins Yield ProfitsHigh Cash Margins Yield Profits

$4.32$4.32

$3.37$3.37

$2.40$2.40

$4.57$4.57

Total Cash Costs

THXTHX

NYMEX Contract PriceAvg. ($/MMBtu)

Volume Effective EffectiveMMBtu/d Floor Ceiling

1Q04 100,000 $4.70 none

2Q04 – 4Q04 100,000 $4.41 $6.91

Calendar ‘04 100,000 $3.75 $5.05

Calendar ‘04 40,000 $4.96 n/a

Calendar ‘05 50,000 $4.77 n/a

Calendar ‘05 150,000 $4.50 $5.69

NYMEX Contract PriceAvg. ($/MMBtu)

Volume Effective EffectiveMMBtu/d Floor Ceiling

1Q04 100,000 $4.70 none

2Q04 – 4Q04 100,000 $4.41 $6.91

Calendar ‘04 100,000 $3.75 $5.05

Calendar ‘04 40,000 $4.96 n/a

Calendar ‘05 50,000 $4.77 n/a

Calendar ‘05 150,000 $4.50 $5.69

Hedged ProductionHedged Production

Gas HedgesGas Hedges

2004

2004

2005

2005

THXTHX

108

51

63

71

80

90

103

0

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100

'97 '98 '99 '00 '01 '02 '03 '04E

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Proven Growth RecordProven Growth Record

13% CAGR

13% CAGR

ReservesReservesProductionProduction

14% CAGR

14% CAGR

THXTHX The THX “Distinctions”The THX “Distinctions”

Geographically focused: 89% of reserves in 3 core areas

Natural gas emphasis: 94% of reserves

Strong track record of production and reserve growth

Operational control: Operates 85% of properties / 75% avg. W.I.

Low cost producer: $1.12/Mcfe cash costs in 2003

Drilling inventory: Current three-year prospect inventory

Accomplished acquirer of assets

Financial discipline / balance sheet strength

Geographically focused: 89% of reserves in 3 core areas

Natural gas emphasis: 94% of reserves

Strong track record of production and reserve growth

Operational control: Operates 85% of properties / 75% avg. W.I.

Low cost producer: $1.12/Mcfe cash costs in 2003

Drilling inventory: Current three-year prospect inventory

Accomplished acquirer of assets

Financial discipline / balance sheet strength

THE HOUSTON EXPLORATION COMPANYTHE HOUSTON EXPLORATION COMPANY

This presentation includes “forward looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward looking statements include estimates, plans, expectations, opinions, forecasts, projections, guidance or other statements that are not statements of fact, such as anticipated dates of first production, estimated reserves and projected drilling and development activity. Although the Company believes that the expectations reflected in such forward looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. There are many factors that could cause forward looking statements not to be correct, including the cautionary statements contained in this report and risks and uncertainties inherent in the Company’s business set forth in the filings of the Company with the Securities and Exchange Commission, including without limitation, the Company’s most recent Annual Report on Form 10-K. These risks include, among others, oil and gas price volatility, availability of services and supplies, operating hazards and mechanical failures, uncertainties in the estimates of proved reserves and in projections of future rates of production and timing of development expenditures, environmental risks, regulatory changes, general economic conditions, and the actions or inactions of third party operators. The Company does not undertake any obligation to update any forward looking statements contained in this report.

The Securities and Exchange Commission has generally permitted oil and gas companies, in their filings with the SEC, to disclose only proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. We use the term “exploration potential” or other descriptions of volumes of reserves potentially recoverable through additional drilling or recovery techniques that the SEC’s guidelines may prohibit us from including in filings with the SEC. These estimates are by their nature more speculative than estimates of proved reserves and accordingly are subject to substantially greater risk of being actually realized by the Company.

This presentation includes “forward looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward looking statements include estimates, plans, expectations, opinions, forecasts, projections, guidance or other statements that are not statements of fact, such as anticipated dates of first production, estimated reserves and projected drilling and development activity. Although the Company believes that the expectations reflected in such forward looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. There are many factors that could cause forward looking statements not to be correct, including the cautionary statements contained in this report and risks and uncertainties inherent in the Company’s business set forth in the filings of the Company with the Securities and Exchange Commission, including without limitation, the Company’s most recent Annual Report on Form 10-K. These risks include, among others, oil and gas price volatility, availability of services and supplies, operating hazards and mechanical failures, uncertainties in the estimates of proved reserves and in projections of future rates of production and timing of development expenditures, environmental risks, regulatory changes, general economic conditions, and the actions or inactions of third party operators. The Company does not undertake any obligation to update any forward looking statements contained in this report.

The Securities and Exchange Commission has generally permitted oil and gas companies, in their filings with the SEC, to disclose only proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. We use the term “exploration potential” or other descriptions of volumes of reserves potentially recoverable through additional drilling or recovery techniques that the SEC’s guidelines may prohibit us from including in filings with the SEC. These estimates are by their nature more speculative than estimates of proved reserves and accordingly are subject to substantially greater risk of being actually realized by the Company.