BARRETT RESOURCES CORP, 424B4, 1996-06-21

BARRETT RESOURCES CORP
424B4, 1996-06-21
PETROLEUM & PETROLEUM PRODUCTS (NO BULK STATIONS)

Previous: SMITH BARNEY SHEARSON FUNDAMENTAL VALUE FUND INC, 497, 1996-06-21

Next: BARRETT RESOURCES CORP, 424B4, 1996-06-21

<PAGE>

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
4,800,000 SHARES

[LOGO OF BARRETT BARRETT RESOURCES CORPORATION Rule 424(b)(4)
RESOURCES APPEARS Reg. No. 333-04051
HERE] COMMON STOCK Reg. No. 333-06347

(PAR VALUE $0.01 PER SHARE)
-----------

Of the 4,800,000 shares of Common Stock offered, 3,840,000 shares are being
offered hereby in the United States and 960,000 shares are being offered in a
concurrent international offering outside the United States. The initial public
offering price and aggregate underwriting discount per share will be identical
for both offerings. See "Underwriting".

The last reported sale price of the Common Stock, which is quoted under the
symbol "BRR", on the New York Stock Exchange on June 19, 1996 was $26.375 per
share. See "Price Range of Common Stock".

SEE "RISK FACTORS" ON PAGE 8 FOR CERTAIN CONSIDERATIONS RELEVANT TO AN
INVESTMENT IN THE COMMON STOCK OFFERED HEREBY.

-----------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.

-----------

<TABLE>
<CAPTION>
INITIAL PUBLIC UNDERWRITING PROCEEDS TO
OFFERING PRICE DISCOUNT(1) COMPANY(2)
-------------- ------------ ------------
<S> <C> <C> <C>
Per Share........................ $26.375 $1.28 $25.095
Total(3)......................... $126,600,000 $6,144,000 $120,456,000
</TABLE>
- -----
(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933.
(2) Before deducting estimated expenses of $420,000 payable by the Company.
(3) The Company has granted the U.S. Underwriters an option for 30 days to
purchase up to an additional 480,000 shares at the initial public offering
price per share, less the underwriting discount, solely to cover over-
allotments. Additionally, the Company has granted the International
Underwriters a similar option with respect to an additional 120,000 shares
as part of the concurrent international offering. If such options are
exercised in full, the total initial public offering price, underwriting
discount and proceeds to Company will be $142,425,000, $6,912,000 and
$135,513,000, respectively. See "Underwriting".

-----------

The shares offered hereby are offered severally by the U.S. Underwriters, as
specified herein, subject to receipt and acceptance by them and subject to
their right to reject any order in whole or in part. It is expected that the
certificates for the shares will be ready for delivery in New York, New York,
on or about June 25, 1996, against payment therefor in immediately available
funds.

GOLDMAN, SACHS & CO.

SALOMON BROTHERS INC

HOWARD, WEIL, LABOUISSE, FRIEDRICHS
INCORPORATED

PETRIE PARKMAN & CO.

-----------

The date of this Prospectus is June 19, 1996.

<PAGE>

[CORE AREAS OF ACTIVITY MAP APPEARS HERE]

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK
OF THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN
THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY
BE DISCONTINUED AT ANY TIME.

2
<PAGE>

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and financial statements appearing elsewhere in this Prospectus and
in the documents incorporated by reference into this Prospectus. As used
herein, the "Company" or "Barrett" means Barrett Resources Corporation and its
subsidiaries unless the context requires otherwise. Unless otherwise indicated,
all references to annual or quarterly periods refer to the Company's fiscal
year ending December 31. Unless otherwise indicated herein, the information in
this Prospectus (i) includes the effects of the restatement of the Company's
financial, operating and reserve information to include Plains Petroleum
Company ("Plains") on a combined basis effective for all periods as a result of
the July 18, 1995 merger with Plains, which was accounted for as a pooling of
interests, and (ii) assumes that the Underwriters' over-allotment options are
not exercised. Investors should carefully consider the information set forth
under the heading "Risk Factors". Certain terms used herein relating to the oil
and gas industry are defined in "Certain Definitions" included on pages 44
through 45 of this Prospectus.

THE COMPANY

GENERAL

Barrett is an independent natural gas and crude oil exploration and
production company with core areas of activity in the Rocky Mountain region of
Colorado and Wyoming; the Mid-Continent region of Kansas and Oklahoma; and the
Southern region of Texas, New Mexico, the Gulf Coast area of Louisiana and
Texas and the shallow waters of the Gulf of Mexico. During 1995, the Company's
total production was 57.9 Bcfe, which consisted of 82% natural gas and 18%
crude oil. At December 31, 1995, the Company's estimated proved reserves were
591.3 Bcfe with an implied reserve life of 10.2 years based on 1995 production.

The Company concentrates its activities in core areas in which it has
accumulated detailed geologic knowledge and developed significant management
expertise. The Company has developed and continues to build on its interests in
the Piceance Basin in northwestern Colorado, the Anadarko and Arkoma Basins in
Oklahoma and the Wind River Basin in Wyoming. As a result of the July 1995
merger with Plains, the Company acquired significant interests in the Hugoton
Embayment in Kansas and Oklahoma, the Permian Basin in Texas and New Mexico,
and the Powder River Basin in Wyoming. Recently, the Company expanded into the
Louisiana and Texas Gulf Coast area and the shallow waters of the Gulf of
Mexico. At December 31, 1995, these principal areas of focus represented an
aggregate of approximately 93% of the Company's estimated proved reserves.

The Company currently is experiencing significant growth in its gas
production volumes, revenues and cash flow primarily as a result of its
development drilling in the Wind River, Anadarko and Piceance Basins. For the
first quarter ended March 31, 1996, the Company's average net daily gas
production increased to 147.8 MMcf from 130.7 MMcf for the full year of 1995.

In addition to these development drilling programs, the Company is engaged in
several exploration projects in the Wind River and Anadarko Basins and the Gulf
Coast/Gulf of Mexico area. Barrett believes these projects will enhance its
reserve base and financial position, although there can be no assurance this
will occur. The Company also is evaluating opportunities to develop expertise
and undertake exploration in selected international projects.

As of December 31, 1995, the Company owned interests in 2,057 producing wells
and operated 1,061, or 52%, of these wells. These operated wells contributed
approximately 90% of Barrett's 1995

3
<PAGE>

gas and oil production. The Company also owns interests in and operates a gas
gathering system, a 27-mile pipeline and a gas processing plant in the Piceance
Basin, and three smaller gas gathering systems in Oklahoma, Wyoming and Utah.

Barrett markets all of its own gas and oil production from wells that it
operates. In addition, the Company engages in natural gas trading activities,
which involve purchasing gas from third parties and selling gas to other
parties at prices and volumes that management anticipates will result in
profits to the Company. Through these trading activities, the Company obtains
knowledge and information that enables it to more effectively market its own
production. See "Business and Properties -- Gas and Oil Marketing and Trading".

BUSINESS STRATEGY

Barrett's business strategy is to generate strong growth in reserves,
production, earnings and cash flow through exploration, development and
selective acquisitions of gas and oil properties in core areas of activity. The
Company implements this strategy through the following:

SPECIALIZED GEOLOGIC EXPERTISE. Both the CEO and President of Barrett are
experienced, practicing geologists. They have established a team of geologists
and geophysicists with expertise in the Company's core areas of activity. Prior
to undertaking projects in new areas, the Company assembles specialized
geologic expertise to identify and evaluate drilling prospects.

AGGRESSIVE DRILLING PROGRAM. Barrett maintains a quality portfolio of higher
risk, higher potential exploration prospects complemented by lower risk
development projects. The majority of the Company's $131 million 1996 capital
expenditure budget, which represents an increase of 82% from 1995 capital
spending levels, is allocated to drilling activities. This budget contemplates
that the Company will participate in drilling over 200 gross wells in 1996,
subject to market conditions and other factors, compared with 129 gross wells
in 1995.

ADVANCED TECHNOLOGY. The Company makes extensive use of advanced
technologies, including 3-D seismic and in-house analytical and processing
capabilities, to better define drilling prospects. The Company also uses
advanced production techniques in its enhanced recovery operations.

OPERATING CORE PROPERTIES. At December 31, 1995, Barrett served as operator
for 1,061 wells, representing approximately 90% of the Company's 1995
production. As operator, the Company coordinates drilling activities and
arranges for the production, gathering and sale of its gas and oil from
operated wells. Serving as operator enables the Company to exert greater
control over the cost and timing of its exploration, development and production
activities.

ACTIVE COST MANAGEMENT. As the Company pursues continued strong growth, it
strives to reduce expenses through implementation of cost control programs and
active management of its operations, personnel and administrative activities.

SELECTIVE ACQUISITIONS. The Company actively seeks to acquire working
interests in gas and oil properties with development potential to augment
operations in its core areas and to build acreage positions for exploration
prospects.

FINANCIAL FLEXIBILITY. The Company is committed to maintaining financial
flexibility in order to pursue exploration and development activities and take
advantage of selective acquisition opportunities that may arise. The Offerings,
and the resulting reduction of debt, will enhance Barrett's financial
flexibility by further strengthening its balance sheet.

4
<PAGE>

RECENT DEVELOPMENTS

On March 6, 1996, the Company announced a 1996 capital expenditure budget for
gas and oil activities of $131 million, which is contingent upon market
conditions and other factors. Total 1996 budgeted expenditures include
approximately $24 million for the Wind River Basin, $13 million for the
Piceance Basin, $22 million for the Anadarko Basin, $18 million for the Arkoma
Basin, $14 million for the Gulf Coast/Gulf of Mexico, $1 million for
international projects, $20 million for exploration and development activities
in other areas, and $19 million for possible acquisitions, primarily in the
Company's core areas.

In April 1996, the Company committed $2.3 million to the acquisition of
working interests in 11 blocks of undeveloped leases in the Gulf of Mexico. In
addition, to support its Gulf Coast/Gulf of Mexico activities, the Company
established an office in Houston, Texas in January 1996.

In April 1996, the Company acquired, for $2.7 million from Zenith Drilling
Corporation ("Zenith"), all of Zenith's Piceance Basin gas and oil interests,
with an estimated 16.6 Bcf of proved natural gas reserves. In addition, the
Company acquired all the stock of Grand Valley Corporation ("GVC") in exchange
for 350,000 shares of the Company's Common Stock. The sole asset of GVC is an
approximate 10% interest in the Grand Valley Gathering System. The Company
previously owned interests in and is the operator of both the gathering system
and the gas and oil assets in which it acquired interests as a result of these
transactions.

Mr. C. Robert Buford, a director of the Company, owns 89% of Zenith. In
addition, at the time of the GVC transaction, Mr. Buford served as a director
of GVC and owned 10% of GVC. Due to these relationships, the terms of these
transactions with Zenith and GVC were negotiated on behalf of the Company by a
Special Committee of the Board of Directors of the Company, consisting of four
independent outside directors. The Company also obtained an opinion from an
investment banking firm that the terms of these transactions were fair to the
Company. See "Business and Properties--Recent Developments", "--Rocky Mountain
Region--Piceance Basin", "--Gas Gathering" and "Underwriting".

THE OFFERINGS(1)

<TABLE>
<S> <C>
Common Stock offered by the
Company:
U.S. Offering................... 3,840,000 shares
International Offering.......... 960,000 shares
---------
Total......................... 4,800,000 shares
=========
Common Stock to be outstanding
after the Offerings.............. 30,372,507 shares(2)
New York Stock Exchange symbol.... BRR
Use of proceeds................... To repay indebtedness and create additional
capacity under the Company's line of credit
which, together with operating cash flow,
will be used to fund the Company's planned
exploration and development activities as
well as possible acquisitions, and for
other general corporate purposes. See "Use
of Proceeds".
</TABLE>
- --------
(1) Assumes that the Underwriters' over-allotment options are not exercised.
See "Underwriting".
(2) Does not include 1,189,131 shares of Common Stock issuable upon exercise of
outstanding stock options.

As used in this Prospectus, references to the "U.S. Offering" shall mean the
offering of shares of Common Stock in the United States, and references to the
"International Offering" shall mean the offering of such shares outside the
United States. The U.S. Offering and the International Offering are referred to
herein collectively as the "Offerings".

5
<PAGE>

SUMMARY GAS AND OIL RESERVE INFORMATION

The following table sets forth summary information with respect to the
Company's estimated net proved gas and oil reserves and the discounted present
value of the estimated future net revenues therefrom as of December 31, 1995.
For additional information relating to the Company's gas and oil reserves, see
"Business and Properties--Core Areas of Activity", "--Production", "--
Reserves", the Supplemental Gas and Oil Information included after the
Consolidated Financial Statements and "Risk Factors--Engineers' Estimates of
Reserves and Future Net Revenues" included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1995
------------------------------
DEVELOPED UNDEVELOPED TOTAL
--------- ----------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Estimated Proved Reserves(1):
Gas (Bcf).................................... 419.7 93.9 513.5
Oil (MMBbls)................................. 11.7 1.3 13.0
Total (Bcfe)............................... 489.7 101.6 591.3
Present Value of Estimated Future Net Revenues
before income taxes discounted at 10%(2)...... $379,546 $53,057 $432,603
Standardized Measure of Discounted Net Cash
Flows(3)...................................... -- -- 309,874
</TABLE>
- --------
(1) The Company's annual reserve report as of December 31, 1995 was prepared by
the Company, with certain portions of the reserve report, exclusive of
those portions concerning the Company's reserves held by its Plains
subsidiary, having been reviewed by Ryder Scott Company, an independent
reservoir engineer. The portions of the report concerning the reserves that
are held by its Plains subsidiary were reviewed by Netherland, Sewell &
Associates, Inc., an independent reservoir engineer that has reviewed
Plains' reserve reports since 1988.
(2) The Present Value of Estimated Future Net Revenues is based on weighted
average prices of $1.77 per Mcf of gas and $17.35 per Bbl of oil realized
by the Company at December 31, 1995.
(3) The Standardized Measure of Discounted Net Cash Flows prepared by the
Company represents the Present Value of Estimated Future Net Revenues after
income taxes discounted at 10%.

6
<PAGE>

SUMMARY CONSOLIDATED FINANCIAL AND OPERATING DATA

The following table sets forth the summary historical consolidated financial
data of Barrett for each of the periods indicated. The historical financial
data of Barrett for the three-year period ended December 31, 1995 have been
derived from Barrett's audited consolidated financial statements. The
historical financial data for the three months ended March 31, 1995 and 1996
are derived from unaudited financial statements of the Company. Production data
for all periods are unaudited. Barrett's previously reported data for 1995 and
prior years have been restated to reflect the merger with Plains under the
pooling of interests method of accounting and the change in fiscal year end
from September 30 to December 31. The summary consolidated financial and
operating data set forth below should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the financial statements, notes thereto and other information included
elsewhere in this Prospectus and the documents incorporated herein by
reference.
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
-------------------------- ---------------
1993 1994 1995(1) 1995 1996
-------- -------- -------- ------- -------
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE
AND SALES PRICE DATA)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA(2):
Revenues.......................... $106,072 $109,458 $128,016 $33,471 $42,307
Depreciation, depletion and
amortization..................... 20,185 22,760 33,480 8,100 9,404
Interest expense.................. 725 942 4,631 941 1,551
Income (loss) before income taxes
and cumulative effect of change
in method of accounting for
postretirement benefits.......... $ 21,043 $ 16,437 $ (406) $ 4,327 $ 5,573
Net income (loss)................. 13,666 11,299 (2,240) 3,014 3,456
Net income (loss) per share....... 0.55 0.46 (0.09) 0.11 0.14
EBITDA(3)......................... $ 41,217 $ 39,275 $ 36,991 $13,215 $16,331
CASH FLOW STATEMENT DATA:
Cash flow from operations before
changes in working capital....... $ 40,484 $ 38,975 $ 33,390 $12,327 $13,560
Cash flow from operations after
changes in working capital....... 41,580 36,573 35,538 6,978 13,225
Additions to property, plant and
equipment........................ 45,488 95,589 82,758 18,252 22,173
RESERVE AND OPERATING DATA:
Proved reserves
Gas (Bcf)........................ 364.8 458.8 513.5 -- --
Oil (MMBbls)..................... 6.9 11.4 13.0 -- --
Total (Bcfe)..................... 406.5 527.5 591.3 -- --
Production
Gas (Bcf)........................ 31.7 33.3 47.7 11.7 13.5
Oil and condensate (MMBbls)...... 1.3 1.3 1.7 0.4 0.4
Total (Bcfe)..................... 39.5 41.0 57.9 14.2 16.0
Reserves to production ratio
(years).......................... 10.3 12.9 10.2 -- --
Average sales price
Gas ($/Mcf)...................... $ 1.94 $ 1.83 $ 1.47 $ 1.57 $ 1.67
Oil and condensate ($/Bbl)....... 14.93 13.95 15.76 15.55 16.51
</TABLE>

<TABLE>
<CAPTION>
AS OF
DECEMBER 31, AS OF MARCH 31, 1996
----------------- -----------------------
1994 1995 ACTUAL AS ADJUSTED(4)
-------- -------- -------- --------------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital....................... $ 2,466 $ 3,686 $ 8,516 $ 28,552
Total assets.......................... 310,952 340,412 361,727 381,763
Long-term debt........................ 53,000 89,000 100,000 --
Stockholders' equity.................. 188,136 191,828 196,513 316,549
</TABLE>
- --------
(1) Excluding 1995 nonrecurring transaction costs relating to the Plains merger
totaling $14.2 million, net income (loss) for the year ended December 31,
1995 would be $9.5 million, EBITDA would be $51.2 million, cash flow from
operations before changes in working capital would be $47.6 million, and
cash flow from operations after changes in working capital would be $49.7
million. In addition, the effect of these nonrecurring costs was to reduce
net income per share for the year ended December 31, 1995 by $0.47. EBITDA
and cash flow from operations before changes in working capital are not
measures determined pursuant to generally accepted accounting principles
("GAAP") nor are they alternatives to GAAP income or cash flow provided by
operations. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations".
(2) Plains used the successful efforts method of accounting and adopted the
full cost method used by Barrett in the retroactively restated financial
statements. See Note 2 to Financial Statements.
(3) Reflects income before income taxes less interest income, plus interest
expense, plus depreciation, depletion and amortization expense. This data
does not purport to reflect any measure of operations or cash flow.
(4) As adjusted to give effect to the issuance and sale of 4,800,000 shares of
Common Stock offered hereby and the application of net proceeds therefrom.
See "Use of Proceeds".

7
<PAGE>

RISK FACTORS

In addition to the other information contained in this Prospectus, the
following risk factors should be considered when evaluating an investment in
the shares of Common Stock offered hereby.

VOLATILITY OF PRICES AND AVAILABILITY OF MARKETS

The Company's revenues, profitability and future rate of growth are
substantially dependent upon prevailing prices for natural gas and oil, which
can be extremely volatile and in recent years have been depressed by excess
domestic and imported supplies. Natural gas prices have risen in recent
months. There can be no assurance that current price levels can be sustained.
Prices also are affected by actions of state and local agencies, the United
States and foreign governments, and international cartels. These external
factors and the volatile nature of the energy markets make it difficult to
estimate future prices of natural gas and oil. Any substantial or extended
decline in the price of natural gas would have a material adverse effect on
the Company's financial condition and results of operations, including reduced
cash flow and borrowing capacity. All of these factors are beyond the control
of the Company. The marketability of the Company's production depends in part
upon the availability, proximity and capacity of gas gathering systems,
pipelines and processing facilities. Federal and state regulation of gas and
oil production and transportation, general economic conditions, changes in
supply and changes in demand all could adversely affect the Company's ability
to produce and market its natural gas and oil. If market factors were to
change dramatically, the financial impact on the Company could be substantial.
The volatility of product prices and the availability of markets are beyond
the control of the Company and thus represent a significant risk. For the year
ended December 31, 1995, the Company's production and reserve base were
approximately 82% and 87% natural gas, respectively, on an energy equivalent
basis. As a result, the Company's earnings and cash flow are more sensitive to
fluctuations in the price of natural gas than to fluctuations in the price of
oil. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Business and Properties--Gas and Oil Marketing and
Trading".

The Company engages in hedging activities with respect to some of its gas
and oil production through a variety of financial arrangements designed to
protect against price declines, including swaps and futures agreements. To the
extent that Barrett engages in such activities, it may be prevented from
realizing the benefits of price increases above the levels of the hedges. See
"Business and Properties--Gas and Oil Marketing and Trading."

The Company reports its operations using the full cost method of accounting
for gas and oil properties. Under full cost accounting rules, the net
capitalized costs of gas and oil properties may not exceed a "ceiling" limit
of the present value of estimated future net revenues from proved reserves,
discounted at 10%, plus the lower of cost or fair market value of unproved
properties. This rule requires calculating future revenues at unescalated
prices in effect as of the end of each fiscal quarter and requires a write-
down if the net capitalized costs of the gas and oil properties exceed the
ceiling limit, even if price declines are temporary. The risk that the Company
will be required to write-down the carrying value of its gas and oil
properties increases when gas and oil prices are depressed or unusually
volatile. A ceiling limitation write-down is a one-time charge to earnings,
which does not impact cash flow from operating activities.

OTHER INDUSTRY AND BUSINESS RISKS

The Company competes in the areas of gas and oil exploration, production,
development and transportation with other companies, many of which may have
substantially larger financial and other resources. The nature of the gas and
oil business also involves a variety of risks, including the risks of
operating hazards such as fires, explosions, cratering, blow-outs,
encountering formations with abnormal pressures, and, in horizontal wellbores,
the increased risk of mechanical failure and collapsed holes, the occurrence
of any of which could result in losses to the Company. The operation

8
<PAGE>

of the Company's gas processing plant and its gas gathering systems involves
certain risks, including explosions and environmental hazards caused by
pipeline leaks and ruptures. The effect of these hazards are increased with
respect to the Company's Gulf Coast activities due to the difficulty of
containing leaks and ruptures in offshore locations. In accordance with
customary industry practices, the Company maintains insurance against some,
but not all, of these risks in amounts that management believes to be
reasonable. The occurrence of a significant event that is not fully insured
could have a material adverse effect on the Company's financial position.

The Company's revenues depend on its level of success in acquiring or
finding additional reserves. Except to the extent that the Company acquires
properties containing proved reserves or conducts successful exploration and
development activities, or both, the proved reserves of the Company will
decline as reserves are produced. There can be no assurance that the Company's
planned exploration and development projects will result in additional
reserves or that the Company will have future success in drilling productive
wells.

Gas trading activities involve a high degree of risk because of the inherent
uncertainties associated with the gas trading process. These uncertainties
include the lack of predictability in gas prices, risk of non-performance by
counter-parties, market imperfections caused by regional price differentials,
possible lack of liquidity in the trading markets and possible failure of
physical delivery. Although the possibility of lower natural gas prices tends
to add risk to the Company's exploration and development activities, it is the
possibility of unexpected price volatility that represents a primary risk for
the Company's gas trading activities. In addition, gas trading is highly
competitive and the Company competes with several other companies, many of
which have more experience, personnel and other resources available to them.
However, the Company does not believe that any one competitor is dominant in
the industry.

ENGINEERS' ESTIMATES OF RESERVES AND FUTURE NET REVENUES

This Prospectus contains estimates of reserves and of future net revenues
which have been prepared by the Company and reviewed by independent petroleum
engineers. However, petroleum engineering is not an exact science and involves
estimates based on many variable and uncertain factors. Estimates of reserves
and of future net revenues prepared by different petroleum engineers may vary
substantially depending, in part, on the assumptions made and may be subject
to adjustment either up or down in the future. The actual amounts of
production, revenues, taxes, development expenditures, operating expenses, and
quantities of recoverable gas and oil reserves to be encountered may vary
substantially from the engineers' estimates. Estimates of reserves also are
extremely sensitive to the market prices for natural gas and oil. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business and Properties--Reserves".

GOVERNMENT REGULATION AND ENVIRONMENTAL RISKS

The production and sale of oil and natural gas are subject to a variety of
federal, state and local government regulations that may be changed from time
to time in response to economic or political conditions. The regulations
concern, among other matters, the prevention of waste, the discharge of
materials into the environment, the conservation of natural gas and oil,
pollution, permits for drilling operations, drilling bonds, reports concerning
operations, the spacing of wells, the unitization and pooling of properties,
and various other matters including taxes. The Company currently has a dispute
with the Internal Revenue Service. Although the Company believes it will
prevail in its position, there can be no assurance of a favorable outcome. See
Note 11 to the Notes to Consolidated Financial Statements. Many jurisdictions
have at various times imposed limitations on the production of gas and oil by
restricting the rate of flow for gas and oil wells below their actual capacity
to produce. In addition, many states have raised state taxes on energy sources
and additional increases may occur, although there can be no certainty of the
effect that increases in state energy taxes would have on natural gas and oil
prices. Although the Company believes it is in substantial compliance with
applicable

9
<PAGE>

environmental and other government laws and regulations and to date such
compliance has not had a material adverse effect on the earnings or
competitive position of the Company, there can be no assurance that
significant costs for compliance will not be incurred in the future.
Compliance with environmental laws, including the preparation of environmental
assessments and impact statements, can delay drilling activity, thereby
potentially reducing revenue and cash flow. See "Business and Properties--
Rocky Mountain Region--Wind River Project" and "--Government Regulation of the
Oil and Gas Industry".

THE COMPANY

The Company was organized as a Colorado corporation in 1980 under the name
AIMEXCO Inc. In December 1983, the Company acquired Barrett Energy Company,
which owned certain gas and oil interests. In 1984, the Company changed its
name to Barrett Resources Corporation, and in 1987 the Company changed its
state of incorporation from Colorado to Delaware. In 1995, Plains merged with
a subsidiary of, and became a wholly owned subsidiary of, the Company. The
executive offices of the Company are located at 1515 Arapahoe Street, Tower 3,
Suite 1000, Denver, Colorado 80202, and its telephone number at that address
is (303) 572-3900.

USE OF PROCEEDS

The net proceeds to the Company from the Offerings are estimated to be
$120.0 million ($135.1 million if the Underwriters' over-allotment options are
exercised in full) after deducting underwriting discounts and estimated
offering expenses payable by the Company. The Company intends to use these net
proceeds to repay its line of credit, which had $100 million outstanding as of
March 31, 1996, and to create additional capacity under this line of credit,
which, together with the Company's operating cash flow, will be used to fund
its planned exploration and development activities, and for other general
corporate purposes. Subject to management's determination that there are
attractive opportunities, the Company also may use a portion of its bank line
of credit and its operating cash flow to pursue exploration and/or development
opportunities in other areas as well as selective acquisitions. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources"; and "Business and Properties--
Core Areas of Activity".

The estimated amounts and uses set forth above indicate the Company's
intentions for use of the net proceeds from the Offerings. The Company may
reallocate the proceeds or utilize the proceeds for other gas and oil
opportunities the Company deems to be in its best interests, due to an
unforeseen change in circumstances concerning matters such as economic
conditions, availability of debt financing or the existence of a property
acquisition or development opportunity.

The Company's bank line of credit is a $200 million facility with a current
borrowing base of $160 million. The amount of the borrowing base at any time
is determined by the lenders with reference to the collateral value of the
Company's proved reserves. The borrowing base currently is being reviewed by
the lenders, and the Company expects to be notified of the updated borrowing
base level by June 30, 1996. As a result of the increase in the Company's
estimated reserves and sales prices from March 31, 1995 to December 31, 1995,
the Company expects an increase in its borrowing base. At the Company's
election at the time of borrowing funds, interest begins to accrue on those
funds either at the London interbank eurodollar rate (LIBOR) plus a spread
ranging from 0.5% to 1.0% (depending on the ratio of the Company's outstanding
borrowing to its borrowing base) or at the U.S. prime rate of interest. As of
March 31, 1996, the Company's outstanding balance under the line of credit was
$100 million, which was accruing interest at an average rate of 6.3%. The
Company is required to pay interest on a quarterly basis until the entire
outstanding balance matures on July 19, 1999. See "Capitalization" and
"Management's Discussion and Analysis of Financial Conditions and Results of
Operations--Liquidity and Capital Resources".

10
<PAGE>

The portion of the outstanding line of credit that has been incurred during
the past year has been used by the Company primarily for its gas and oil
activities and also for certain costs related to the Plains merger.

The excess, if any, of net proceeds from the Offerings after paying the
outstanding balance of the Company's line of credit will be placed temporarily
in certificates of deposit, short-term obligations of the United States
government, or other money-market instruments that are rated investment grade
or its equivalent until used for the purposes described above.

PRICE RANGE OF COMMON STOCK

The Company's Common Stock is listed on the New York Stock Exchange (the
"NYSE") under the symbol "BRR". Prior to November 29, 1994, the Company's
Common Stock was traded on the NASDAQ National Market System under the symbol
"BARC". The following table sets forth the high and low sale prices of the
Common Stock for each of the quarters indicated:

<TABLE>
<CAPTION>
HIGH LOW
------- -------
<S> <C> <C>
1994
First Quarter........................................... $14.375 $10.375
Second Quarter.......................................... 16.500 13.250
Third Quarter........................................... 20.000 15.625
Fourth Quarter.......................................... 22.750 17.875
1995
First Quarter........................................... 21.750 16.875
Second Quarter.......................................... 25.875 19.375
Third Quarter........................................... 25.375 19.375
Fourth Quarter.......................................... 30.625 21.000
1996
First Quarter........................................... 29.500 22.000
Second Quarter (through June 19, 1996).................. 28.375 22.500
</TABLE>

On June 19, 1996, the last reported sale price of the Common Stock as
reported on the NYSE was $26.375. As of May 23, 1996, there were approximately
4,890 stockholders of record of the Common Stock.

DIVIDEND POLICY

The Company has not paid any cash dividends since its inception. The Company
anticipates that all earnings will be retained for the development of its
business and that no cash dividends on its Common Stock will be paid in the
foreseeable future. In addition, the Company's bank line of credit restricts
payment of dividends during a quarter to amounts that are less than 50% of the
Company's average net income for the previous four quarters. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations".

11
<PAGE>

CAPITALIZATION

The following table sets forth the unaudited capitalization of the Company
as of March 31, 1996 and as adjusted to reflect the issuance and sale of
4,800,000 shares of Common Stock by the Company (based on the initial public
offering price of $26.375 per share and after deduction of underwriting
discounts and estimated offering expenses payable by the Company) and the
application of the net proceeds therefrom. This table should be read in
conjunction with "Use of Proceeds", the Selected Consolidated Financial Data,
the Consolidated Financial Statements and notes thereto and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
MARCH 31, 1996
---------------------
ACTUAL AS ADJUSTED
-------- -----------
(IN THOUSANDS)
<S> <C> <C>
Cash and cash equivalents................................ $ 10,945 $ 30,981
======== ========
Long-term debt(1)........................................ $100,000 $ --
Stockholders' equity:
Preferred stock, $0.001 par value: 1,000,000 shares
authorized, none issued and outstanding............... -- --
Common stock, $0.01 par value: 35,000,000 shares
authorized, 25,153,666 issued and outstanding;
29,953,666 issued and outstanding as adjusted(2)...... 252 300
Additional paid-in capital............................. 87,382 207,370
Retained earnings...................................... 109,346 109,346
Treasury stock, at cost................................ (467) (467)
-------- --------
Total stockholders' equity........................... $196,513 $316,549
-------- --------
Total capitalization................................. $296,513 $316,549
======== ========
</TABLE>
- --------
(1) See "Use of Proceeds" and Note 6 to Consolidated Financial Statements for
certain terms of the Company's bank line of credit.
(2) Does not include 1,189,131 shares of Common Stock issuable upon exercise
of outstanding stock options.

12
<PAGE>

SELECTED CONSOLIDATED FINANCIAL DATA

The selected consolidated financial data set forth below should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations", the consolidated financial statements, notes
thereto and other information included elsewhere in this Prospectus and the
documents incorporated herein by reference. The selected financial data for
each of the three years in the period ended December 31, 1995 are derived from
consolidated financial statements of the Company, which have been audited by
Arthur Andersen LLP, independent public accountants. See "Experts". The data
presented for the three month periods ended March 31, 1995 and 1996 are
derived from the unaudited consolidated financial statements and include, in
the opinion of management, all normal and recurring adjustments necessary to
present fairly the data for such periods. Production data for all periods are
unaudited. Barrett's previously reported data for 1995 and prior years have
been restated to reflect the merger with Plains under the pooling of interests
method of accounting and the change in fiscal year end from September 30 to
December 31. The selected data provided below are not necessarily indicative
of the future results of operations or financial performance of the Company.

<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
--------------------------- ---------------
1993 1994 1995(1) 1995 1996
-------- -------- -------- ------- -------
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA(2):
Revenues:
Oil and gas production........... $ 80,911 $ 78,794 $ 96,996 $24,981 $29,544
Trading revenues................. 22,955 28,114 28,554 7,788 11,993
Revenue from gas gathering....... 216 353 1,074 291 448
Interest Income.................. 736 864 714 153 197
Other income..................... 1,254 1,333 678 258 125
-------- -------- -------- ------- -------
Total Revenues................... $106,072 $109,458 $128,016 $33,471 $42,307
Operating expenses:
Lease operating expenses......... $ 30,383 $ 28,223 $ 34,525 $ 8,897 $10,947
Depreciation, depletion and
amortization.................... 20,185 22,760 33,480 8,100 9,404
Cost of trading.................. 21,675 27,190 27,611 7,452 11,214
General and administrative....... 11,194 13,261 13,426 3,629 3,618
Interest expense................. 725 942 4,631 941 1,551
Other expenses, net.............. 867 645 588 125 --
Merger and reorganization
expense......................... -- -- 14,161 -- --
-------- -------- -------- ------- -------
Total Expenses................... $ 85,029 $ 93,021 $128,422 $29,144 $36,734
Income (loss) before income taxes
and cumulative effect of change
in method of accounting for
postretirement benefits.......... $ 21,043 $ 16,437 $ (406) $ 4,327 $ 5,573
Provision for income taxes........ 6,721 5,138 1,834 1,313 2,117
-------- -------- -------- ------- -------
Income (loss) before cumulative
effect of change in method of
accounting for postretirement
benefits......................... $ 14,322 $ 11,299 $ (2,240) $ 3,014 $ 3,456
Cumulative effect of change in
method of accounting for
postretirement benefits, net of
tax.............................. (656) -- -- -- --
-------- -------- -------- ------- -------
Net income (loss)................. $ 13,666 $ 11,299 $ (2,240) $ 3,014 $ 3,456
======== ======== ======== ======= =======
Net income (loss) per common share
and common share equivalent
before change in method of
accounting for postretirement
benefits......................... $ 0.58 $ 0.46 $ (0.09) $ 0.11 $ 0.14
Net income (loss) per common share
and common share equivalent--
cumulative effect................ (.03) -- -- -- --
-------- -------- -------- ------- -------
Net income (loss) per common share
and common share equivalent...... $ 0.55 $ 0.46 $ (0.09) $ 0.11 $ 0.14
======== ======== ======== ======= =======
EBITDA(3)......................... $ 41,217 $ 39,275 $ 36,991 $13,215 $16,331
CASH FLOW STATEMENT DATA:
Cash flow from operations before
changes in working capital....... $ 40,484 $ 38,975 $ 33,390 $12,327 $13,560
Cash flow from operations after
changes in working capital....... 41,580 36,573 35,538 6,978 13,225
Additions to property, plant and
equipment........................ 45,488 95,589 82,758 18,252 22,173
</TABLE>

13
<PAGE>

<TABLE>
<CAPTION>
AS OF DECEMBER 31, AS OF MARCH 31, 1996
------------------- -----------------------
1994 1995 ACTUAL AS ADJUSTED(4)
--------- --------- -------- --------------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital..................... $ 2,466 $ 3,686 $ 8,516 $ 28,552
Total assets........................ 310,952 340,412 361,727 381,763
Long-term debt...................... 53,000 89,000 100,000 --
Stockholders' equity................ 188,136 191,828 196,513 316,549
</TABLE>
- --------
(1) Excluding 1995 nonrecurring transaction costs relating to the Plains
merger totaling $14.2 million, income (loss) for the year ended December
31, 1995 would be $9.5 million, EBITDA would be $51.2 million, cash flow
from operations before changes in working capital would be $47.6 million,
and cash flow from operations after changes in working capital would be
$49.7 million. In addition, the effect of these nonrecurring costs was to
reduce net income per share for the year ended December 31, 1995 by $0.47.
EBITDA and cash flow from operations before changes in working capital are
not measures determined pursuant to GAAP nor are they alternatives to GAAP
income or cash flow provided by operations. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations".
(2) Plains used the successful efforts method of accounting and adopted the
full cost method used by Barrett in the retroactively restated financial
statements. See Note 2 to Financial Statements.
(3) Reflects income before income taxes less interest income, plus interest
expense, plus depreciation, depletion and amortization expense. This data
does not purport to reflect any measure of operations or cash flow.
(4) As adjusted to give effect to the issuance and sale of 4,800,000 shares of
Common Stock offered hereby and the application of net proceeds therefrom.
See "Use of Proceeds".

14
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

On July 18, 1995, the Company consummated the merger of a wholly owned
subsidiary of the Company with Plains by issuing 12.8 million shares of its
Common Stock to the former Plains stockholders. As a result of this merger,
Plains became a wholly owned subsidiary of the Company. Also on July 18, 1995,
the Company changed its fiscal year end from September 30 to December 31. The
merger is being accounted for using the pooling of interests method. The
pooling of interests method combines previously reported results as though the
combination had occurred at the beginning of the periods being presented.
Merger costs have been expensed during the 1995 year. The financial statements
of the Company and Plains for 1993 through 1995 have been restated and
adjusted for the merger with Plains and the change in fiscal year end. Due to
this restatement, these financial statements are not comparable to the
financial statements for the same periods as previously presented by the
Company or Plains. The following discussion should be read in conjunction with
the Consolidated Financial Statements and Notes thereto presented elsewhere in
this Prospectus.

LIQUIDITY AND CAPITAL RESOURCES

CAPITAL EXPENDITURES. Capital expenditures were $82.8 million for the year
ended December 31, 1995 as compared to $95.6 million for the year ended
December 31, 1994. Assuming reasonably successful development drilling
results, the total capital expenditure budget for 1996, including expenditures
of $22.2 million made during the first quarter of 1996, would be $131 million
for gas and oil activities, and $6 million for other capital expenditures.

CAPITAL SOURCES. The Company anticipates that the funds available from the
Company's operations and borrowings under the Company's bank line of credit,
together with cash flow from operations, should be sufficient to fund the
planned capital expenditures described above. At March 31, 1996, the Company
had cash and short-term investments of $10.9 million, working capital of $8.5
million, property and equipment of $313.4 million and total assets of $361.7
million. Compared to December 31, 1995, cash and short-term investments
increased $3.4 million, working capital increased $4.8 million and property
and equipment increased $12.7 million. Total assets increased by $21.3
million, funded by the Company's cash flow and by an $11.0 million increase in
long-term debt. During the first quarter of 1996, as well as during 1995, the
Company invested in its gas and oil properties in its core areas of activity,
which increased both property and equipment and long-term debt.

During the first quarter of 1996 and all of 1995, the Company generated
operating cash flow of $13.6 million and $33.4 million, respectively, before
working capital changes. After working capital changes, cash flow provided by
operations was $13.2 million and $35.5 million, respectively. Excluding merger
costs, cash flow from operations before working capital changes for 1995 was
$47.6 million ($49.7 million after working capital changes).

As of March 31, 1996 and December 31, 1995, respectively, the outstanding
balance under the bank line of credit was $100 million and $89 million, as
compared with $53 million at December 31, 1994. In July 1995, the Company
entered into a $200 million credit agreement. The line of credit matures on
July 19, 1999 and is funded by a consortium of six banks. The line of credit
is unsecured and provides for interest rates based on LIBOR or prime rates at
the Company's option. The borrowing base under the Credit Agreement is based
on the banks' review of the collateral value of the Company's gas and oil
properties. The current borrowing base is $160 million and was determined from
a review of the gas and oil reserves as of December 31, 1994 for Plains and
March 31, 1995 for Barrett. The borrowing base is scheduled for a review that
will be completed by June 30, 1996 and will be based on the Company's December
31, 1995 reserves. As a result of the increase in the Company's estimated
proved reserves and sales prices from March 31, 1995 to December 31, 1995, the
Company anticipates that this review will result in an increase in its
borrowing base.

15
<PAGE>

During the quarter ended March 31, 1996, the Company's capital expenditures
were $22.2 million, including an aggregate of $16.1 million invested in
development and expansion activities in the Piceance, Wind River, and Anadarko
Basins. During 1995, the Company invested $72.3 million in property and
equipment principally in the Piceance, Wind River and Arkoma Basins. The
Company's drilling activities were primarily to develop and extend producing
fields. Included in gas and oil property additions in 1995 is $7.4 million to
purchase interests in properties with proved reserves of an estimated 4.0 Bcf
of gas and 831,000 barrels of oil. In April 1996, the Company expended $2.7
million to acquire an estimated 16.6 Bcf of gas and issued 350,000 shares of
its Common Stock to acquire an additional 10% interest in the Grand Valley
Gathering System. See "Business and Properties--Recent Developments".

During 1995, the Company increased its gas reserves by 12% to 514 Bcf and
its oil reserves by 13% to 13.0 million barrels, thereby replacing 210% of its
1995 production. On an energy equivalent basis, the Company's reserves were
87% natural gas. Proved undeveloped reserves were 17% of the Company's total
reserves. As of December 31, 1995, 34% of the Company's reserves were located
in the Hugoton Embayment, 20% were located in the Piceance Basin, and 15% were
located in the Wind River Basin.

Reserve quantities increased 12% on an energy equivalent basis in 1995,
while the standardized measure of discounted future net cash flows increased
$67.3 million, or 28%, primarily due to reserve additions and increases in the
sales prices of gas and oil. As of December 31, 1995, the Company was
receiving an average of $1.77 per Mcf for its gas production and $17.35 per
barrel for its oil production. Reserve extensions and discoveries added $85.5
million to the standardized measure, and purchases of proved reserves added
$7.4 million to the valuation. In addition, the changes in sales prices and
production costs increased the standardized measure of discounted future net
cash flows by $24.6 million. These additions were offset by a $62.3 million
reduction due to reserves produced during the year and $33.2 million for
additional income taxes. The Company's reserve values remain sensitive to gas
prices in the current environment of fluctuating commodities prices.

From time to time the Company uses swaps to hedge the sales price of its
natural gas and oil. In a typical swap agreement, the Company and a counter
party will enter into an agreement whereby one party will pay a fixed price
and the other will pay an index price on a specified volume of production
during a specified period of time. Settlement is made by the parties for the
difference between the two prices at approximately the same time as the
physical transactions. The intent of hedging activities is to reduce the
volatility associated with the sales prices of the Company's gas and oil
production.

The Company's merger with Plains and its drilling activities have increased
its reserve base and its productive capacity and, therefore, its potential
cash flow. The Company intends to continue to develop and acquire gas and oil
properties in its areas of activity as dictated by market conditions and
financial ability. The Company retains flexibility to participate in gas and
oil activities at a level that is supported by its cash flow and financial
ability. Management believes that the Company's borrowing capacity and cash
flow are sufficient to fund its currently anticipated activities. The Company
intends to continue to make prudent use of financial leverage to fund its
operations on terms that management believes warrant investment of the
Company's capital resources.

Any additional equity issuances by the Company within 120 days after the
Offerings would require the approval of the representatives of the
Underwriters pursuant to the terms of the Underwriting Agreement between the
Company and the Underwriters. See "Business and Properties--Recent
Developments", "--Rocky Mountain Region--Piceance Basin" and "Underwriting".

RESULTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 1996 AS COMPARED TO THREE MONTHS ENDED MARCH 31,
1995

The following discussion of operating results is based on historical
consolidated financial information that has been restated to reflect the
merger of the Company and Plains on July 18, 1995 under the pooling of
interests method of accounting.

16
<PAGE>

Net income for the quarters ended March 31, 1996 and 1995 was $3.5 million
($0.14 per share) and $3.0 million ($0.11 per share), respectively. This
increase is primarily due to increased gas and oil production revenue, a 6%
increase in average gas and oil sales prices, and a $443,000 increase in gross
profit from gas trading.

Total revenues for the quarter were $42.3 million, up 26% from $33.5 million
for the same period in 1995. This increase is attributable to higher
production revenues and a 54% increase in trading revenues.

Production revenues for the first quarter of 1996 increased 18% from $25.0
million to $29.5 million. Production revenues and related volumes and average
prices during the periods presented were as follows:

<TABLE>
<CAPTION>
QUARTER ENDED
MARCH 31,
---------------
1995 1996
------- -------
<S> <C> <C>
Gas Revenues (in thousands)............................... $18,296 $22,444
Gas Production (Bcf)...................................... 11.7 13.5
Average Price per Mcf..................................... $ 1.57 $ 1.67
Oil Revenues (in thousands)............................... $ 6,685 $ 7,100
Oil Production (MBbls).................................... 430 430
Average Price per Barrel.................................. $ 15.55 $ 16.51
</TABLE>

First quarter gas revenues increased 23% as compared with the same period in
1995, principally due to a 15% increase in production volumes and a 6%
increase in average gas prices.

The 6% increase in first quarter 1996 oil revenues from the same period in
1995 is directly attributable to a 6% increase in average oil prices.

For the quarter ended March 31, 1996, revenues from trading were $12.0
million compared to $7.8 million for the same period in 1995. The associated
costs of trading increased to $11.2 million from $7.5 million. Gross profit
from trading was $779,000 and $336,000 for the respective quarters ended March
31, 1996 and 1995.

To reduce its exposure to gas and oil price fluctuations, the Company enters
into hedging arrangements from time to time for both trading and producing
activities. During the first quarter ended March 31, 1996, the Company
recognized net production hedging expenses of $812,000, which were recorded in
the consolidated statements of income as adjustments of gas and oil production
revenue. As of March 31, 1996, the Company held positions to hedge 0.075 Bcf
of the Company's gas production and 91 MBbls of the Company's oil production.

Production costs increased due to increases in sales and higher operating
costs in the winter months in the first quarter.

Depreciation, depletion and amortization increased to $9.4 million from $8.1
million due to a 13% increase in gas and oil equivalent production. During the
1996 and 1995 quarters, depletion, depreciation and amortization was $0.56 and
$0.54 per Mcfe, respectively.

Interest expense for the first quarter increased from $0.9 million in 1995
to $1.6 million in 1996. Increases were attributable to additional borrowing
used principally to fund exploration, development and acquisition of gas and
oil properties.

The Company's largest source of operating income is from sales of its gas
and oil production. Therefore, the levels of the Company's revenues and
earnings are affected by prices at which natural gas and oil are being sold.
This is particularly true with respect to natural gas, which accounted for

17
<PAGE>

approximately 76% of the Company's production revenue for the first quarter of
1996. As a result, the Company's operating results for any prior period are
not necessarily indicative of future operating results because of the
fluctuations in gas and oil prices and the lack of predictability of those
fluctuations as well as changes in production levels.

YEAR ENDED DECEMBER 31, 1995 AS COMPARED TO YEAR ENDED DECEMBER 31, 1994

During 1995, the Company incurred a net loss of $2.2 million ($0.09 per
share) compared to net income of $11.3 million ($0.46 per share) in 1994. The
1995 results include merger and reorganization costs of $14.2 million.
Excluding these merger costs, the Company's net income after taxes would have
been $9.5 million ($0.38 per share).

Revenues increased 17% from 1994 to $128.0 million, and operating expenses,
including $14.2 million of merger and reorganization costs, increased 38% to
$128.4 million. Oil and gas production revenue increased 23% to $97.0 million.
Lease operating expenses increased $6.3 million and depreciation, depletion
and amortization increased $10.7 million.

Production revenues increased $18.2 million primarily due to a 43% increase
in gas production to 47.7 Bcf (130.7 MMcf per day). Oil production increased
32% to 1,702,000 barrels (4,660 barrels per day). Average gas sales prices
decreased 20% to $1.47 per Mcf, while average oil prices increased 13% to
$15.76 per barrel. Gas production accounted for 82% of total production on an
energy equivalent basis. The Hugoton Embayment and Piceance Basin properties
accounted for 37% and 14% percent, respectively, of total gas production. The
Powder River and Permian Basins accounted for 43% and 32%, respectively, of
total oil production. The decreased gas sales price was due to an overall
deterioration in gas markets during most of the year.

Lease operating expenses of $34.5 million was $0.60 per Mcfe compared to
$0.69 per Mcfe in 1994. Depreciation, depletion and amortization increased
$10.7 million primarily due to production increases. During 1995,
depreciation, depletion and amortization on gas and oil production was
provided at an average rate of $0.55 per Mcfe compared to an average rate of
$0.52 per Mcfe in 1994.

The gross margin on trading activities was virtually unchanged from 1994 at
$943,000. Gas trading volumes increased 26% to 22.2 Bcf in 1995.

During 1995, the Company hedged 4.9 Bcf (22%) of its gas trading volumes to
lock in margins on specific transactions at a cost of $2.1 million. In
addition, the Company hedged 11.0 Bcf (23%) of gas production for a net gain
of $417,000. The hedging gain related to production is net of $1.2 million for
an expense recorded in the fourth quarter due to a lack of correlation of the
hedging instruments to the underlying commodity as of December 31, 1995. The
Company enters into the hedging arrangements to reduce its exposure to price
risks associated with commodities markets. Although hedging transactions
associated with its production minimize the Company's exposure to losses as a
result of unfavorable price changes, the transactions also limit the Company's
ability to benefit from favorable price changes. At the end of December, 1995,
the basis differential between the commodities markets and the market price of
the Company's gas widened to historic levels. Because the increase in the
commodities price was not accompanied by a similar increase in the market
price of the Company's gas, the Company recorded an expense for the difference
due to the inefficient hedge and positions that did not qualify for hedge
accounting treatment. With respect to trading activities, the Company
generally will not enter into a commitment for either a purchase or a sale
unless (i) it has established a commitment for an offsetting sale or purchase,
or (ii) it has established a hedge arrangement with a counter party that
creates the same matching position.

18
<PAGE>

General and administrative expenses of $13.4 million were 1% greater than
the previous year. The 1995 amount is net of $3.8 million of operating fee
recoveries compared to a $3.4 million recovery in 1994. General and
administrative expense in 1995 is generally a combination of the separate
companies' expenses, because the integration of the two entities did not occur
until late in the year and included costs for the Company to expand its
business in existing and new activity areas. The Company expects to eliminate
duplicative costs in 1996. Interest expense increased significantly from $0.9
million in 1994 to $4.6 million in 1995 as the Company financed a portion of
its growth with bank debt. The Company incurred a 1995 expense of $14.2
million to combine Barrett and Plains and to integrate the separate companies'
operations. The costs consist primarily of $7.4 million of investment banker
and other professional fees to evaluate and consummate the merger and
$5.6 million for employee termination and benefit costs. See "Underwriting".

During 1995, the Company recorded a $1.8 million income tax expense even
though it incurred a loss before taxes due to non-deductible merger costs.
Excluding non-deductible merger costs, the Company would have had a $600,000
tax benefit.

The Company's results of operations depend primarily on the production of
natural gas which accounted for 87% of the Company's reserves and 82% of its
production during 1995. Therefore, the Company's future results will depend on
both the volume of natural gas production and the sales price for gas. The
Company continues to explore for gas and oil to increase its production. The
lack of predictability of both production volumes and sales prices may
influence future operating results.

YEAR ENDED DECEMBER 31, 1994 AS COMPARED TO YEAR ENDED DECEMBER 31, 1993

During 1994, the Company earned net income of $11.3 million ($0.46 per
share) compared to net income of $13.7 million ($0.55 per share) in 1993. The
1994 results include a tax benefit of $2.1 million due to an increase in
financial reporting value of the Company's net operating loss carryover.
Without the tax benefit from the net operating loss carryover, the Company's
net income after taxes in 1994 would have been $9.2 million ($0.37 per share).
The 1993 results include a tax benefit of $1.5 million from the value of the
tax loss carryover and an expense of $656,000 for the cumulative effect of
adopting Statement No. 106 of the Financial Accounting Standards Board to
recognize accumulated postretirement benefit liabilities as of January 1,
1993. Net income before income taxes and the cumulative effect of the change
in accounting method was $16.4 million in 1994 compared to $21.0 million in
1993.

Revenues increased 3% from 1993 to $109.5 million, and operating expenses
increased 9% to $93.0 million. Production revenue decreased $2.1 million, and
trading revenues increased $5.2 million. These changes were offset by a
decrease of $2.2 million in lease operating expenses, an increase of $2.6
million in depreciation, depletion and amortization and an increase of $5.5
million in the cost of trading.

Production revenues decreased $2.1 million as a 5% increase in gas
production was offset by a 6% decrease in the average gas sales price and a 7%
decline in the average oil sales price. Oil production was virtually unchanged
from 1993 to 1994. During 1994, the Company produced 91.2 MMcf of gas per day
and 3.5 MBbls of oil per day. Gas production accounted for 81% of total
production on an energy equivalent basis of 41.0 Bcfe. During 1994, the
average gas sales price was $1.83 per Mcf ($1.94 in 1993) and the oil sales
price was $13.95 per barrel ($14.93 in 1993). The decreased gas and oil sales
prices were due to an overall market reduction in the commodity prices of the
products.

Lease operating expenses of $28.2 million averaged $0.69 per Mcfe compared
with $0.77 per Mcfe in 1993. Depreciation, depletion and amortization
increased $2.6 million primarily due to

19
<PAGE>

production increases. During 1994, depreciation, depletion and amortization
was $0.52 per Mcfe compared to $0.48 per Mcfe in 1993.

The gross margin on trading activities decreased to $924,000 from $1.3
million in 1993. Gas trading volumes increased 62% to 17.5 Bcf in 1994. The
reduced results were due to a reduction of margins available for gas trading
activities.

General and administrative expenses of $13.3 million were 18% greater than
the previous year. The 1994 amount is net of $3.4 million of operating fee
recoveries compared to a $3.8 million recovery in 1993. The increased general
and administrative expense was due to additional costs incurred by the Company
to expand its activities and to explore in other areas.

During 1994, the Company recorded a $5.1 million net income tax expense
compared to a $6.7 net income tax expense in 1993. The 1994 expense is net of
a $2.1 million reduction in the valuation allowance provided for the deferred
income tax benefit of the net operating loss carryover.

20
<PAGE>

BUSINESS AND PROPERTIES

OVERVIEW

The Company concentrates its activities in core areas in which it has
accumulated detailed geologic knowledge and developed significant management
expertise. The Company has developed and continues to build on its interests
in the Piceance Basin in northwestern Colorado, the Anadarko and Arkoma Basins
in Oklahoma and the Wind River Basin in Wyoming. As a result of the July 1995
merger with Plains, the Company acquired significant interests in the Hugoton
Embayment in Kansas and Oklahoma, the Permian Basin in Texas and New Mexico,
and the Powder River Basin in Wyoming. Recently, the Company expanded into the
Louisiana and Texas Gulf Coast area and the shallow waters of the Gulf of
Mexico. At December 31, 1995, these principal areas of focus represented an
aggregate of approximately 93% of the Company's estimated proved reserves.

In addition to these development drilling programs, the Company is engaged
in several exploration projects in the Wind River and Anadarko Basins and the
Gulf Coast/Gulf of Mexico area. Barrett believes these projects will enhance
its reserve base and financial position, although there can be no assurance
this will occur. The Company also is evaluating opportunities to develop
expertise and undertake exploration in selected international projects.

As of December 31, 1995, the Company owned interests in 2,057 producing
wells and operated 1,061, or 52%, of these wells. These operated wells
contributed approximately 90% of Barrett's 1995
gas and oil production. The Company also owns interests in and operates a gas
gathering system, a 27-mile pipeline and a gas processing plant in the
Piceance Basin, and three smaller gas gathering systems in Oklahoma, Wyoming
and Utah. See "--Gas Gathering".

Barrett markets all of its own gas and oil production from wells that it
operates. In addition, the Company engages in natural gas trading activities,
which involve purchasing gas from third parties and selling gas to other
parties at prices and volumes that management anticipates will result in
profits to the Company. Through these trading activities, the Company obtains
knowledge and information that enables it to more effectively market its own
production. See "Risk Factors" and "--Gas and Oil Marketing and Trading".

BUSINESS STRATEGY

Barrett's business strategy is to generate strong growth in reserves,
production, earnings and cash flow through exploration, development and
selective acquisitions of gas and oil properties in core areas of activity.
The Company implements this strategy through the following:

21
<PAGE>

SPECIALIZED GEOLOGIC EXPERTISE. Both the CEO and President of Barrett are
experienced, practicing geologists. They have established a team of geologists
and geophysicists with expertise in the Company's core areas of activity.
Prior to undertaking projects in new areas, the Company assembles specialized
geologic expertise to identify and evaluate drilling prospects.

FINANCIAL FLEXIBILITY. The Company is committed to maintaining financial
flexibility in order to pursue exploration and development activities and take
advantage of selective acquisition opportunities that may arise. The
Offerings, and the resulting reduction of debt, will enhance Barrett's
financial flexibility by further strengthening its balance sheet. See
"Capitalization".

RECENT DEVELOPMENTS

On March 6, 1996, the Company announced a 1996 capital expenditure budget
for gas and oil activities of $131 million, which is contingent upon market
conditions and other factors. Total 1996 budgeted expenditures include
approximately $24 million for the Wind River Basin, $13 million for the
Piceance Basin, $22 million for the Anadarko Basin, $18 million for the Arkoma
Basin, $14 million for the Gulf Coast/Gulf of Mexico, $1 million for
international projects, $20 million for exploration and development activities
in other areas, and $19 million for possible acquisitions, primarily in the
Company's strategic core areas. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations", "--Core Areas of Activities",
"--Rocky Mountain Region--Piceance Basin" and "--Gas Gathering".

At the April 24, 1996 Central Gulf of Mexico Outer Continental Shelf Lease
Sale, the Company joined United Meridian Corporation ("UMC") in submitting the
high bids on nine blocks in the West Cameron, East Cameron, Vermilion, South
Marsh Island and Eugene Island areas. The Company will have a 25% working
interest through completion of production facilities and a 22% working
interest thereafter in each of these nine blocks. Separately, the Company
joined with Norcen Explorer, Inc. ("Norcen"), with a 50% working interest, in
submitting the high bid for Ship Shoal Block 235, and the

22
<PAGE>

Company independently submitted the high bid for West Cameron Block 211. All
bids are subject to final approval by the Mineral Management Service ("MMS").
Two of the bids with UMC and the bid with Norcen have been approved by the
MMS, and the Company's share of the bonus payments for these leases is $0.6
million. If all the bids are approved, total bonus payments, net to the
Company, for these lease interests will be $2.3 million. In addition, to
support its Gulf Coast/Gulf of Mexico activities, the Company established an
office in Houston, Texas in January 1996. See "--Southern Region--Gulf
Coast/Gulf of Mexico".

In April 1996, the Company acquired, for $2.7 million from Zenith, all of
Zenith's Piceance Basin gas and oil interests, with an estimated 16.6 Bcf of
proved natural gas reserves. In addition, the Company acquired all the stock
of GVC in exchange for 350,000 shares of the Company's Common Stock. The sole
asset of GVC is an approximate 10% interest in the Grand Valley Gathering
System. The Company previously has owned interests in and is the operator of
both the gathering system and the gas and oil assets in which it acquired
interests as a result of these transactions. The Company has agreed to file a
registration statement covering the sale of the shares received by the GVC
shareholders in the GVC transaction. The 10% portion of these shares owned by
Mr. Buford are subject to the 120 day lock-up described under "Underwriting".
See "--Rocky Mountain Region--Piceance Basin".

Mr. C. Robert Buford, a director of the Company, owns 89% of Zenith. In
addition, at the time of the GVC transaction, Mr. Buford served as a director
of GVC and owned 10% of GVC. The other 90% of GVC was owned at that time by
Mr. Buford's three adult children. Due to these relationships, the terms of
these transactions with Zenith and GVC were negotiated on behalf of the
Company by a Special Committee of the Board of Directors of the Company,
consisting of four independent outside directors. The Company also obtained an
opinion from an investment banking firm that the terms of these transactions
were fair to the Company. See "Underwriting".

23
<PAGE>

CORE AREAS OF ACTIVITY
The Company has organized its existing gas and oil activities into three
regional core areas: the Rocky Mountain, Mid-Continent and Southern Regions.

[CORE AREAS OF ACTIVITY MAP APPEARS HERE]

The following table sets forth certain information concerning these core
areas of activity:
<TABLE>
<CAPTION>
1996
ESTIMATED PROVED CAPITAL
RESERVES AT 1995 EXPENDITURE
DECEMBER 31, 1995 PRODUCTION BUDGET
BASIN OR FIELD (BCFE) (BCFE) (IN MILLIONS)(1)
-------------- ----------------- ---------- ----------------
<S> <C> <C> <C>
Rocky Mountain Region
Wind River...................... 88.1 7.0 $ 23.6
Piceance........................ 119.1 7.4 12.6
Powder River.................... 30.0 4.8 9.2
Green River..................... 12.5 2.4 3.0
Mid-Continent Region
Hugoton Embayment............... 200.7 17.6 $ 0.9
Arkoma.......................... 27.4 4.4 17.8
Anadarko........................ 33.7 4.5 21.9
Southern Region
Permian......................... 39.1 5.3 $ 5.1
Gulf Coast/Gulf of Mexico....... 8.7 2.1 14.4
Other Gas and Oil Activities(2)... 32.0 2.4 $ 22.2
----- ---- ------
Total......................... 591.3 57.9 $130.7
===== ==== ======
</TABLE>
- --------
(1) All budgeted expenditures are for exploration and development except for
$19.5 million for acquisitions included under "Other".
(2) Includes Utah, Nevada and international projects. Also includes 1996
capital budget of $19.5 million for acquisitions.

24
<PAGE>

ROCKY MOUNTAIN REGION

WIND RIVER BASIN. In 1994, following its major natural gas discovery in the
Cave Gulch Field, the Company began a focused exploration program in the Wind
River Basin of Wyoming, particularly along the Owl Creek Thrust fault.

Cave Gulch Field. In August 1994, the Company drilled the Cave Gulch Federal
Unit #1 well and discovered a significant natural gas field in the Fort Union
and Lance Sandstones below the Owl Creek Thrust. In September 1994, the
Company acquired additional interests, thereby increasing its working interest
in the well and the 440-acre Cave Gulch Unit from 72% to 94%. The Company owns
working interests from 40% to 100% in the surrounding area and owns leasehold
interests in 15,687 gross and 7,839 net acres in the Cave Gulch area.

During 1995, the Company drilled and set production casing on eight wells in
the Cave Gulch Federal Unit Nos. 2, 3, 4, 7, 8, 9, 11 and 13. All eight wells
have been completed in various intervals from the Fort Union, Lance and/or
Meeteetse Formations. Combined daily production for the Cave Gulch Field at
year end 1995 was 52 MMcf of natural gas and 232 barrels of oil. As of
December 31, 1995, the Field had a total cumulative production of 9 Bcf of
natural gas and 52,000 barrels of oil. The Company owns a 94% working interest
in each of these eight wells.

In December 1995, the Company drilled the Cave Gulch #15, a 12,661-foot twin
to the Cave Gulch Unit #1 well, to probe for deeper Mesaverde and Cody
Sandstones of the Upper Cretaceous age. Production pipe was run to total depth
in the well. However, due to requirements of the Cave Gulch environmental
assessment, completion of testing has been delayed until the summer of 1996.
The Company owns a 90.62% working interest below the shallower Lance
Formation, which, subsequent to completion, will be reduced to 58.13%.

During 1996 the Company plans to drill a well in Cave Gulch to test the
deeper Frontier, Muddy, Dakota and Lakota Formations. Because of the multiple
formations prevalent in the Wind River Basin, Barrett can reduce the risk of
testing these deeper formations by attempting to develop the shallower Fort
Union, Lance and Meeteetse Formations in the same well.

During 1996, the Company had planned to drill up to 10 wells. However, the
Bureau of Land Management has determined that an environmental impact
statement in the greater Cave Gulch area will be required to assess future
development proposals from the Company and other operators in the area. The
Company believes that certain locations could be drilled in the Cave Gulch
area during the environmental impact statement process, and the Company will
proceed accordingly.

Effective March 1, 1996, the Company augmented its Cave Gulch position by
purchasing for $3.62 million a 5% working interest in 15 wells (12 producing,
two waiting on completion, and one shut-in) operated by a third party.

The Company's gas production is currently constrained to a production rate
of approximately 60,000 MMBtu per day due to pipeline take-away capacity in
the Cave Gulch area of operation and the Wind River Basin. Two interstate
pipelines serve the Cave Gulch area, and both have proposed expansions to
increase their take-away capacity. The Company is supporting these expansion
proposals with transportation volume commitments. Both pipeline expansions are
scheduled for completion during the first half of 1997. See "--Gas and Oil
Marketing and Trading".

Owl Creek Thrust. The Company continues to evaluate additional exploration
prospects in the Owl Creek Thrust and central Wind River Basin. The Company
has 80,100 gross and 62,222 net acres under lease outside of the Cave Gulch
area.

For the year ended December 31, 1995, the Wind River Basin represented 15%
of the Company's estimated proved reserves and 12% of the Company's total
production. In 1996, 18% of Barrett's $131 million capital expenditure budget
is planned to be spent in the Wind River Basin for development, leasehold
acquisition, seismic surveys and exploration, including participating in
drilling up to 21 wells.

25
<PAGE>

PICEANCE BASIN. The Piceance Basin of northwestern Colorado is a core
operating area for the Company and will continue to be very prominent in the
Company's capital spending plans. The Company's activities in the Piceance
Basin are conducted primarily in three fields: Parachute, Rulison and Grand
Valley. In addition, the Company has small projects in the Trailridge area and
the Story Gulch Federal Unit.

The Company's drilling activities in the Piceance Basin primarily target the
lenticular sandstones of the Williams Fork Formation of the Mesaverde Group.
These sandstone reservoirs overlie the blanket sandstones of the Iles
Formation in the basal Mesaverde. Barrett drilled its first well in the
Piceance Basin in 1984. At present, the Company owns interests in and operates
267 wells in the Piceance Basin. The Company also operates and owns an
interest in the Grand Valley Gathering System, an approximate 150-mile
pipeline gathering system with related production and compression facilities,
a 27-mile pipeline and a gas processing plant in the Piceance Basin.

The Company is currently negotiating the purchase of an additional 5%
working interest in the Piceance Basin gas and oil properties and an
additional 5% working interest in the Grand Valley Gathering System for up to
236,000 shares of Common Stock. The Company also continues to pursue the
possibility of acquiring additional interests from other owners of interests
in these assets. There is no assurance that any such acquisition transaction
will be consummated.

In February 1995, the Company received approval for 40-acre well density by
the Colorado Oil and Gas Conservation Commission with respect to 81 640-acre
sections in the Parachute, Rulison and Grand Valley Fields. The Company has
completed the drilling of two three-well test programs on 40 acres in the
Rulison and Grand Valley Fields.

For the year ended December 31, 1995, the Piceance Basin represented 20% of
the Company's estimated proved reserves and 13% of the Company's total
production. In 1996, the Company intends to spend 10% of its capital
expenditure budget in the Piceance Basin for development and exploration,
including participating in drilling up to 23 wells and six recompletions. The
Company currently is continuously operating one drilling rig in the Basin.

POWDER RIVER BASIN. The Powder River Basin in Wyoming is primarily an oil
province, with production from Cretaceous and Permian-age formations. One of
the reservoir targets in this area is the Permian Minnelusa Formation. This
Basin contributes nearly one-half of the Company's daily oil production and
further activity will concentrate on development drilling and enhanced
recovery projects utilizing 3-D seismic technology where appropriate.

The Company has initiated or is planning the use of alkaline surfactant
polymer ("ASP") technology to chemically enhance oil recovery in a number of
fields. The Company also is using 3-D seismic technology to identify
development opportunities in this area. The Company is targeting the North
Adon Road, West Rozet, Rozet Minnelusa Unit, South Rozet, Cambridge Unit, West
Moran, East Moran, Wallace, Bracken and Powell Fields.

For the year ended December 31, 1995, the Powder River Basin represented 5%
of the Company's estimated proved reserves and 8% of the Company's total
production. In 1996, Barrett intends to spend 7% of its capital expenditure
budget for development, enhanced recovery projects utilizing 3-D seismic
technology, and exploration opportunities in the Powder River Basin, including
participating in drilling up to 16 wells.

GREEN RIVER BASIN/WYOMING OVERTHRUST. The Company owns leasehold interests
within the greater Green River Basin, primarily in the Moxa Arch, Rock Springs
Uplift and Wamsutter Arch areas, and in the Wyoming Overthrust Trend. The
Company participated in one well in the Green River Basin and one well in the
Wyoming Overthrust in 1995. For the year ended December 31, 1995, the Green

26
<PAGE>

River Basin represented 2% of the Company's estimated proved reserves and 4%
of the Company's total production. In 1996, the Company intends to spend 2% of
its capital expenditure budget in drilling up to 10 wells in the Green River
Basin in 1996. See "--Gas Gathering--Latham Draw Gathering System."

UINTA BASIN. The Company purchased an interest in the Brundage Canyon Field,
located in the Uinta Basin in Duchesne County, Utah, in December 1995 for $4.6
million. The Company made additional acquisitions totaling $0.6 million in
this area during the first four months of 1996. As a result of these
acquisitions, the Company currently owns working interests ranging from 49% to
100% in 20 producing wells, a pipeline gathering and transmission system, and
24,660 gross acres, approximately 21,700 net acres, all of which are on the
Ute Indian Reservation. Since discovery, the Brundage Canyon Field has
produced 1,270 MBbls of oil and is currently producing 300 barrels of oil and
750 Mcf of gas per day, primarily from multiple sandstone reservoirs of the
lower Green River Formation at depths averaging 5,500 feet. Individual wells
in the area can have a primary recovery of over 200 MBbls of black wax crude
oil, which can command a premium price over posted prices.

The Company plans extensive work in this Field during 1996, including a 12-
well program to develop infill and field extension locations, a 40-acre pilot
waterflood project, and recompletions and workovers of existing wells to test
the viability of shallower horizons for potential future development. Deeper
gas bearing Wasatch and Mesaverde reservoirs are also prospective and will be
tested in the future.

MID-CONTINENT REGION

HUGOTON EMBAYMENT. The largest single producing area for the Company is the
Hugoton Embayment, which is one of the largest gas producing areas in the
United States, located in southwest Kansas, the Oklahoma panhandle and the
Texas panhandle. The Company produces gas from three fields in the Hugoton
Embayment: the Hugoton, the Guymon-Hugoton and Panoma Fields. For the year
ended December 31, 1995, the Hugoton Embayment represented 34% of the
Company's estimated proved reserves and 30% of the Company's total production.

Hugoton and Guymon-Hugoton Fields. In the Hugoton and Guymon-Hugoton
Fields, the Company has working interests in 357 gross wells and operates 304
of them. The Hugoton and the Guymon-Hugoton Fields produce from the Chase
Formation.

Panoma Field. Panoma is the field designation for gas produced from the
Council Grove Formation, a formation immediately beneath the Chase Formation.
The Council Grove Formation has similar reservoir rocks as the Chase
Formation. However, the productive limits are not as extensive. Presently, the
Company has a working interest in 54 gross Panoma wells and operates 50 of
those wells.

Gas Sales Agreement. The majority of the Company's gas production from the
Hugoton and Panoma Fields is sold under a long-term contract (life-of-field)
to KN Gas Supply Services, Inc. ("KNGSS"). Among other things, this contract
provides for annual re-determination of the price the Company is to receive.
In 1996, the price is calculated each month by using the average price of a
basket of four Mid-Continent indices less a variable amount not to exceed
$0.20 per MMBtu.

Net Profit Agreements. The Company produces natural gas in the Guymon-
Hugoton Field under a Dry Gas Agreement with Chevron U.S.A. Inc. ("Chevron").
This agreement allows the Company to expend funds for the operation of the
properties (including the cost of drilling wells) and to recoup the funds so
expended from current production income. Eighty percent of net operating
income generated by the natural gas production (after operational costs are
recouped, including the cost of drilling and equipping wells) is then paid to
Chevron. At December 31, 1995, the Company had interests in 56 wells subject
to the terms of this agreement.

27
<PAGE>

The Company also produces natural gas in the Hugoton Field under various
agreements similar to the Chevron agreement, except that net operating income
is allocated 15% to the Company and 85% to other parties. At December 31,
1995, the Company had interests in 48 Chase Formation wells and eight Council
Grove Formation wells under these agreements.

The third party interests under all the net profit agreements are treated as
lease operating expenses by the Company. Additional or replacement wells
drilled on the properties, including wells drilled under the infill drilling
program in the Hugoton Field, would be operated under the same terms and
conditions as existing wells, and would result in the commencement of the
80/20 or 85/15 net operating income allocation after the cost of the new wells
is recovered.

Hugoton Gas Trust Agreement. Natural gas rights established in 1955 to
approximately 50,000 partially developed acres in Finney and Kearny Counties,
Kansas were transferred to Plains by K N Energy, Inc. ("K N") on October 1,
1984 subject to a natural gas payment of $0.06 per Mcf for natural gas
produced from the acreage. Quarterly payments are made by Plains to the
Hugoton Gas Trust, a publicly held trust created in 1955. Payments terminate
when the estimated gross recoverable natural gas reserves decline to 50 Bcf or
less. As of December 31, 1995, the gross proved natural gas reserves
attributable to the leases burdened by this agreement were estimated to be
176.4 Bcf. The natural gas payments are treated as lease operating expenses by
the Company. At December 31, 1995, the Company had working interests in 196
wells that were subject to such payments. Any additional natural gas wells
drilled on this acreage also will be subject to the $0.06 payment per Mcf of
natural gas produced.

Barrett intends to spend $0.9 million of its 1996 capital expenditure budget
on the Hugoton Embayment for development drilling and increased deliverability
through compression, including participating in drilling six new wells.

ARKOMA BASIN. Due to the complex structure and overlapping nature of the
rock formations, the Company has been using and will continue to use 3-D
seismic surveys extensively in the Arkoma Basin in Oklahoma. In 1995, Barrett
participated in the drilling of 16 wells in the five main focus areas of the
Arkoma Basin in Oklahoma: Red Oak Field, Limestone Ridge area, White Ranch
Field, Wilburton Field and the Choctaw Thrust 3-D area. Additionally, the
Company entered two new areas in 1995 with acquisitions of non-producing
leaseholds and of producing properties in the Choctaw Thrust 3-D area
extension and the South Panola 3-D area. For the year ended December 31, 1995,
the Arkoma Basin represented 5% of the Company's estimated proved reserves and
8% of the Company's total production.

Development and exploration drilling are the Company's priorities for Arkoma
in 1996. Barrett intends to spend 14% of its 1996 capital expenditure budget
in the Arkoma Basin, including participating in drilling up to 19 wells,
together with land and seismic surveys.

ANADARKO BASIN. Since 1993, the Anadarko Basin in southwestern Oklahoma has
been one of the Company's most active drilling areas. In 1995, the Company
participated in the drilling of 32 wells with working interests ranging from
1.5% to 100% after payout. While staying active in the Strong City Red Fork
Play, the Company has become increasingly active in the Mountain Front Granite
Wash play and the Sentinel Field area. For the year ended December 31, 1995,
the Anadarko Basin represented 6% of the Company's estimated proved reserves
and 8% of the Company's total production.

Barrett plans to spend 17% of its 1996 capital expenditure budget in the
Anadarko Basin for development and exploration drilling, including
participating in drilling up to 74 wells, together with leasehold acquisitions
and seismic surveys as currently planned.

28
<PAGE>

SOUTHERN REGION

PERMIAN BASIN. The Permian Basin in west Texas and southeast New Mexico is
primarily an oil province. The Company's activities in 1995 in the Permian
Basin included the final phases of exploratory drilling and a continuing
effort in development drilling. As of December 31, 1995, the Company had an
interest in 300 gross wells (225 net wells) located in the Permian Basin,
which produce approximately 1,100 net barrels of oil per day. The primary
areas of production for the Company are in the South Cowden Field, Spraberry
Trend area, Novice Field and North Knox City Field in Ector, Midland, Martin,
Coleman and Knox Counties, Texas, respectively, and the Teague Field in Lea
County, New Mexico. In 1995, Barrett participated in drilling 17 wells in the
Permian Basin. For the year ended December 31, 1995, the Permian Basin
represented 7% of the Company's estimated proved reserves and 9% of the
Company's total production.

The Company's potential plans for the Permian Basin include waterflood,
enhanced oil recovery projects and development drilling opportunities. Barrett
intends to spend 4% of its 1996 capital expenditure budget in the Permian
Basin, including participating in drilling up to 21 wells.

GULF COAST/GULF OF MEXICO. The Company recently has established a new core
area in the Louisiana and Texas Gulf Coast area and the shallow waters of the
Gulf of Mexico. The Company believes that this area has significant reserve
potential and is well suited to its exploration emphasis and geologic
expertise. The availability of extensive 3-D seismic coverage over most of the
Outer Continental Shelf, the frequency of lease sales and the turnover of
expiring leases also make the Gulf of Mexico an attractive area. In addition,
wells in the Gulf of Mexico typically produce at higher rates, which increases
cash flow, but have relatively shorter productive lives. This production
profile will complement the Company's long-lived, relatively lower
deliverability wells in the Rocky Mountain and Mid-Continent regions. Finally,
Gulf Coast/Gulf of Mexico natural gas prices historically have been higher
than prices in other regions in which the Company operates. For the year ended
December 31, 1995, the Gulf Coast/Gulf of Mexico represented 1% of the
Company's estimated proved reserves and 4% percent of the Company's total
production.

The Company's strategy in the Gulf Coast/Gulf of Mexico is to participate
with established operators to identify and drill high quality prospects. At
the April 24, 1996 Central Gulf of Mexico Outer Continental Shelf Lease Sale,
the Company joined UMC in submitting the high bids on nine blocks in the West
Cameron, East Cameron, Vermilion, South Marsh Island and Eugene Island areas.
The Company will have a 25% working interest through completion of production
facilities and a 22% working interest thereafter in each of these nine blocks.
Separately, the Company joined with Norcen, with a 50% working interest, in
submitting the high bid for Ship Shoal Block 235, and the Company
independently submitted the high bid for West Cameron Block 211. All bids are
subject to final approval by the MMS. Two of the bids with UMC and the bid
with Norcen have been approved by the MMS and the Company's share of the bonus
payments for these leases is $0.6 million. If all the bids are approved, total
bonus payments, net to the Company, for these lease interests will be $2.3
million. The Company anticipates participating in drilling one or more of the
blocks beginning in the second quarter of 1997.

Barrett intends to spend 11% of its 1996 capital expenditure budget in the
Gulf Coast/Gulf of Mexico area for development and exploration opportunities,
including participating in drilling up to 10 wells, together with land and
seismic surveys.

GAS GATHERING

The Company currently owns interests in and operates gas gathering systems
through its wholly owned subsidiary, Bargath Inc. ("Bargath"). These systems
connect to producing wells in which the Company owns interests. The Company
also owns various gathering assets in the Hugoton Field through another wholly
owned subsidiary, Plains Petroleum Gathering Company. The Company believes
that these assets enable the Company to better control the costs and marketing
of its production.

29
<PAGE>

GRAND VALLEY GATHERING SYSTEM. In 1985, Bargath designed and constructed a
gathering system in the Grand Valley Field to transport natural gas from
certain of the Company's wells to Questar Pipeline Corporation's interstate
pipeline. This gathering system subsequently has been expanded to
approximately 150 miles, and a 16-inch, 27-mile pipeline has been added. As of
December 31, 1995, the Grand Valley Gathering System was connected to 210
producing gas wells in the Piceance Basin. The system now has the flexibility
to deliver gas to three interstate pipelines, owned by Questar Pipeline
Company, Northwest Pipeline Corporation and Colorado Interstate Gas Company,
and one intrastate pipeline owned by Public Service Company of Colorado and K
N.

In December 1994, the Company completed the construction of a 90,000 MMBtu
per day gas processing plant to extract liquid hydrocarbons from the gas
stream. Depending on the take-away capacity from time to time of these four
pipeline systems, the gathering system has the capability of delivering
approximately 110,000 MMBtu of gas per day. The Company, which is the operator
for these systems in the Piceance Basin, increased its interest in the systems
to 39.5% when it acquired an additional 10% interest in April 1996. See
"Business and Properties--Recent Developments" and "--Rocky Mountain Region--
Piceance Basin".

BLUE MOUNTAIN GATHERING SYSTEM The Company acquired the Blue Mountain
Gathering System in January 1995 to complement drilling activity Barrett was
conducting in Latimer County, Oklahoma. The 5 1/2-mile system moves Barrett's
and third party gas into NorAm Gas Transmission System for flow to Midwest and
East Coast markets.

LATHAM DRAW GATHERING SYSTEM. During fiscal 1992, Bargath designed and
constructed a 30-mile gas gathering system in southwestern Wyoming to connect
seven wells drilled and completed by the Company on the Red Desert-Washakie
prospect. On May 23, 1996, the Company entered into an agreement to exchange
Bargath's 48% interest in the Latham Draw Gathering System and related gas and
oil properties for the receipt of $0.8 million and gas and oil properties in
the Green River Basin that are more closely aligned to the Company's core
needs. Closing is anticipated to occur in late June 1996 subject to
satisfaction of certain conditions.

GAS AND OIL MARKETING AND TRADING

Barrett markets all of its own gas and oil production from wells that it
operates. In addition, the Company engages in natural gas trading activities,
which involve purchasing gas from third parties and selling gas to other
parties at prices and volumes that management anticipates will result in
profits to the Company. Through these trading activities, the Company obtains
knowledge and information that enables it to more effectively market its own
production. See "Risk Factors--Volatility of Prices and Availability of
Markets" and "--Other Industry and Business Risks".

NATURAL GAS. The Company has entered into a number of gas sales agreements
on behalf of itself and its industry partners with respect to the sale of gas
from its properties in each of the Company's basins. These contracts vary with
respect to their specific provisions, including price, quantity, and length of
contract. As of May 1, 1996, less than 5% of the Company's production was
committed to gas sales contracts that had fixed prices. However, with the
exception of one contract covering approximately 2,000 MMBtu per day of gas
production from the Piceance Basin through 2011, none of the contracts
provides for fixed prices beyond May 1997. The Company believes that it has
sufficient production from its properties to meet the Company's delivery
obligations under its existing gas sales contracts.

The Company has entered into a series of firm transportation agreements with
various Rocky Mountain pipeline companies. These transportation arrangements
have terms ranging from one year to ten years. These various transportation
agreements provide the Company the opportunity to

30
<PAGE>

transport its Rocky Mountain gas production from a current low priced
environment. These agreements in total provide transportation of approximately
35% of the Company's current daily Rocky Mountain production.

In addition, the Company has entered into transportation arrangements to
support future expansions of Rocky Mountain interstate pipelines. These
expansions are designed to transport Rocky Mountain gas production to the Mid-
Continent region for sale. The Company has committed to 35,000 MMBtu per day
of pipeline capacity for terms ranging from five years to 10 years. These
expansions are subject to Federal Energy Regulatory Commission approval and
are scheduled to be operational by the second quarter of 1997.

For 1996, the Company renegotiated the pricing provisions with KNGSS with
respect to a majority of its Hugoton and Panoma Fields' gas production. The
price is calculated on a monthly basis by using the average price of a basket
of four Mid-Continent indices less a variable amount not to exceed $0.20 per
MMBtu.

During the year ended December 31, 1995, there was one gas purchaser, KNGSS,
that accounted for approximately 18% of the Company's total revenues. The
Company believes it would be able to locate alternate customers in the event
of the loss of this customer.

The Company has established a Risk Management Committee to manage the
Company's hedging activities with respect to both production and trading. The
Risk Management Committee consists of the Chief Executive Officer, the
President and Chief Operating Officer, the Chief Financial Officer, and the
Executive Vice President-Operations. With respect to production hedge
transactions, it is the policy of the Company that the Risk Management
Committee review and approve all such transactions and that all such
transactions must be fully hedged with no open positions.

As a result of its gas trading activities, the Company may from time to time
have gas purchase or sales commitments without corresponding contracts to
offset these commitments, which could result in losses to the Company. The
Company currently attempts to control and manage its exposure to these risks
by monitoring and hedging its trading positions as it deems appropriate and by
having the Company's Risk Management Committee review significant trades or
positions before they are committed to by trading personnel. All fixed price
trading activities are hedged to lock in margins.

As of May 1, 1996, the Company had entered into financial hedge transactions
to hedge 42,000 MMBtu per day of gas production from May 1, 1996 through
October 31, 1996, representing approximately 26% of the Company's current net
daily gas production.

During the year ended December 31, 1995, revenues from trading activities,
which includes the cost of gas purchased or sold for trading purposes, was
$28.6 million, representing 22% of the Company's consolidated revenues. During
the quarter ended March 31, 1996, revenues from trading activities was $12
million, representing 28% of the Company's consolidated revenues.

OIL AND CONDENSATE. Oil, including condensate production, is generally sold
from the leases at posted field prices, plus negotiated bonuses. Marketing
arrangements are made locally with various petroleum companies. The Company
sells its oil production to numerous customers. No customer's total 1995 oil
purchases represented more than 10% of total Company revenues. Oil revenues
totaled $26.8 million for 1995 and represented 21% of the Company's total
revenues for the year.

In addition, the Company has entered into a hedge transaction to hedge 1,000
barrels of daily crude oil production from May 1, 1996 through June 30, 1996
representing approximately 22% of the Company's current daily net oil
production.

31
<PAGE>

PRODUCTION

The table below sets forth information with respect to the Company's net
interests in producing gas and oil properties for each of its last three years
and for the three months ended March 31, 1996 and 1995, respectively:

<TABLE>
<CAPTION>
GAS AND OIL PRODUCTION
-------------------------------------
THREE MONTHS
ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
----------------------- -------------
1993 1994 1995 1995 1996
------- ------- ------- ------ ------
<S> <C> <C> <C> <C> <C>
Quantities Produced and Sold
Gas (Bcf).............................. 31.7 33.3 47.7 11.7 13.5
Oil and Condensate (MMBbls)............ 1.3 1.3 1.7 0.4 0.4
Average Sales Price
Gas ($/Mcf)............................ $ 1.94 $ 1.83 $ 1.47 $ 1.57 $ 1.67
Oil and Condensate ($/Bbls)............ 14.93 13.95 15.76 15.55 16.51
Average Production Costs ($/Mcfe)........ $ 0.77 $ 0.69 $ 0.60 $ 0.63 $ 0.68
</TABLE>

PRODUCTIVE WELLS AND DEVELOPED ACREAGE

The productive wells in which the Company owned a working interest as of
December 31, 1995 are described in the following table:

<TABLE>
<CAPTION>
PRODUCTIVE WELLS (1)
-------------------------
GAS WELLS OIL WELLS DEVELOPED ACREAGE
------------ ------------ -----------------
BASIN OR FIELD GROSS NET GROSS NET GROSS NET
-------------- ----- ------ ----- ------ -----------------
<S> <C> <C> <C> <C> <C> <C>
Rocky Mountain Region
Wind River........................ 9 8.46 0 0.00 440 414
Piceance.......................... 289 99.93 0 0.00 35,200 10,600
Powder River...................... 16 2.30 288 67.60 42,654 25,521
Green River....................... 45 21.43 3 1.80 19,998 9,396
Mid-Continent Region
Hugoton Embayment................. 411 346.80 0 0.00 118,238 114,100
Arkoma............................ 135 24.81 0 0.00 41,181 11,755
Anadarko.......................... 180 66.34 13 12.60 40,725 14,571
Southern Region
Permian........................... 13 9.60 287 215.73 25,922 20,407
Gulf Coast/Gulf of Mexico......... 12 2.90 10 0.60 2,934 420
Other(2)............................ 93 58.30 253 33.94 45,403 30,741
----- ------ --- ------ -------- --------
Total............................. 1,203 640.87 854 332.27 372,695 237,925
===== ====== === ====== ======== ========
</TABLE>
- --------
(1) Each well completed to more than one producing zone is counted as a single
well. The Company has royalty interests in certain wells that are not
included in this table.
(2) Includes Uinta (Utah) and Paradox (Utah) Basins and Eagle Springs (Nevada)
Field.

32
<PAGE>

DRILLING ACTIVITY

The following table summarizes the Company's gas and oil drilling
activities, all of which were located in the continental United States, during
the last three years:

<TABLE>
<CAPTION>
WELLS DRILLED
-----------------------------------
YEAR ENDED DECEMBER 31,
-----------------------------------
1993 1994 1995
----------- ----------- -----------
GROSS NET GROSS NET GROSS NET
----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Exploratory
Gas....................................... 0 0.00 1 0.50 0 0.00
Oil....................................... 1 0.10 5 .58 1 0.33
Non-productive............................ 12 4.55 8 1.84 8 2.65
--- ----- --- ----- --- -----
Total................................... 13 4.65 14 2.92 9 2.98
=== ===== === ===== === =====
Development
Gas....................................... 70 24.29 100 36.51 88 39.03
Oil....................................... 13 10.40 19 12.62 22 11.68
Non-productive............................ 9 1.35 18 7.65 10 3.51
--- ----- --- ----- --- -----
Total................................... 92 36.04 137 56.78 120 54.22
=== ===== === ===== === =====
</TABLE>

In addition, the Company was participating in 10 gross (2.97 net) wells
which were in the process of being drilled at December 31, 1995.

RESERVES

The table below sets forth the Company's estimated quantities of proved
reserves, all of which were located in the continental U.S., and the present
value of estimated future net revenues from these reserves on a non-escalated
basis, discounted at 10% per year, as of the end of each of the last three
years. These estimates were prepared by the Company, with certain portions
having been reviewed by Ryder Scott Company, an independent reservoir
engineer, and the other portions having been reviewed by Netherland, Sewell &
Associates, Inc., an independent reservoir engineer. The total proved net
reserves estimated by the Company were within 10% of those reviewed and
estimated by the engineers; however, on a well by well basis, differences of
greater than 10% may exist. See "Risk Factors--Engineers' Estimates of
Reserves and Future Net Revenues".

<TABLE>
<CAPTION>
AS OF DECEMBER 31,
-----------------------------------------------
1993 1994 1995
--------------- --------------- ---------------
(DOLLARS IN THOUSANDS, EXCEPT SALES PRICE DATA)
<S> <C> <C> <C>
Estimated Proved Reserves:
Gas (Bcf)................... 364.8 458.8 513.5
Oil (MMBbls)................ 6.9 11.4 13.0
Total (Bcfe).............. 406.5 527.5 591.3
Gas Price as of December 31
($/Mcf)...................... $ 1.95 $ 1.67 $ 1.77
Oil Price as of December 31
($/Bbl)...................... 11.05 14.43 17.35
Present Value of Estimated
Future Net Revenues before
income taxes discounted at
10%.......................... $ 277,571 $ 322,689 $ 432,603
</TABLE>

In accordance with applicable requirements of the Securities and Exchange
Commission (the "Commission"), estimates of the Company's proved reserves and
future net revenues are made using sales prices estimated to be in effect as
of the date of such reserve estimates and are held constant throughout the
life of the properties (except to the extent a contract specifically provides
for escalation). Estimated quantities of proved reserves and future net
revenues therefrom are affected by gas and oil

33
<PAGE>

prices, which have fluctuated widely in recent years. There are numerous
uncertainties inherent in estimating natural gas and oil reserves and their
estimated values, including many factors beyond the control of the producer.
The reserve data set forth in this Prospectus represents only estimates.
Reservoir engineering is a subjective process of estimating underground
accumulations of natural gas and oil that cannot be measured in an exact
manner. The accuracy of any reserve estimate is a function of the quality of
available data and of engineering and geological interpretation and judgment.
As a result, estimates of different engineers, including those used by the
Company, may vary. In addition, estimates of reserves are subject to revision
based upon actual production, results of future development and exploration
activities, prevailing gas and oil prices, operating costs and other factors,
which revisions may be material. Accordingly, reserve estimates are often
different from the quantities of natural gas and oil that are ultimately
recovered and are highly dependent upon the accuracy of the assumptions upon
which they are based.

In general, the volume of production from gas and oil properties owned by the
Company declines as reserves are depleted. Except to the extent the Company
acquires additional properties containing proved reserves or conducts
successful exploration and development activities, or both, the proved reserves
of the Company will decline as reserves are produced. Volumes generated from
future activities of the Company are therefore highly dependent upon the level
of success in acquiring or finding additional reserves and the costs incurred
in doing so.

Reference should be made to "Supplemental Gas and Oil Information" on page F-
22 following the Financial Statements included in this Prospectus for
additional information pertaining to the Company's proved gas and oil reserves
as of the end of each of the last three fiscal years. During the past year, the
only report concerning the Company's estimated proved reserves that was filed
with a U.S. federal agency other than the Commission was filed prior to the
Company's merger with Plains, by Barrett and Plains, respectively. This report
was the Annual Survey of Domestic Oil and Gas Reserves and was filed with the
Energy Information Administration (EIA) as required by law. Only minor
differences of less than 5% in reserve estimates, which were due to small
variances in actual production versus year end estimates, have occurred in
certain classifications reported in this Prospectus as compared to those in the
EIA report.

UNDEVELOPED ACREAGE

The gross and net acres of undeveloped gas and oil leases held by the Company
as of December 31, 1995 are summarized in the following table. "Undeveloped
Acreage" includes leasehold interests that already may have been classified as
containing proved undeveloped reserves.

<TABLE>
<CAPTION>
UNDEVELOPED
ACREAGE(1)
---------------
LOCATION GROSS NET
-------- ------- -------
<S> <C> <C>
Arkansas (Arkoma Basin)........................................ 360 360
Colorado (Piceance Basin)...................................... 78,737 23,815
Louisiana (Gulf Coast)......................................... 5,803 1,516
Montana (Williston Basin)...................................... 15,950 8,255
New Mexico (Permian Basin)..................................... 240 240
North Dakota (Williston Basin)................................. 12,721 2,684
Oklahoma (Anadarko and Arkoma Basins).......................... 39,948 20,203
Texas (Permian Basin and Gulf Coast)........................... 22,937 4,493
Utah (Uinta Basin)............................................. 10,823 9,703
Wyoming (Wind River, Green River and Powder River Basins)...... 221,238 119,723
Offshore (Gulf of Mexico)...................................... 12,500 2,713
------- -------
Total........................................................ 421,257 193,705
======= =======
</TABLE>

34
<PAGE>

- --------
(1) Undeveloped acreage is lease acreage on which wells have not been drilled
or completed to a point that would permit the production of commercial
quantities of gas and oil regardless of whether such acreage contains
proved reserves. Of the aggregate of 421,257 gross and 193,705 net
undeveloped acres, 68,700 gross and 29,055 net acres are held by
production from other leasehold acreage.

Substantially all the leases summarized in the preceding table will expire
at the end of their respective primary terms unless the existing leases are
renewed or production has been obtained from the acreage subject to the lease
prior to that date, in which event the lease will remain in effect until the
cessation of production. The following table sets forth the gross and net
acres subject to leases summarized in the preceding table that will expire
during the periods indicated:

<TABLE>
<CAPTION>
ACRES EXPIRING
---------------
GROSS NET
------- -------
<S> <C> <C>
Twelve Months Ending:
December 31, 1996............................................. 82,041 23,555
December 31, 1997............................................. 72,902 32,016
December 31, 1998............................................. 45,551 25,636
December 31, 1999 and later................................... 220,763 112,496
</TABLE>

OVERRIDING ROYALTY INTERESTS

The Company owns overriding royalty interests covering in excess of 52,394
gross acres. The majority of these overriding royalty interests are within a
range of approximately 0.25 to 2.5%.

GOVERNMENT REGULATION OF THE OIL AND GAS INDUSTRY

GENERAL. The Company's exploration, production and marketing operations are
regulated extensively at the federal, state and local levels. Gas and oil
exploration, development and production activities are subject to various laws
and regulations governing a wide variety of matters. For example, hydrocarbon-
producing states have statutes or regulations addressing conservation
practices and the protection of correlative rights, and such regulations may
affect Barrett's operations and limit the quantity of hydrocarbons Barrett may
produce and sell. Other regulated matters include marketing, pricing,
transportation, and valuation of royalty payments.

At the U.S. federal level, the Federal Energy Regulatory Commission ("FERC")
regulates interstate transportation of natural gas under the Natural Gas Act
and regulates the maximum selling prices of certain categories of gas sold in
"first sales" in interstate and intrastate commerce under the Natural Gas
Policy Act ("NGPA"). Effective January 1, 1993, the Natural Gas Wellhead
Decontrol Act deregulated natural gas prices for all "first sales" of natural
gas, which includes sales by Barrett of its own production. As a result, all
sales of the Company's natural gas produced in the U.S. may be sold at market
prices, unless otherwise committed by contract. See "Business and Properties--
Gas and Oil Marketing and Trading".

The Company's gas sales are affected by regulation of intrastate and
interstate gas transportation. In an attempt to promote competition, the FERC
has issued a series of orders which have altered significantly the marketing
and transportation of natural gas. The effect of these orders has been to
enable the Company to market its natural gas production to purchasers other
than the interstate pipelines located in the vicinity of its producing
properties. The Company believes that these changes have generally improved
the Company's access to transportation and have enhanced the marketability of
its natural gas production. To date, Barrett has not experienced any material
adverse effect on gas marketing as a result of these FERC orders; however, the
Company cannot predict what new

35
<PAGE>

regulations may be adopted by the FERC and other regulatory authorities, or
what effect subsequent regulations may have on its future gas marketing.

The Company also is subject to laws and regulations concerning occupational
safety and health. It is not anticipated that the Company will be required in
the near future to expend amounts that are material in the aggregate to the
Company's overall operations by reason of occupational safety and health laws
and regulations, but inasmuch as such laws and regulations are frequently
changed, the Company is unable to predict the ultimate cost of compliance.

ENVIRONMENTAL MATTERS. Barrett, as an owner or lessee and operator of gas
and oil properties, is subject to various federal, state and local laws and
regulations relating to discharge of materials into, and protection of, the
environment. These laws and regulations may, among other things, impose
liability on the lessee under a gas and oil lease for the cost of pollution
clean-up resulting from operations, subject the lessee to liability for
pollution damages, require suspension or cessation of operations in affected
areas and impose restrictions on the injection of liquid into subsurface
aquifers that may contaminate groundwater.

Barrett has made and will continue to make expenditures in its efforts to
comply with these requirements, which it believes are necessary business costs
in the oil and gas industry.The Company believes it is in substantial
compliance with applicable environmental laws and requirements and to date
such compliance has not had a material adverse effect on the earnings or
competitive position of the Company, although there can be no assurance that
significant costs for compliance will not be incurred in the future. See "Risk
Factors--Government Regulation and Environmental Risks".

TITLE TO PROPERTIES

Title to properties is subject to royalty, overriding royalty, carried, net
profits, working and other similar interests and contractual arrangements
customary in the oil and gas industry, to liens for current taxes not yet due
and to other encumbrances. As is customary in the industry in the case of
undeveloped properties, little investigation of record title is made at the
time of acquisition (other than a preliminary review of local records).
Drilling title opinions are always prepared before commencement of drilling
operations.

EMPLOYEES AND OFFICES

Barrett currently has 135 full time employees, including eight officers (two
of whom are geologists and one of whom is a petroleum engineer), nine
geologists, five geophysicists, nine engineers, one environmental manager,
four landmen, four district managers, one operations superintendent, and
administrative, clerical, accounting and field operations personnel, none of
whom is represented by organized labor unions.

The Company is headquartered in Denver, Colorado with additional exploration
offices in Tulsa, Oklahoma and Houston, Texas. Barrett also has production
offices in Lakin, Kansas, Midland, Texas, Parachute, Colorado and Gillette,
Wyoming.

36
<PAGE>

MANAGEMENT

The directors and executive officers of the Company, their respective
positions and ages, and the year in which each director was first elected, are
set forth in the following table. Additional information concerning each of
these individuals follows the table:

<TABLE>
<CAPTION>
DIRECTOR
NAME AGE POSITION WITH THE COMPANY SINCE
---- --- ------------------------- --------
<C> <C> <S> <C>
William J. Barrett (1)(2)(3).... 67 Chief Executive Officer and 1983
Chairman Of The Board Of
Directors
C. Robert Buford (4)(5)......... 62 Director 1983
Derrill Cody (4)(5)............. 57 Director 1995
James M. Fitzgibbons (4)(5)(6).. 61 Director 1987
Hennie L.J.M. Gieskes (4)(5) 57 Director 1985
William W. Grant, III (4)....... 63 Director 1995
J. Frank Keller (1)............. 52 Chief Financial Officer, 1983
Executive Vice President,
Secretary, and a Director
Paul M. Rady.................... 42 President, Chief Operating 1994
Officer, and a Director
A. Ralph Reed................... 58 Executive Vice President-- 1990
Operations and a Director
James T. Rodgers (4)(5)......... 61 Director 1993
Philippe S.E. Schreiber (4)(5).. 55 Director 1985
Harry S. Welch (5).............. 72 Director 1995
Joseph P. Barrett (2)........... 42 Vice President--Land --
Robert W. Howard................ 41 Senior Vice President--Finance --
and Treasurer
Eugene A. Lang, Jr. ............ 42 Senior Vice President--General --
Counsel
Donald H. Stevens............... 43 Vice President--Corporate --
Relations and Capital Markets
</TABLE>
- --------
(1) Mr. Barrett and Mr. Keller are brothers-in-law.
(2) Joseph P. Barrett is the son of William J. Barrett.
(3) Mr. Barrett's retirement plans include remaining as Chairman of the Board
until the Company's 1999 Annual Meeting of Stockholders and remaining as
Chief Executive Officer until the Company's 1997 Annual Meeting of
Stockholders.
(4) Member of the Audit Committee of the Board of Directors.
(5) Member of the Compensation Committee of the Board of Directors.
(6) Mr. Fitzgibbons served as a director of the Company from July 1987 until
October 1992. He was reelected to the Board of Directors in January 1994.

WILLIAM J. BARRETT has been Chief Executive Officer since December 1983 and
Chairman of the Board of Directors of the Company since March 1994. Mr.
Barrett was President of the Company from December 1983 through September
1994. Mr. Barrett has been the Chairman of the Board, Chief Executive Officer,
and a director of Plains since it became a wholly owned subsidiary of the
Company as the result of a merger in July 1995. Mr. Barrett has also been a
director of Barrett Fuels since its formation in September 1990. From January
1979 to February 1982, Mr. Barrett was an independent gas and oil operator in
the western United States in association with Aeon Energy, a partnership
composed of four sole proprietorships. From 1971 to 1978, Mr. Barrett served
as Vice President--Exploration and a director of Rainbow Resources, Inc., a
publicly held independent gas and oil exploration company that merged with a
subsidiary of the Williams Companies in 1978. Mr. Barrett served as President,
Exploration Manager and Director for B&C Exploration from 1969 until 1971 and
was a chief geologist for Wolf Exploration Company, now known as Inexco Oil
Co., from 1967 to 1969. He was an exploration geologist with Pan-American
Petroleum Corporation from 1963 to 1966 and

37
<PAGE>

worked as an exploration geologist, a petroleum geologist and a stratigrapher
for El Paso Natural Gas Co. at various times from 1958 to 1963. Mr. Barrett
received a B.S. Degree in Geology and an M.S. Degree in Geology from Kansas
State University in 1956 and 1957, respectively. Mr. Barrett's retirement
plans include remaining as Chairman of the Board until the Company's 1999
Annual Meeting of Stockholders and remaining as Chief Executive Officer until
the Company's 1997 Annual Meeting of Stockholders.

C. ROBERT BUFORD has been a director of the Company since December 1983 and
served as Chairman of the Board of Directors from December 1983 through March
1994. Mr. Buford has been President, Chairman of the Board and controlling
shareholder of Zenith, Wichita, Kansas, since February 1966. Zenith is engaged
in the gas and oil business and owns approximately 3% of the Company's Common
Stock. Since 1993, Mr. Buford has served as a director of Encore Energy, Inc.,
a wholly owned subsidiary of Zenith engaged in the marketing of natural gas.
Mr. Buford is also a member of the Board Of Directors of First Bancorp of
Wichita, Kansas, a bank holding company, and Lonestar Steakhouse & Saloon,
Inc., a restaurant company headquartered in Wichita, Kansas. He received a
B.A. Degree in Business Administration from Oklahoma State University in 1955.

DERRILL CODY has been a director of the Company since July 1995. Mr. Cody
was a director of Plains from May 1990 through July 1995. Since January 1990,
Mr. Cody has been an attorney in private practice in Oklahoma City, Oklahoma.
From 1986 to 1990, he was Executive Vice President of Texas Eastern
Corporation, and from 1987 to 1990 he was the Chief Executive Officer of Texas
Eastern Pipeline Company. He has been a director of the General partner of
TEPPCO Partners, L.P. since January 1990. Mr. Cody received a B.A. Degree in
History from East Central State College in 1960 and an L.L.B. from the
University of Oklahoma in 1964.

JAMES M. FITZGIBBONS has been a director of the Company since January 1994,
and previously served as a director of the Company from July 1987 until
October 1992. Since October 1990, Mr. Fitzgibbons has been Chairman and Chief
Executive Officer of Fieldcrest Cannon, Inc., a manufacturer of home
furnishing textiles. From January 1986 until October 1990, Mr. Fitzgibbons was
President of Amoskeag Company in Boston, Massachusetts. Prior to 1986, he was
President of Howes Leather Company, a producer of leather. Mr. Fitzgibbons is
also member of the Board Of Directors of Lumber Insurance Company, American
Textile Manufacturers Institute and a Trustee of Laurel Funds, a series of
mutual funds. Mr. Fitzgibbons received an A.B. Degree from Harvard College in
1956.

HENNIE L.J.M. GIESKES has been a director of the Company since November
1985. Mr. Gieskes is the Managing Director of Spaarne Compagnie N.V., a
Netherlands company engaged in the investment business. From before 1976 until
December 1990, Mr. Gieskes was a Managing Director of Vitol Beheer B.V., a
Netherlands trading company engaged primarily in energy-related commodities.
Mr. Gieskes received a law degree from the University of Amsterdam, The
Netherlands, in 1968.

WILLIAM W. GRANT, III has been a director of the Company since July 1995.
Mr. Grant was a director of Plains from May 1987 through July 1995. He has
been an advisory director of Colorado National Bankshares, Inc. and Colorado
National Bank since 1993. He was a director of Colorado National Bankshares,
Inc. from 1982 to 1993 and the Chairman of the Board of Colorado National Bank
from 1986 to 1993. He served as the Chairman of the Board of Colorado Capital
Advisors from 1989 through 1994. Mr. Grant received a B.A. Degree in English
from Yale University in 1954 and attended the Harvard University Graduate
School of Business' Advanced Management Program from 1970 to 1971.

J. FRANK KELLER has been Chief Financial Officer since July 1995 and an
Executive Vice President, the Secretary and a director of the Company since
December 1983. Mr. Keller has been the Chief Financial Officer, an Executive
Vice President, the Secretary, and a director of Plains since July 1995. He
also has been the President and a director of Barrett Fuels Corporation since
its formation in

38
<PAGE>

September 1990. Mr. Keller was an Executive Vice President of the Company from
December 1983 through September 1995. Mr. Keller was the President and a co-
founder of Myriam Corp., an architectural design and real estate development
firm beginning in 1976, until it was reorganized as Barrett Energy in February
1982. Mr. Keller graduated from Kansas State University in 1967 with a B.S.
Degree and received an M.B.A. Degree from Colorado State University in 1992.

PAUL M. RADY has been President, Chief Operating Officer, and a director of
the Company since September 1994. Prior to that time Mr. Rady served as
Executive Vice President--Exploration of the Company beginning February 1993.
Mr. Rady has been the President, Chief Operating Officer, and a director of
Plains since July 1995. From August 1990 until July 1992, Mr. Rady served as
Chief Geologist for the Company, and from July 1992 until January 1993 he
served as Exploration Manager for the Company. From July 1980 until August
1990, Mr. Rady served in various positions with the Denver, Colorado regional
office of Amoco Production Company, the exploration and production subsidiary
of Amoco Corporation. Mr. Rady was a Geologist and Geophysicist for Amoco
Production Company. While with Amoco Production Company, Mr. Rady's areas of
responsibility included the Rocky Mountain Basins, Utah-Wyoming Overthrust
Belt, offshore Alaska, Oklahoma, particularly with respect to the Arkoma
Basin, and the New Ventures Group, which concentrated on the western United
States. Mr. Rady received a B.A. Degree in Geology in 1978 from Western State
College of Colorado in Gunnison, Colorado, and an M.S. Degree in Geology in
1980 from Western Washington University in Bellingham, Washington.

A. RALPH REED has been an Executive Vice President of the Company since
November 1989 and a director of the Company since September 1990. Mr. Reed has
served as Executive Vice President--Operations and a director of Plains since
July 1995. From 1986 to 1989, Mr. Reed was an independent gas and oil operator
in the Mid-Continent region of the United States, including the period from
January 1988 to November 1989 when he acted as a consultant to Zenith. From
1982 to 1986, Mr. Reed was President and Chief Executive Officer of Cotton
Petroleum Corporation, a wholly owned exploration and production subsidiary of
United Energy Resources, Inc. Prior to joining Cotton Petroleum Corporation in
1980, Mr. Reed was employed by Amoco Production Company from 1962, holding
various positions including Manager of International Production, Division
Production Manager and Division Engineer. Mr. Reed received a B.S. Degree in
Petroleum Engineering from the University of Oklahoma in 1959 and in 1975
attended the Executive School at the University of Virginia.

JAMES T. RODGERS has been a director of the Company since October 1993. Mr.
Rodgers served as the President, Chief Operating Officer and a director of
Anadarko Petroleum Corporation ("Anadarko") from 1986 through 1992. Anadarko
is a Houston-based gas and oil exploration and production company. Prior to
1986, Mr. Rodgers was employed in other capacities by Anadarko and Amoco
Production Company. Mr. Rodgers taught Petroleum Engineering at the University
of Texas in Austin in 1958 and at Texas Tech University in Lubbock from 1958
to 1961. Mr. Rodgers currently serves as a Director of Louis Dreyfus Natural
Gas Corporation and as an Advisory Director for Texas Commerce Bank in
Houston. Mr. Rodgers received a B.S. Degree from Louisiana State University in
1956 and an M.S. Degree from the University of Texas in 1958.

PHILIPPE S.E. SCHREIBER has been a director of the Company since November
1985. Mr. Schreiber is an independent lawyer and business consultant who also
is of counsel to the law firm of Walter, Conston, Alexander & Green, P.C. in
New York, New York. Mr. Schreiber has been affiliated with that law firm as
counsel or partner since August 1985. From 1988 to mid-1992, he also was the
Chairman of the Board and a principal shareholder of HSE, Inc., d/b/a
Manhattan Kids Limited, a privately owned corporation involved in catalogue
sales of American made children's clothing in Europe. From October 1985
through June 1992, Mr. Schreiber served as a director, and from July 1990
until June 1991 as Managing Director, of Owl Creek Investments Plc, a publicly
traded English gas and oil company. Mr. Schreiber received an A.B. Degree from
Columbia College in 1964 and a J.D. Degree from Columbia University School of
Law in 1967.

39
<PAGE>

HARRY S. WELCH has been a director of the Company since July 1995. Mr. Welch
was a director of Plains from May 1986 to July 1995. Since August 1989, he has
been an attorney in private practice in Houston, Texas. He served as Vice
President and General Counsel of Texas Eastern Corporation from 1988 to July
1989. Mr. Welch received a B.B.A. Degree and an L.L.B. Degree from the
University of Texas in 1947 and 1949, respectively.

JOSEPH P. BARRETT has been a Vice President since March 1995 and has been
with the Company since 1982. Mr. Barrett has served as Vice President--Land and
a director of Plains since July 1995. He is a 1977 graduate of the University
of Colorado where he earned a Bachelor's Degree in Business and Mineral Land
Management, and a 1982 graduate of Washburn University Law School where he
earned his law degree.

ROBERT W. HOWARD has been Senior Vice President of the Company since March
1992. Mr. Howard has served as Senior Vice President and a director of Plains
since July 1995. Mr. Howard served as the Executive Vice President--Finance
from December 1989 until March 1992 and served as Vice President--Finance of
the Company from December 1983 until December 1989. Mr. Howard has been the
Treasurer of the Company since March 1986. During 1982, Mr. Howard was a
Manager/Accountant with Weiss & Co., a certified public accounting firm. Mr.
Howard received a B.B.A. Degree from the University of Wisconsin, Eau Claire,
in 1976.

EUGENE A. LANG, JR. has been Senior Vice President--General Counsel of the
Company since September 1995. Mr. Lang served as Senior Vice President, General
Counsel and Secretary of Plains from May 1994 to July 1995, and from October
1990 to May 1994 he served as Vice President, General Counsel and Secretary of
Plains. From 1986 to 1990 he was an associate with the Houston, Texas law firm
of Vinson & Elkins. From 1984 to 1986, he was General Attorney and Assistant
Secretary of K N. From 1978 to 1984, he was an attorney for K N.

DONALD H. STEVENS has been the Vice President--Corporate Relations and
Capital Markets for the Company since August 1992. From July 1989 until August
1992, Mr. Stevens served as Manager of Corporate and Tax Planning for Kennecott
Corporation, a mining company. From May 1986 until September 1989, Mr. Stevens
served as Corporate Planning Analyst in Corporate Acquisition and Divestitures
for BP America, Inc., formerly The Standard Oil Company. Prior to May 1986, Mr.
Stevens served in various finance, tax and analyst positions with Seco Energy
Corporation and Gulf Oil Corporation, both of which are gas and oil companies.
Mr. Stevens received his B.S. Degree in Finance/Accounting from the University
of Wyoming in 1975.

40
<PAGE>

BENEFICIAL OWNERS OF SECURITIES

The following table summarizes certain information as of May 15, 1996 with
respect to the ownership by each director, by all executive officers and
directors as a group, and by each other person known by the Company to be the
beneficial owner of more than 5% of the Common Stock:

<TABLE>
<CAPTION>
PERCENT OF CLASS
-------------------
NAME OF NUMBER OF SHARES PRIOR TO AFTER
BENEFICIAL OWNER BENEFICIALLY OWNED OFFERINGS OFFERINGS
---------------- ------------------ --------- ---------
<S> <C> <C> <C>
William J. Barrett...................... 337,934(1) 1.3% 1.1%
C. Robert Buford........................ 658,611(2) 2.6 2.2
Derrill Cody............................ 10,560(3) * *
James M. Fitzgibbons.................... 9,000(3) * *
Hennie L.J.M. Gieskes................... 896,714(3) 3.5 3.0
William W. Grant, III................... 23,650(3) * *
J. Frank Keller......................... 66,286(3) * *
Paul M. Rady............................ 56,521(3) * *
A. Ralph Reed........................... 63,843(4) * *
James T. Rodgers........................ 9,500(3) * *
Philippe S.E. Schreiber................. 17,507(3) * *
Harry S. Welch.......................... 16,000(3) * *
All Directors And Executive Officers As
A Group
(16 persons)........................... 2,274,658(5) 8.8 7.4
State Farm Mutual Insurance Company
One State Farm Plaza
Bloomington, IL 61710.................. 2,065,233(6) 8.1 6.8
Fidelity Management and Research
Corporation
82 Devonshire Street
Boston, MA 02109....................... 1,350,360(7) 5.3 4.4
</TABLE>
- --------
* Less than 1% of the Common Stock outstanding.
(1) The number of shares indicated includes 37,718 shares owned by Louise K.
Barrett, Mr. Barrett's wife and 230,000 shares owned by the Barrett Family
L.L.L.P., a Colorado limited partnership for which Mr. Barrett and his
wife are general partners and owners of an aggregate of 62.9% of the
partnership interests. Pursuant to Rule 16a-1(a)(4) under the Securities
Exchange Act of 1934 (the "1934 Act"), Mr. Barrett disclaims ownership of
all but 144,723 shares held by the Barrett Family L.L.L.P., which
constitutes Mr. and Mrs. Barrett's proportionate share of the shares held
by the Barrett Family L.L.L.P.
(2) C. Robert Buford is considered a beneficial owner of the 604,830 shares of
which Zenith is the record owner. Mr. Buford owns approximately 89% of the
outstanding common stock of Zenith. The number of shares of the Company's
stock indicated for Mr. Buford also includes 10,000 shares that are owned
by Aguilla Corporation, which is owned by Mr. Buford's wife and adult
children. Mr. Buford disclaims beneficial ownership of the shares held by
Aguilla Corporation pursuant to Rule 16a-1(a)(4) under the 1934 Act. The
number of shares indicated also includes 8,500 shares underlying options
currently exercisable.
(3) The number of shares indicated consists of or includes the following
number of shares underlying options that currently are exercisable or that
become exercisable within the next 60 days that are held by each of the
following persons: Derrill Cody, 10,300; James M. Fitzgibbons, 7,000;
Hennie L.J.M. Gieskes, 7,500; William W. Grant, III, 13,900; J. Frank
Keller, 22,350; Paul M. Rady, 26,500; James T. Rodgers, 9,500; Philippe
S.E. Schreiber, 7,500; and Harry S. Welch, 13,400.
(4) The number of shares indicated includes 12,500 shares owned by Mary C.
Reed, Mr. Reed's wife and 35,800 shares underlying options that currently
are exercisable or that become exercisable within the next 60 days.

41
<PAGE>

(5) The number of shares indicated includes the shares owned by Zenith that
are beneficially owned by Mr. Buford as described in note (2) and the
aggregate of 162,250 shares underlying the options described in notes (2),
(3) and (4), an aggregate of 29,423 shares owned by four executive
officers not named in the above table, and an aggregate of 79,109 shares
underlying options that currently are exercisable or that are exercisable
within 60 days that are held by those four executive officers.
(6) Based on information included in a Schedule 13G filed with the Commission
by the named stockholder.
(7) Based on information included in a Form 13F filed with the Commission by
Fidelity Management and Research Corporation on behalf of itself and other
managers.

DESCRIPTION OF CAPITAL STOCK

The Company's authorized capital consists of 35,000,000 shares of $0.01 par
value Common Stock and 1,000,000 shares of $0.001 par value Preferred Stock.

Each share of Common Stock is entitled to share equally in dividends from
sources legally available therefor when, as, and if declared by the Board of
Directors and, upon liquidation or dissolution of the Company, whether
voluntary or involuntary, to share equally in the assets of the Company
available for distribution to the holders of the Company's Common Stock. Each
holder of Common Stock is entitled to one vote per share for all purposes. The
Company's bank line of credit restricts payment of dividends during a quarter
to amounts that are less than 50% of the Company's average net income for the
four previous quarters. The holders of Common Stock have no preemptive rights
and there is no cumulative voting, redemption right or right of conversion
with respect to the Common Stock. All outstanding shares of Common Stock and
all shares to be sold and issued by the Company pursuant to the Offerings will
be fully paid and nonassessable. The Board of Directors is authorized to issue
additional shares of Common Stock within the limits authorized by the
Company's Certificate of Incorporation and without stockholder action.

No shares of Preferred Stock have been issued. However, the Board of
Directors of the Company has the right to fix the rights, privileges and
preferences, including preference upon liquidation, of any class of preferred
stock to be issued in the future out of authorized but unissued shares of
Preferred Stock. The Board of Directors may issue these shares after adopting
and filing a certificate of designations with the Secretary of State of the
State of Delaware.

SECTION 203 OF THE DELAWARE LAW AND THE COMPANY'S BYLAWS. Generally, Section
203 of the Delaware General Corporation Law ("GCL"), to which the Company is
subject, prohibits a publicly held Delaware corporation from engaging in a
"business combination" with an "interested stockholder" for a period of three
years after the date of the transaction in which the person became an
interested stockholder, unless (i) prior to the date of the business
combination, the transaction is approved by the board of directors of the
corporation, (ii) upon consummation of the transaction which resulted in the
stockholder becoming an interested stockholder, the interested stockholder
owns at least 85% of the outstanding voting stock, or (iii) on or after such
date the business combination is approved by the board and by the affirmative
vote of at least 66 2/3% of the outstanding voting stock which is not owned by
the interested stockholder. A "business combination" includes a merger, asset
sale and other transactions resulting in a financial benefit to the
stockholder. An "interested stockholder" is a person who, together with
affiliates and associates, owns (or within three years, did own) 15% or more
of the corporation's voting stock. In addition, the Company's Bylaws provide
that the Company cannot enter into a business combination or sale of a
substantial part of its assets with an interested stockholder without approval
of 75% of all directors, including two-thirds of the outside directors who are
independent with respect to the transaction, or approval of two-thirds of the
Company's stockholders, including a majority of the outstanding shares of
Common Stock, with such majority not to include any shares owned by the
interested stockholder or its affiliates. These provisions may have the effect
of delaying, deferring or preventing a change of control of the Company.

42
<PAGE>

LEGAL MATTERS

Bearman Talesnick & Clowdus Professional Corporation, Denver, Colorado, has
acted as counsel for the Company in connection with the Offerings, including
with respect to the validity of the issuance of the shares of Common Stock
offered hereby. Attorneys employed by that law firm beneficially own
approximately 22,000 shares of the Company's Common Stock. Certain legal
matters will be passed upon for the Underwriters by Andrews & Kurth L.L.P.,
New York, New York.

EXPERTS

The consolidated financial statements and schedules of the Company as of
December 31, 1995 and 1994 and for each of the three years in the period ended
December 31, 1995 included in this Prospectus and elsewhere in the
Registration Statement of which this Prospectus forms a part have been audited
by Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect thereto, and are included herein in reliance upon the
authority of such firm as experts in giving such reports.

The information included and incorporated by reference herein regarding the
total proved reserves of the Company was prepared by the Company. A portion
was reviewed by Ryder Scott Company and the remaining portion was reviewed by
Netherland, Sewell & Associates, Inc., as stated in their respective letter
reports with respect thereto. The reserve review letters of Ryder Scott
Company and Netherland, Sewell & Associates, Inc. are filed as exhibits to the
Registration Statement of which this Prospectus is a part, in reliance upon
the authority of said firms as experts with respect to the matters covered by
their reports and the giving of their reports.

AVAILABLE INFORMATION

This Prospectus constitutes a part of a Registration Statement on Form S-3
(herein together with all amendments thereto referred to as the "Registration
Statement") filed by the Company with the Commission under the Securities Act
of 1933, as amended. This Prospectus does not contain all the information set
forth in the Registration Statement and exhibits thereto, and statements
included in this Prospectus as to the content of any contract or other
document referred to are not necessarily complete. For further information,
reference is made to the Registration Statement and to the exhibits and
schedules filed therewith. All these documents may be inspected at the
Commission's principal office in Washington, D.C. without charge, and copies
of them may be obtained from the Commission upon payment of prescribed fees.
Statements contained in this Prospectus as to the contents of any contract or
other document filed as an exhibit to the Registration Statement are not
necessarily complete, and in each instance reference is hereby made to the
copy of such contract or other document filed as an exhibit to the
Registration Statement, each such statement being qualified in all respects by
such reference.

The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and, in accordance
therewith files reports, proxy statements and other information with the
Commission. Such reports, proxy statements and other information can be
inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, Room 1024 and at
the following Regional Offices of the Commission: 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661-2511, and 7 World Trade Center, New York,
New York 10048. Copies of such material also can be obtained at prescribed
rates by writing to the Commission, Public Reference Section, 450 Fifth
Street, N.W., Washington, D.C. 20549. In addition, such material may also be
inspected and copied at the offices of the New York Stock Exchange, Inc., 20
Broad Street, New York, New York 10005.

43
<PAGE>

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents that previously were, or are required in the future
to be, filed with the Commission (File No. 1-13446) pursuant to the 1934 Act
are incorporated herein by reference:

<TABLE>
<C> <S>
(i) the Company's Annual Report on Form 10-K for the year ended December
31, 1995;
(ii) the Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1996;
(iii) the description of the Company's Common Stock contained in the
Company's registration statement on Form 8-A as filed with the
Commission on October 27, 1994;
(iv) the Company's Proxy Statement dated April 11, 1996 concerning the
Company's Annual Meeting of Stockholders held June 5, 1996; and
(v) all documents filed by the Company pursuant to Sections 13(a), 13(c),
14 or 15(d) of the 1934 Act subsequent to the date of this Prospectus
and prior to the termination of the offering made hereby.
</TABLE>

Any statement contained in a document incorporated by reference herein shall
be deemed to be modified or superseded for purposes of this Prospectus to the
extent that such statement is modified or replaced by a statement contained in
this Prospectus or in any other subsequently filed document that also is or is
deemed to be incorporated by reference into this Prospectus. Any such
statement so modified or superseded shall not be deemed, except as so modified
or replaced, to constitute a part of this Prospectus. The Company will provide
without charge to each person to whom a copy of this Prospectus has been
delivered, upon the written or oral request of any such person, a copy of any
or all of the documents referred to above that have been or may be
incorporated in this Prospectus by reference, other than exhibits to such
documents. Written or oral requests for such copies should be directed to
Donald H. Stevens, Vice President, Barrett Resources Corporation, 1515
Arapahoe Street, Tower 3, Suite 1000, Denver, Colorado 80202, (303) 572-3900.

CERTAIN DEFINITIONS

Unless otherwise indicated in this Prospectus, natural gas volumes are
stated at the legal pressure base of the state or area in which the reserves
are located at 60(degrees) Fahrenheit. Natural gas equivalents are determined
using the ratio of six Mcf of natural gas to one barrel of crude oil,
condensate or natural gas liquids so that one barrel of oil is referred to as
six Mcf of natural gas equivalent or "Mcfe".

As used in this Prospectus, the following terms have the following specific
meanings: "Mcf" means thousand cubic feet, "MMcf" means million cubic feet,
"Bcf" means billion cubic feet, "Bbl" means barrel, "MBbl" means thousand
barrels, "MMBbl" means million barrels, "Mcfe" means thousand cubic feet
equivalent, "MMcfe" means million cubic feet equivalent, "Bcfe" means billion
cubic feet equivalent, and "MMBtu" means million British thermal units.

With respect to information concerning the Company's working interests in
wells or drilling locations, "gross" gas and oil wells or "gross" acres is the
number of wells or acres in which the Company has an interest, and "net" gas
and oil wells or "net" acres are determined by multiplying "gross" wells or
acres by the Company's working interest in those wells or acres. A working
interest in a gas and oil lease is an interest that gives the owner the right
to drill, produce, and conduct operating activities on the property and to
receive a share of production of any hydrocarbons covered by the lease. A
working interest in a gas and oil lease also entitles its owner to a
proportionate interest in any well located on the lands covered by the lease,
subject to all royalties, overriding royalties and other burdens, to all costs
and expenses of exploration, development and operation of any well located on
the lease, and to all risks in connection therewith.

44
<PAGE>

"Behind-pipe recompletion" is the completion of an existing well for
production from a formation that exists behind the casing of the well.

"Capital expenditures" means costs associated with exploratory and
development drilling (including exploratory dry holes); leasehold
acquisitions; seismic data acquisitions; geological, geophysical and land
related overhead expenditures; delay rentals; producing property acquisitions;
and other miscellaneous capital expenditures. "Capital expenditure budget"
means an estimate prepared by management for the total expenditures
anticipated to be incurred during the subject time period. This amount can
deviate or fluctuate due to the timing of drilling of wells, environmental
considerations, acquisition of key fee, state and federal leases, and gas and
oil prices. "Reserve replacement cost" means the cost to the Company of
additions to the Company's reserve base divided by the aggregate costs of
developing or acquiring those additional reserves.

A "development well" is a well drilled as an additional well to the same
horizon or horizons as other producing wells on a prospect, or a well drilled
on a spacing unit adjacent to a spacing unit with an existing well capable of
commercial production and which is intended to extend the proven limits of a
prospect. An "exploratory well" is a well drilled to find commercially
productive hydrocarbons in an unproved area, or to extend significantly a
known prospect.

A "farmout" is an assignment to another party of an interest in a drilling
location and related acreage conditional upon the drilling of a well on that
location. A "farm-in" is an assignment by the owner of a working interest in a
gas and oil lease of the working interest or a portion thereof to another
party who desires to drill on the leased acreage. Generally, the assignee is
required to drill one or more wells in order to earn its interest in the
acreage. The assignor usually retains a royalty or reversionary working
interest in the lease. The assignee is said to have "farmed-in" the acreage.

"Present Value of Estimated Future Net Revenues" means the present value of
estimated future revenues to be generated from the production of proved
reserves calculated in accordance with Commission guidelines, net of estimated
production and future development costs, using prices and costs as of the date
of estimation without future escalation, without giving effect to non-property
related expenses such as general and administrative expenses, debt service,
future income tax expense and depreciation, depletion and amortization, and
discounted using an annual discount rate of 10%.

"Reserves" means natural gas and crude oil, condensate and natural gas
liquids on a net revenue interest basis, found to be commercially recoverable.
"Proved developed reserves" includes proved developed producing reserves and
proved developed behind-pipe reserves. "Proved developed producing reserves"
includes only those reserves expected to be recovered from existing completion
intervals in existing wells. "Proved developed behind-pipe reserves" includes
those reserves that exist behind the casing of existing wells when the cost of
making such reserves available for production is relatively small compared to
the cost of a new well. "Proved undeveloped reserves" includes those reserves
expected to be recovered from new wells on proved undrilled acreage or from
existing wells where a relatively major expenditure is required for
recompletion.

45
<PAGE>

<TABLE>
<CAPTION>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<S> <C>
Report Of Independent Public Accountants.................................. F-2
Consolidated Balance Sheets as of March 31, 1996 (unaudited) and at
December 31, 1995 and 1994............................................... F-3
Consolidated Statements Of Income for the three months ended March 31,
1996 and 1995 (unaudited) and each of the three years in the period ended
December 31, 1995........................................................ F-4
Consolidated Statements Of Stockholders' Equity for the three months ended
March 31, 1996 and 1995 (unaudited) and each of the three years in the
period ended December 31, 1995........................................... F-5
Consolidated Statements Of Cash Flows for the three months ended March 31,
1996 and 1995 (unaudited) and each of the three years in the period ended
December 31, 1995........................................................ F-6
Notes to the Consolidated Financial Statements............................ F-7
Supplemental Gas And Oil Information...................................... F-22
</TABLE>

F-1
<PAGE>

REPORT OF ARTHUR ANDERSEN LLP

INDEPENDENT PUBLIC ACCOUNTANTS

The Board of Directors
Barrett Resources Corporation
Denver, Colorado 80202

We have audited the accompanying consolidated balance sheets of Barrett
Resources Corporation (a Delaware corporation) and subsidiaries as of December
31, 1995 and 1994, and the related consolidated statements of income,
stockholders' equity and cash flows for each of the three years in the period
ended December 31, 1995. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Barrett Resources
Corporation and subsidiaries as of December 31, 1995 and 1994, and the results
of their operations and their cash flows for each of the three years in the
period ended December 31, 1995, in conformity with generally accepted
accounting principles.

As explained in Note 8 to the financial statements, effective January 1,
1993, the Company changed its method of accounting for postretirement
benefits.

ARTHUR ANDERSEN LLP

Denver, Colorado
March 1, 1996

F-2
<PAGE>

BARRETT RESOURCES CORPORATION

CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)

ASSETS

<TABLE>
<CAPTION>
DECEMBER 31,
------------------ MARCH 31,
1994 1995 1996
-------- -------- ----------
(UNAUDITED)
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents.................... $ 12,348 $ 7,529 $ 10,945
Receivables, net............................. 34,522 31,089 36,290
Inventory.................................... 643 554 598
Other current assets......................... 1,099 574 535
-------- -------- --------
Total current assets....................... $ 48,612 $ 39,746 $ 48,368
Net property and equipment (full cost method).. 261,424 300,666 313,359
Other assets................................... 916 -- --
-------- -------- --------
$310,952 $340,412 $361,727
======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY

<S> <C> <C> <C>
Current liabilities:
Accounts payable............................. $ 24,587 $ 14,369 $ 14,522
Amounts payable to gas and oil property own-
ers......................................... 16,091 13,366 9,656
Accrued and other liabilities................ 5,468 8,325 15,674
-------- -------- --------
Total current liabilities.................. $ 46,146 $ 36,060 $ 39,852
Long term debt................................. 53,000 89,000 100,000
Deferred income taxes.......................... 21,726 23,524 25,362
Postretirement benefits........................ 927 -- --
Other long-term liabilities.................... 1,017 -- --
Commitments and contingencies--Note 10
Stockholders' equity:
Preferred stock, $0.001 par value: 1,000,000
shares authorized, none outstanding......... -- -- --
Common stock, $0.01 par value: 35,000,000
shares authorized, 25,153,666 outstanding at
March 31, 1996 (25,092,246 and 24,694,669 at
December 31, 1995 and 1994, respectively)... 247 251 252
Additional paid-in capital................... 78,628 86,154 87,382
Retained earnings............................ 109,304 105,890 109,346
Treasury stock, at cost...................... (43) (467) (467)
-------- -------- --------
Total stockholders' equity................. $188,136 $191,828 $196,513
-------- -------- --------
$310,952 $340,412 $361,727
======== ======== ========
</TABLE>

(See accompanying notes)

F-3
<PAGE>

BARRETT RESOURCES CORPORATION

CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
--------------------------- ---------------
1993 1994 1995 1995 1996
-------- -------- -------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues:
Oil and gas production......... $ 80,911 $ 78,794 $ 96,996 $24,981 $29,544
Trading revenues............... 22,955 28,114 28,554 7,788 11,993
Revenue from gas gathering..... 216 353 1,074 291 448
Interest income................ 736 864 714 153 197
Other income................... 1,254 1,333 678 258 125
-------- -------- -------- ------- -------
$106,072 $109,458 $128,016 $33,471 $42,307
Operating expenses:
Lease operating expenses....... $ 30,383 $ 28,223 $ 34,525 $ 8,897 $10,947
Depreciation, depletion and
amortization.................. 20,185 22,760 33,480 8,100 9,404
Cost of trading................ 21,675 27,190 27,611 7,452 11,214
General and administrative..... 11,194 13,261 13,426 3,629 3,618
Interest expense............... 725 942 4,631 941 1,551
Other expenses, net............ 867 645 588 125 --
Merger and reorganization
expense....................... -- -- 14,161 -- --
-------- -------- -------- ------- -------
$ 85,029 $ 93,021 $128,422 $29,144 $36,734
Income (loss) before income taxes
and cumulative effect of change
in method of accounting for
postretirement benefits......... $ 21,043 $ 16,437 $ (406) $ 4,327 $ 5,573
Provision for income taxes....... 6,721 5,138 1,834 1,313 2,117
-------- -------- -------- ------- -------
Income (loss) before cumulative
effect of change in method of
accounting for postretirement
benefits........................ $ 14,322 $ 11,299 $ (2,240) $ 3,014 $ 3,456
Cumulative effect of change in
accounting for postretirement
benefits, net of tax............ (656) -- -- -- --
-------- -------- -------- ------- -------
Net income (loss)................ $ 13,666 $ 11,299 $ (2,240) $ 3,014 $ 3,456
======== ======== ======== ======= =======
Net income (loss) per common
share and common share
equivalent before change in
method of accounting for
postretirement benefits......... $ 0.58 $ 0.46 $ (0.09) $ 0.11 $ 0.14
Net income (loss) per common
share and common share
equivalent--cumulative effect... (0.03) -- -- -- --
-------- -------- -------- ------- -------
Net income (loss) per common
share and common share
equivalent...................... $ 0.55 $ 0.46 $ (0.09) $ 0.11 $ 0.14
======== ======== ======== ======= =======
</TABLE>

(See accompanying notes)

F-4
<PAGE>

BARRETT RESOURCES CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS)

<TABLE>
<CAPTION>
ADDITIONAL TOTAL
COMMON PAID-IN TREASURY RETAINED STOCKHOLDERS'
STOCK CAPITAL STOCK EARNINGS EQUITY
------ ---------- -------- -------- -------------
<S> <C> <C> <C> <C> <C>
Balances, October 1, 1992 as
previously reported........ $ 97 $39,651 $ -- $ 3,567 $ 43,315
Effect of change to
December 31 year end
Net income for the three
month period ending
December 31, 1992...... -- -- -- 1,333 1,333
Pooling of interests with
Plains Petroleum
Company.................. 128 19,163 -- 84,144 103,435
---- ------- ----- -------- --------
Balance, December 31, 1992
as restated................ $225 $58,814 -- $ 89,044 $148,083
Exercise of stock
options.................. 1 515 (204) -- 312
Issuance of common stock.. 20 18,881 -- -- 18,901
Cash dividends--Plains
common stock............. -- -- -- (2,352) (2,352)
Net income for the year
ended December 31, 1993.. -- -- -- 13,666 13,666
---- ------- ----- -------- --------
Balance, December 31, 1993.. $246 $78,210 $(204) $100,358 $178,610
Exercise of stock
options.................. 1 970 (313) -- 658
Purchase of treasury
stock.................... -- -- (78) -- (78)
Retirement of treasury
stock.................... -- (552) 552 -- --
Cash dividends--Plains
common stock............. -- -- -- (2,353) (2,353)
Net income for the year
ended December 31, 1994.. -- -- -- 11,299 11,299
---- ------- ----- -------- --------
Balance, December 31, 1994.. $247 $78,628 $ (43) $109,304 $188,136
Exercise of stock
options.................. 4 7,690 (588) -- 7,106
Retirement of treasury
stock.................... -- (164) 164 -- --
Cash dividends--Plains
common stock............. -- -- -- (1,174) (1,174)
Net loss for the year
ended December 31, 1995.. -- -- -- (2,240) (2,240)
---- ------- ----- -------- --------
Balance, December 31, 1995.. $251 $86,154 $(467) $105,890 $191,828
Exercise of stock
options.................. 1 1,228 -- -- 1,229
Net income for the quarter
ended March 31, 1996
(unaudited).............. -- -- -- 3,456 3,456
---- ------- ----- -------- --------
Balance, March 31, 1996..... $252 $87,382 $(467) $109,346 $196,513
==== ======= ===== ======== ========
</TABLE>

(See accompanying notes)

F-5
<PAGE>

BARRETT RESOURCES CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
---------------------------- ------------------
(UNAUDITED)
1993 1994 1995 1995 1996
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Cash flows from operations:
Net income (loss).......... $ 13,666 $ 11,299 $ (2,240) $ 3,014 $ 3,456
Adjustments needed to
reconcile to net cash flow
provided by operations:
Depreciation, depletion
and amortization........ 20,185 22,760 33,480 8,100 9,404
Unrealized (gain) loss on
trading................. (124) 58 1,139 -- (1,138)
Deferred income taxes.... 5,975 4,788 1,798 1,213 1,838
Other.................... 782 70 (787) -- --
-------- -------- -------- -------- --------
$ 40,484 $ 38,975 $ 33,390 $ 12,327 $ 13,560
Change in current assets
and liabilities:
Accounts receivables..... (4,304) (8,436) 3,433 6,185 (4,856)
Other current assets..... (209) (148) 525 265 (65)
Accounts payable......... (1,870) 6,803 (524) (14,133) 119
Other current
liabilities............. 7,479 (621) (1,286) 2,334 4,467
-------- -------- -------- -------- --------
Net cash flow provided by
operations.................. $ 41,580 $ 36,573 $ 35,538 $ 6,978 $ 13,225
Cash flows from investing
activities:
Proceeds from sale of gas
and oil properties........ 16,210 458 504 5 135
Purchase of short-term
investments............... (5,952) (11,322) -- -- --
Maturity of short-term
investments............... 1,984 15,290 -- -- --
Acquisition of property and
equipment................. (45,488) (95,589) (82,758) (18,252) (22,173)
Other...................... 65 146 -- (264) --
-------- -------- -------- -------- --------
Net cash flow used in
investing activities........ $(33,181) $(91,017) $(82,254) $(18,511) $(22,038)
Cash flows from financing
activities:
Proceeds from issuance of
common stock.............. 19,212 301 7,071 323 1,229
Purchase of treasury
stock..................... -- (78) -- -- --
Borrowing under line of
credit.................... 1,300 44,000 115,000 15,000 11,000
Payments on line of
credit.................... (7,800) (4,500) (79,000) (2,500) --
Dividends paid............. (2,352) (2,353) (1,174) (590) --
Other...................... 868 (147) -- -- --
-------- -------- -------- -------- --------
Net cash flow provided by
financing activities........ $ 11,228 $ 37,223 $ 41,897 $ 12,233 $ 12,229
Increase (decrease) in cash
and cash equivalents........ 19,627 (17,221) (4,819) 700 3,416
Cash and cash equivalents at
beginning of year........... 9,942 29,569 12,348 12,348 7,529
-------- -------- -------- -------- --------
Cash and cash equivalents at
end of year................. $ 29,569 $ 12,348 $ 7,529 $ 13,048 $ 10,945
======== ======== ======== ======== ========
</TABLE>

(See accompanying notes)

F-6
<PAGE>

BARRETT RESOURCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INFORMATION FOR THE THREE MONTH PERIODS ENDED
MARCH 31, 1996 AND 1995 IS UNAUDITED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business

Barrett is an independent natural gas and oil exploration and production
company with producing properties located in the mid-continent states and
Rocky Mountain region of the United States. Barrett also operates gas
gathering systems and related facilities in the areas which are synergistic to
the Company's production. Barrett has a gas marketing and trading subsidiary,
which allows the Company to market the Company's natural gas production and to
purchase and sell other companies natural gas.

Principles of consolidation

The consolidated financial statements include the accounts of the Company
and its subsidiaries, all of which are wholly owned. All significant
intercompany transactions have been eliminated in consolidation. Certain
reclassifications have been made to 1993 and 1994 amounts to conform to the
1995 presentation.

Use of estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates. There are many factors, including global events, that may influence
the production, processing, marketing, and valuation of crude oil and natural
gas. A reduction in the valuation of gas and oil properties resulting from
declining prices or production could adversely impact depletion rates and
ceiling test limitations.

Partnerships

The consolidated financial statements include the Company's proportionate
share of the assets, liabilities, revenues and expenses of its gas and oil
partnership interests.

Cash and cash equivalents

Cash in excess of daily requirements is invested in money market accounts
and commercial paper with maturities of three months or less. Such investments
are deemed to be cash equivalents for purposes of the consolidated statements
of cash flows. The carrying amount of cash equivalents approximates fair value
because of the short maturity of those instruments.

Gas and oil properties

The Company utilizes the full cost method of accounting for gas and oil
properties whereby all productive and nonproductive costs paid to third
parties that are incurred in connection with the acquisition, exploration and
development of gas and oil reserves are capitalized. No gains or losses are
recognized upon the sale, conveyance or other disposition of gas and oil
properties except in extraordinary transactions.

F-7
<PAGE>

BARRETT RESOURCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Capitalized costs are accumulated on a country-by-country basis subject to a
cost center ceiling and amortized using the units-of-production method. The
Company presently has only one cost center since all of its properties are
located in the United States. Amortizable costs include developmental drilling
in progress as well as estimates of future development costs of proved
reserves but exclude the costs of unevaluated gas and oil properties.
Accumulated depreciation and amortization is written off as assets are
retired. Depletion and amortization equaled approximately $0.55, $0.52 and
$0.48 per Mcfe during the years ended December 31, 1995, 1994 and 1993,
respectively.

The Company capitalizes interest costs on amounts expended on assets during
the period in which activities are occurring to place the asset in service.
Amounts spent to develop properties included in the full cost center of gas
and oil properties are excluded from the interest capitalization computation.

The Company acquires nonproducing acreage for its exploration and
development activities. The cost of these leases is included in unevaluated
gas and oil property costs recorded at the lower of cost or fair market value.

The Company operates many of the wells in which it owns an economic
interest. The operating agreements for these activities provide for a fee
structure to allow the Company to recover a portion of its direct and overhead
charges related to its operating activities. The fees collected under the
operating agreements are recorded as a reduction of general and administrative
expenses. Any amounts collected from a sale of gas and oil interests or earned
as a result of assembling gas and oil drilling activities are applied to
reduce the book value of gas and oil properties.

Other property and equipment

Other property and equipment is recorded at cost. Renewals and betterments
which substantially extend the useful life of the assets are capitalized.
Maintenance and repairs are expensed when incurred. Depreciation is provided
using accelerated and straight-line methods over the estimated useful lives,
ranging from five to ten years, of the assets.

Amounts payable to gas and oil property owners

Amounts payable to gas and oil property owners consist of cash calls from
working interest owners to pay for development costs of properties being
currently developed, production revenue that the Company, as operator, is
collecting and distributing to revenue interest owners and production revenue
taxes that the Company, as operator, has withheld for timely payment to the
tax agencies.

Trading and hedging activities

The Company's business activities include buying and selling of natural gas.
The Company recognizes revenue and costs on gas trading transactions at the
point in time when gas is delivered to the purchaser.

The Company uses both commodity futures contracts and price swaps to hedge
the impact of price fluctuations on a portion of its production and trading
activities. The Company enters into a hedging position for specific
transactions that management deems expose the Company to an unacceptable
market price risk. Price swaps or commodities transactions without
corresponding scheduled physical transactions (scheduled physical transactions
include committed trading activities

F-8
<PAGE>

BARRETT RESOURCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
or production from producing wells) do not qualify for hedge accounting. The
Company classifies these positions as trading positions and records these
instruments at fair value. Gains and losses are recognized as fair values
fluctuate from time to time compared to cost.

Gains or losses on hedging transactions are deferred until the physical
transaction occurs for financial reporting purposes. Deferred gains and losses
and unrealized gains and losses are evaluated in connection with the physical
transaction underlying the hedge position. Hedging gains or losses
significantly exceeding the price movement of the underlying physical
transaction are recorded in the consolidated statements of income in the
period in which the lack of correlation occurred. Gains or losses on hedging
activities are recorded in the consolidated statements of income as
adjustments of the revenue or cost of the underlying physical transaction.
Hedging transactions are reported as operating activities in the consolidated
statements of cash flows.

Earnings per share

Per share amounts were computed using the weighted average number of shares
of common stock and common stock equivalents outstanding during each year:
1995--24,931,000; 1994--24,967,000 and 1993--24,778,000. Options to purchase
stock are included as common stock equivalents, when dilutive, using the
treasury stock method.

Change in fiscal year

On July 18, 1995, the Company changed its fiscal year-end from September 30
to December 31. A transition report for the period October 1, 1994 through
December 31, 1994 was filed with the Securities and Exchange Commission.
During the three months ended December 31, 1994, the Company reported revenues
of $15 million and net income of $207,000.

Unaudited financial statements:

In the opinion of management, the accompanying unaudited consolidated
condensed financial statements contain all adjustments necessary to present
fairly the financial position of the Company as of March 31, 1996 and the
results of operations and cash flows for the periods presented. All such
adjustments are of a normal recurring nature. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to the SEC's rules and regulations. The results of operations for the
periods presented are not necessarily indicative of the results for the full
year.

2. MERGER

On July 18, 1995 Plains was merged with and into a subsidiary of the
Company, resulting in Plains becoming a wholly owned subsidiary of the
Company. Approximately 12.8 million shares of the Company's common stock were
issued in exchange for all of the outstanding common stock of Plains.
Additionally, outstanding options to acquire Plains common stock were
converted to options to acquire approximately 593,000 shares of the Company's
common stock. In connection with the merger, the Company's authorized number
of shares of common stock was increased to 35 million. The merger was
accounted for as a pooling of interests, and accordingly, the accompanying
financial statements have been restated to include the accounts and operations
of Plains for all periods prior to the merger.

F-9
<PAGE>

BARRETT RESOURCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Plains used the successful efforts method of accounting for its gas and oil
exploration and development activities. In conjunction with the merger, Plains
adopted the full cost method used by the Company resulting in increases of net
property and equipment due to the capitalization of exploration costs,
reversal of impairment and adjustments of depreciation, depletion and
amortization expense for periods prior to the merger. The financial statements
for 1994 and 1993 have been retroactively restated for the change in
accounting method which resulted in increased net income. Retained earnings
and deferred income taxes have been adjusted for the effect of the retroactive
application of the new method.

Certain reclassifications have been made to the historical consolidated
financial statements of the separate companies to conform the financial
statements to a comparable presentation. There were no intercompany
transactions between the Company and Plains. Separate results for the periods
preceding the merger, including the conversion to full cost for Plains and the
change to a December 31 year-end for the Company, were as follows (in 000s):

<TABLE>
<CAPTION>
BARRETT PLAINS(1) ADJUSTMENTS(2) COMBINED
------- --------- -------------- --------
<S> <C> <C> <C> <C>
Six month period ended (unaudited): 6/30/95 6/30/95 6/30/95
Net revenues....................... $29,277 $ 35,823 -- $ 65,100
Net income......................... 2,200 3,771 -- 5,971
Twelve month period ended:........... 9/30/94 12/31/94 12/31/94
Net revenues....................... $41,252 $ 63,024 $ 5,182 $109,458
Net income......................... 4,439 7,768 (908) 11,299
Twelve month period ended:........... 9/30/93 12/31/93 12/31/93
Net revenues....................... $42,686 $ 64,998 $(1,612) $106,072
Net income......................... 5,756 8,128 (218) 13,666
</TABLE>
- --------
(1) Restated to full cost to conform accounting policies
(2) To conform year ends

In connection with the merger, approximately $14.2 million of merger and
reorganization costs and expenses were incurred and have been charged to
expense in the Company's third and fourth quarters of fiscal 1995. These
nonrecurring costs and expenses consist of (1) investment banker and
professional fees of $7.4 million; (2) severance and employee benefit costs of
$5.6 million for approximately 38 employees, terminated through consolidation
of administrative and operational functions; (3) a non-cash credit of
approximately $0.9 million associated with the termination of Plains'
postretirement benefit plans and other related benefit plans and (4) other
merger and reorganization related costs of $2.1 million.

3. RECEIVABLES

<TABLE>
<CAPTION>
DECEMBER 31,
---------------
1994 1995
------- -------
(IN THOUSANDS)
<S> <C> <C>
Gas and oil revenue receivable.................................. $13,257 $15,535
Joint interest billings......................................... 14,542 7,652
Trading receivables............................................. 6,483 5,665
Other accounts receivable....................................... 240 2,237
------- -------
$34,522 $31,089
======= =======
</TABLE>

F-10
<PAGE>

BARRETT RESOURCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

The Company's accounts receivable are primarily due from medium size gas and
oil entities in the Rocky Mountain region. Collection of joint interest
billings is generally secured by future production. The Company performs
periodic credit evaluations of customers purchasing production for which no
collateral is required. Historically, the Company has not experienced
significant losses related to these extensions of credit.

As of December 31, 1995 and 1994, receivables are recorded net of allowance
for doubtful accounts of $201,000 and $224,000, respectively.

4. PROPERTY AND EQUIPMENT

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1994 1995
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Oil and gas properties, full cost method:
Unevaluated costs, not being amortized. .............. $ 12,611 $ 10,579
Evaluated costs....................................... 346,950 420,784
Gas gathering systems................................. 8,388 8,815
Furniture, vehicles and equipment....................... 9,765 9,801
-------- --------
$377,714 $449,979
Less accumulated depreciation, depletion, amortization
and impairment......................................... 116,290 149,313
-------- --------
$261,424 $300,666
======== ========
</TABLE>

The Company capitalized interest costs of $0.4 million in 1995 with respect
to qualifying properties. Total interest costs incurred after recognition of
the capitalized interest amount was $4.6 million in 1995.

5. UNEVALUATED OIL AND GAS PROPERTY COSTS

Unevaluated gas and oil property costs consist of the following:

<TABLE>
<CAPTION>
COSTS INCURRED DURING
-------------------------------
1992 1993 1994 1995 TOTAL
---- ---- ------ ------ -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Acquisition costs........................... $71 $-- $2,130 $5,623 $ 7,824
Exploration costs........................... 11 32 53 2,659 2,755
--- ---- ------ ------ -------
$82 $ 32 $2,183 $8,282 $10,579
=== ==== ====== ====== =======
</TABLE>

The unevaluated costs were incurred for projects which are being explored.
The Company anticipates that substantially all unevaluated costs will be
classified as evaluated costs within the next three years.

6. LONG TERM DEBT

The Company has a reserve-based line of credit with a group of banks which
provides up to $200 million for a four year period ending July 19, 1999. The
amount actually available to the Company

F-11
<PAGE>

BARRETT RESOURCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
under the line at any given time is limited to the collateral value of proved
reserves as determined by the lenders. Based on the lenders' determination of
collateral value, as of December 31, 1995 (which was based on the March 31,
1995 and December 31, 1994 reserve reports), the Company has a borrowing limit
of $160 million. In order to reduce the commitment fees, the Company
voluntarily requested that the lenders limit the maximum borrowing to $90
million through December 31, 1995. Subsequent to December 31, 1995, the
Company increased the maximum borrowing limit to $110 million. The lenders are
currently reviewing the December 31, 1995 reserve report to determine current
collateral value. The Company is required to pay interest only during the
revolving period. At its option, the Company has elected to use the London
interbank eurodollar rate (LIBOR) plus a spread ranging from 0.5 percent to
1.0 percent (depending on the Company's borrowing relative to its borrowing
base) for a substantial portion of the outstanding balance. As of December 31,
1995 the Company's outstanding balance under the line of credit was $89
million of which $83 million was accruing interest at an average LIBOR based
rate of 6.62 percent and $6 million was accruing interest on a prime based
rate of 8.50 percent. The line of credit agreement restricts the payment of
dividends, borrowings, sale of assets, loans to others, investment and merger
activity over certain limits without the prior consent of the bank and
requires the Company to maintain certain net worth and debt to equity levels.
Based on the variable borrowing rates and re-pricing terms currently available
to the Company for the line of credit, management believes the fair value of
long-term debt approximates the carrying value. As of March 31, 1996, the
Company's outstanding balance under the line of credit was $100 million, all
of which was accruing interest at an average rate of 6.3%.

7. OPTIONS

The Company has two employee stock option plans, a 1990 Plan and a 1994
Plan, under which the Company's common stock may be granted to officers and
employees of the Company and subsidiaries. The 1990 Plan, as amended, provided
for the granting of 775,000 shares. The 1994 Plan provides for the granting of
400,000 shares of the Company's common stock. In addition, the Company has a
non-discretionary stock option plan under which options for an aggregate of
100,000 shares of the Company's common stock may be granted to non-employee
directors. In connection with the merger discussed in Note 2, the Company
assumed preexisting Plains stock option plans and converted all options then
outstanding into options to acquire shares of the Company's common stock. No
further options will be granted under the Plains' plans.

Summary of options granted, exercised and outstanding during 1994 and 1995
is as follows:

<TABLE>
<CAPTION>
OPTION
NUMBER OF SHARES OPTION PRICE VALUE
---------------- ------------- --------
($000'S)
<S> <C> <C> <C>
Outstanding at December 31, 1993...... 336,500 $ 3.88-$13.38 $ 1,949
Plains outstanding options............ 592,611 $15.91-$27.50 13,962
--------- ------------- -------
Outstanding at December 31, 1993, re-
stated............................... 929,111 $ 3.88-$27.50 15,911
Granted............................... 585,500 $10.38-$20.88 8,560
Exercised or canceled................. (154,820) $ 3.88-$12.13 (712)
--------- ------------- -------
Outstanding at December 31, 1994...... 1,359,791 $ 3.88-$27.50 23,759
Granted............................... 110,000 $13.38-$22.75 2,454
Exercised or canceled................. (477,460) $ 3.88-$27.50 (9,443)
--------- ------------- -------
Outstanding at December 31, 1995...... 992,331 $ 5.00-$26.94 $16,770
========= ============= =======
Exercisable at December 31, 1995...... 354,883 $ 5.13-$26.94 $ 6,349
========= ============= =======
</TABLE>

F-12
<PAGE>

BARRETT RESOURCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

8. RETIREMENT BENEFITS

The Company has a voluntary 401(k) employee savings plan. Under this plan,
the Company matches 50% of each of the participating employees contributions,
up to a maximum of 6% of base salary. Effective April 1, 1996, the Company's
match will be increased to 100% of each of the participating employees
contributions, up to a maximum of 6% of base salary, with one-half of the
match paid in cash and one half of the match paid in the Company's common
stock. The Company's matching contributions are subject to a vesting schedule.
Company contributions were $239,000, $179,000 and $166,000 in 1995, 1994 and
1993, respectively.

Plains had several employee benefit plans described below. Pursuant to the
terms of the merger agreement between Plains and the Company, these plans were
terminated.

Plains' qualified, defined benefit retirement plan covered substantially all
of its employees. The benefits were based on a specified level of the
employees compensation during plan participation. As of July 18, 1995, the
plan froze benefit accruals. Pursuant to the plan, all participants became
fully vested. Plan assets consist of cash and equivalents, corporate stocks
and bonds, U.S. treasury notes, insured annuity contracts, and accrued
interest. Contributions totaled $169,000, $312,000 and $341,000 for the 1995,
1994 and 1993 plan years, respectively.

The following table sets forth the plans funded status:

<TABLE>
<CAPTION>
1993 1994 1995
------- ------- ------
(IN THOUSANDS)
<S> <C> <C> <C>
Actuarial present value of benefit obligations:
Accumulated benefit obligation, including vested
benefits of $2,961,000, $1,637,000 and $1,290,000
respectively........................................ $(1,383) $(1,666) $2,961
======= ======= ======
Projected benefit obligation......................... $(2,321) $(2,396) $2,961
Plan assets at fair value............................ 1,977 2,205 2,709
------- ------- ------
Projected benefit obligation in excess of plan
assets.............................................. $ (344) $ (191) $ (252)
Unrecognized net (gain) loss......................... 16 (141) --
Prior service cost not yet recognized in net periodic
pension costs....................................... 64 93 --
Unrecognized net obligation being recognized over 9.5
and 10.5 years in 1994 and 1993, respectively....... 146 132 --
------- ------- ------
Accrued pension cost................................. $ (118) $ (107) $ (252)
======= ======= ======
Net pension cost included the following components:
Service cost--benefits earned........................ $ 346 $ 290 $ 140
Interest cost on projected benefit obligation........ 150 157 160
Actual loss (return) on plan assets.................. (145) 70 (369)
Net amortization of unrecognized obligation and
deferral............................................ 28 (216) 347
Curtailment gain..................................... -- -- (735)
------- ------- ------
Net periodic pension cost (benefit).................. $ 379 $ 301 $ (457)
======= ======= ======
</TABLE>

The weighted average discount rate used in determining the actuarial present
value of the projected benefit obligation was 4.5% (termination rates). The
rate of increase used for compensation levels was nil in 1995 and 5% in 1994
and 1993, respectively. The expected long-term rate of return on assets was
8.5%.

F-13
<PAGE>

BARRETT RESOURCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Plains also contributed the lesser of 10% of its net earnings or 10% of
employee compensation to a profit sharing plan of Plains. No contributions
were made for 1995. Plains contributed $334,000 and $188,000 for 1994 and
1993, respectively.

Through June 30, 1995 and during 1994, Plains matched 401(k) plan deferrals
with contributions equal to 50% of each deferral up to 6% of current salary.
This matching contribution was invested in Plains stock and were subject to a
vesting schedule. Participants became fully vested with the merger with and
into Barrett. Contributions were approximately $112,000, $192,000 and $250,000
for 1995, 1994 and 1993, respectively.

The above described profit-sharing and 401(k) plans were terminated July 1,
1995; the pension plans were terminated September 18, 1995. Internal Revenue
Service approval for termination of these plans was received in January 1996.
Final distribution of plan assets will be made to participants in the second
quarter of 1996.

Plains' executive deferred compensation plan and directors' deferred plan
permitted the deferral of current salary or directors' fees for the purpose of
providing funds at retirement or death for employees, directors and their
beneficiaries. These plans were terminated effective June 30, 1995 and will be
disbursed to the participants by the trustee of the assets over a period
ending January 1, 1997. Total accrued liability under these plans at December
31, 1995 and 1994 was $36,000 and $1,006,000, respectively.

Concurrently with the effective date of the merger, Plains' postretirement
healthcare benefit and salary continuation plans were terminated. Participants
in the salary continuation plan received (1) a lump sum benefit equal to the
present value of the remaining monthly payments if receiving Death Benefits
under the plan at the date of the termination, or (2) insurance polices, the
cost of which was limited to the cash values of the life insurance policies
owned by Plains. Benefits associated with the postretirement healthcare
benefit plan were terminated and, accordingly, accrued postretirement benefit
costs were relieved.

Effective January 1, 1993, Plains adopted Statement No. 106 (FAS 106) issued
by the Financial Accounting Standards Board on accounting for postretirement
benefits other than pensions. In accordance with this statement, Plains
elected to recognize the accumulated postretirement benefit liability as of
the effective date, totaling approximately $800,000 (pretax). With the
termination of these plans in 1995, all future obligations were settled and
ceased to exist.

F-14
<PAGE>

BARRETT RESOURCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Obligations for previous periods were as follows:

<TABLE>
<CAPTION>
DECEMBER 31, 1994
-----------------
(IN THOUSANDS)
<S> <C>
Accumulated postretirement benefit obligation:
Active plan participants......................... $(458)
Retirees......................................... (302)
-----
$(760)
Plan assets...................................... 0
-----
Net accumulated postretirement benefit
obligation...................................... $(760)
Unrecognized net gain from past experience
different from that assumed and from changes in
assumptions..................................... (167)
-----
Accrued postretirement benefit cost.............. $(927)
=====
Net periodic postretirement benefit cost included
the following components:
Service cost of benefits earned.................. $ 41
Interest cost on accumulated postretirement
benefit obligation.............................. 61
-----
Net periodic postretirement benefit cost......... $ 102
=====
</TABLE>

9. HEDGING ACTIVITIES

The Company uses various hedging techniques to reduce the effect of price
volatility on the sales price of a portion of its gas and oil sales. The
objective of its hedging activities is to achieve more predictable revenues
and cash flows. The following is a summary of the Company's hedging
transactions in effect as of December 31, 1995.

A. The Company is the fixed price payor for hedging transactions relating to
6,000 MMBtu of gas per day for 1996 at $1.33 per MMBtu and approximately 7,000
MMBtu of gas per day for January through May 1996 at an average price of $2.12
per MMBtu. Under these price swap arrangements, the Company has agreed to buy
gas at a fixed price and sell gas at an index price. These price swaps were
entered to accommodate markets desiring fixed price supplies.

B. The Company will receive fixed prices ranging from $1.46 to $2.12 per
MMBtu in swap transactions associated with an average of 52,000 MMBtu of gas
per day to be produced by the Company subsequent to December 31, 1995 through
March 1996. The Company is required to pay an index price to its financial
counterparty. The Company sold a call option on 20,000 MMBtu per day for April
through October 1996. Under this option, the Company will receive $1.86 per
MMBtu should the option holder elect to exercise.

C. The Company's gas hedges also include a collar in which the Company sold
a call and purchased a put with respect to 10,000 MMBtu per day in 1996 with
an average floor (put) price of $1.60 per MMBtu and an average ceiling (call)
price of $1.92 per MMBtu. Under this arrangement, the Company receives a
payment if the index price falls below the floor and makes a payment to the
counterparty if the index price exceeds the ceiling. To reduce exposure to
increasing index prices, the Company purchased call options with prices
averaging $2.673 per MMBtu January-March and $1.969 per MMBtu April-December,
1996.

F-15
<PAGE>

BARRETT RESOURCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

D. The Company has entered into basis swaps to minimize different index
price fluctuations. The Company will receive a payment in the event that the
New York Mercantile Exchange ("NYMEX") price per MMBtu for a reference period
exceeds the average specified index price by more than an average of $0.29 on
10,000 MMBtu of gas per day from January through March 1996 ($0.44 on 5,000
MMBtu of gas per day for April 1996). In separate basis swaps, the Company
will receive a payment in the event the specified index price exceeds the
NYMEX price net of a basis adjustment of an average of $0.48 on 10,000 MMBtu
of gas per day from January through October 1996. Conversely, the Company will
be required to make payments to the counterparty if the opposite situation
exists in these swaps. These swaps were entered to offset a portion of the
risk associated with the Company's long-term firm transportation portfolio.

E. With respect to crude oil production, the Company entered into a price
swap whereby the Company will receive a fixed price of $18.00 per Bbl for
1,000 Bbls per day through March 1996. The Company is required to pay the
counterparty a NYMEX settlement price.

As of December 31, 1995, some of the Company's hedging positions described
above did not qualify for hedge accounting due to reduced correlation between
the index price and the prices to be realized for certain physical gas
deliveries. Accordingly, the Company recognized hedging losses of $1.2 million
in the fourth quarter of 1995. These losses offset hedging gains of $1.6
million realized in 1995. The net hedging gain was included in gas and oil
revenues. The Company paid and received certain premiums related to its option
contracts for future periods. The unrealized hedging losses and net deferred
premium costs have been included in other liabilities.

During the first quarter ended March 31, 1996, the Company recognized net
production hedging expense of $812,000 which was recorded in the consolidated
statements of income as adjustments of gas and oil production revenue. As of
March 31, 1996, the Company held positions to hedge production of 0.075 Bcf of
gas and 91 MBbls of oil.

During 1995, the Company incurred a net cost of $2.1 million to hedge the
index based price for a portion of its gas purchased in various transactions
for gas trading activities. These payments allowed the Company to purchase gas
on a fixed price basis to satisfy fixed price sales commitments. This hedging
allowed the Company to avoid gas price fluctuations for the related
transactions so that the Company realized the gross profit margins anticipated
upon entering into the trading arrangements. This hedging cost is included in
the income statement as a component of "Cost of Trading."

10. COMMITMENTS AND CONTINGENCIES

Lease Commitments

The minimum future payments under the terms of operating leases, principally
for office space, are as follows:

<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
Year ended December 31, 1996.. $1,012
1997........................ 988
1998........................ 1,001
1999........................ 887
2000........................ 610
2001........................ 205
------
$4,703
======
</TABLE>

The Company plans to sublet office space vacated with the consolidation and
relocation of its Denver offices and accordingly anticipates a substantial
reduction in rental expense for the years 1996 through 1999. Rent expense was
$956,000, $859,000 and $788,000 for the years ended December 31, 1995, 1994
and 1993, respectively.

F-16
<PAGE>

BARRETT RESOURCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Litigation

On November 2, 1994, a putative class action was filed in Delaware Chancery
Court. In that case, entitled Miller v. Cody, the plaintiff has alleged that
certain named former directors of Plains, and Plains, have, among other
things, breached their fiduciary duties and otherwise acting to entrench
themselves in office. Plaintiff seeks various forms of injunctive relief,
damages and an award of plaintiff's costs and disbursements.

On May 3, 1995, the same day Plains announced it had executed a merger
agreement with the Company, a putative class action, entitled Crandon Capital
Partners v Miller, was filed in Delaware Chancery Court against Plains and the
then-current members of its Board of Directors. In this suit it is alleged
that, among other things, the agreement was inadequate, plaintiff seeks
various forms of declaratory and injunctive relief, damages and an award of
plaintiff's costs and disbursements.

In March 1996, these two putative class actions were dismissed without
prejudice. No defendant paid any consideration for such dismissals.

At December 31, 1995, the Company was a party to certain other legal
proceedings which have arisen out of the ordinary course of business. Based on
the facts currently available, in managements opinion the liability,
individually or in the aggregate, if any, to the Company resulting from such
actions will not have a material adverse effect on the Company's consolidated
financial position or results of operations.

Environmental Controls

At year end 1995, there were no known environmental or other regulatory
matters related to the Company's operations which are reasonably expected to
result in a material liability to the Company. Compliance with environmental
laws and regulations has not had, and is not expected to have, a material
adverse effect on the Company's capital expenditures, earnings or competitive
position.

Major Purchaser

During 1995, one purchaser accounted for 18 percent of the Company's total
revenue (24 percent of gas and oil revenues.) Sales of gas to this purchaser
represented 19 percent and 29 percent of total revenues in 1994 and 1993,
respectively.

11. INCOME TAXES

The provision for income taxes consists of the following:

<TABLE>
<CAPTION>
1993 1994 1995
------ ------ ------
(IN THOUSANDS)
<S> <C> <C> <C>
Current:
Federal................................................. $ 174 $ 233 $ 269
State................................................... 416 117 (233)
------ ------ ------
$ 590 $ 350 $ 36
Deferred:
Federal................................................. $5,138 $4,511 $2,039
State................................................... 993 277 (241)
------ ------ ------
$6,131 $4,788 $1,798
------ ------ ------
$6,721 $5,138 $1,834
====== ====== ======
</TABLE>

F-17
<PAGE>

BARRETT RESOURCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

The difference between the provision for income taxes and the amounts which
would be determined by applying the statutory federal income tax rate to
income before provision for income taxes is analyzed below:

<TABLE>
<CAPTION>
1993 1994 1995
------- ------ ------
(IN THOUSANDS)
<S> <C> <C> <C>
Tax by applying the statutory federal income tax rate
to pretax accounting income (loss).................. $ 7,365 $5,753 $ (138)
Increase (decrease) in tax from:
Change in valuation allowance...................... (1,477) (2,148) 396
State income taxes................................. 1,409 394 (474)
Non-deductible merger costs........................ -- -- 2,429
Other, net......................................... (576) 1,139 (379)
------- ------ ------
$ 6,721 $5,138 $1,834
======= ====== ======
</TABLE>

Long-term deferred tax assets (liabilities) are comprised of the following
at December 31, 1995 and 1994:

<TABLE>
<CAPTION>
1994 1995
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Deferred tax assets:
Allowance for losses..................................... $ 624 $ 81
Loss carryforwards and other............................. 30,221 26,520
-------- --------
Gross deferred tax assets.............................. $ 30,845 $ 26,601
Deferred tax liabilities:
Deferred revenue--partnership activities................. $ (1,086) $ (466)
Depreciation, depletion and amortization................. (50,650) (48,460)
Capitalized interest on other assets..................... (38) (6)
-------- --------
Gross deferred tax liabilities......................... $(51,774) $(48,932)
Net deferred tax liability........................... (20,929) (22,331)
Valuation allowance.................................. (797) (1,193)
-------- --------
$(21,726) $(23,524)
======== ========
</TABLE>

Valuation allowances of $1,193,000 and $797,000 were provided at December
31, 1995 and 1994, respectively, based on carryforward amounts which may not
be utilized before expiration and the possible effect of exploratory drilling
costs.

F-18
<PAGE>

BARRETT RESOURCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

The Company has the following net operating loss and investment tax credit
carryforwards available:

<TABLE>
<CAPTION>
EXPIRATION NET OPERATING INVESTMENT
YEAR LOSS TAX CREDIT
---------- ------------- ----------
(IN THOUSANDS)
<S> <C> <C>
1996....................... $ 4,227 $172
1997....................... 4,673 246
1998....................... 8,090 103
1999....................... 6,530 100
2000....................... 4,900 25
2001....................... 3,274 5
2002....................... 108 --
2004....................... 197 --
2005....................... 685 --
2006....................... 1,446 --
2007....................... 37 --
2008....................... 22,352 --
2009....................... 6,123 --
------- ----
Total...................... $62,642 $651
======= ====
</TABLE>

A substantial portion of the net operating losses were acquired in
conjunction with purchased operations.

The 1990 public offering of common stock by the Company before the Plains
merger resulted in a change in the Company's ownership as defined in Section
382 of the Internal Revenue Code. The effect of this change in ownership
limits the utilization of net operating losses for income tax purposes to
approximately $3,069,000 per year which affects $13,590,000 of the net
operating losses. The 1995 merger with Plains also resulted in a change in the
Company's and Plains' ownership as defined by Section 382 of the Internal
Revenue Code. The change effectively limits the utilization of the remaining
net operating losses for income tax purposes to approximately $14,000,000 for
each company. Portions of the above limitations which are not used each year
may be carried forward to future years.

The Internal Revenue Service (IRS) has examined the federal tax returns of
Plains for the calendar years 1991, 1992 and 1993. In a report to the Company,
transmitted by a "30-day letter" that requests a response by the Company
within a 30 day period, the IRS has proposed a tax deficiency of $5.3 million
together with penalties of $1.1 million, and an undetermined amount of
interest. The IRS proposed deficiency resulted primarily from the disallowance
of certain net operating loss deductions claimed during the periods under
examination. These net operating losses originally were incurred by a company
that was acquired by Plains in 1986. The Company currently has additional
unused net operating loss carryforwards of approximately $30 million related
to the same acquisition.

Management disagrees with the IRS position, and the Company has rejected the
IRS's position by refusing to accept the adjustments proposed in the 30-day
letter. In management's opinion, the federal tax returns of Plains under
examination reflect the proper federal income tax liability and the existing
net operating loss carryforwards are appropriate as supported by relevant
authority. The Company will vigorously contest these proposed adjustments and
believes it will prevail in its positions. It is anticipated that the final
determination of this matter will involve a lengthy process.

F-19
<PAGE>

BARRETT RESOURCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

12. SUPPLEMENTAL CASH FLOW SCHEDULES AND INFORMATION

<TABLE>
<CAPTION>
1993 1994 1995
---- ---- ------
(IN THOUSANDS)
<S> <C> <C> <C>
CASH PAID DURING YEARS:
Income tax................................................... $426 $338 $ 65
Interest..................................................... 792 711 5,129

SUPPLEMENTAL INFORMATION OF NONCASH INVESTING AND FINANCING ACTIVITIES:

Issuance of common stock exchanged for treasury shares in
cashless option transactions................................ $204 $313 $ 545
</TABLE>

In May 1994, Plains completed a contingent provision of the 1990 McAdams,
Roux and Associates, Inc. (MRA) Agreement and Plan of Merger, as it related to
the right of the MRA shareholders to receive additional shares of Plains'
common stock and cash subject to reserves additions on certain property
interests owned by MRA prior to the merger. Under this Agreement, 31,873
shares of Plains' common stock were issued and a cash payment of $1.5 million
was paid to MRA's shareholders in settlement of this obligation.

13. RELATED PARTIES

During the years ended December 31, 1995, 1994 and 1993 Zenith was billed by
the Company as operator, approximately $1,062,000, $1,853,000 and $2,555,000,
respectively, for Zenith's portion of lease operating expenses and development
costs in certain leases operated by the Company. Also as a result of Zenith's
working interest ownership, the Company distributed gas and oil revenue of
approximately $942,000, $936,000 and $1,074,000 to Zenith during 1995, 1994
and 1993, respectively. Zenith owns its working interests subject to the same
terms and arrangements that exist for all working interest owners in the
properties. Zenith owns approximately three percent of the Company's common
stock and its president is a member of the Company's board of directors.

During 1993, the Company and Zenith both sold their respective interests in
the Wattenberg field. The Company and Zenith jointly negotiated the sale but
the purchaser independently determined the individual offer prices and entered
into separate sales agreements with each party.

Grand Valley Corporation owns approximately 10 percent of a pipeline joint
venture for gas gathering of which a subsidiary of the Company owns
approximately 29 percent. A member of the Company's board of directors owns 10
percent of the outstanding stock, and is the president of Grand Valley
Corporation. His three adult children own the remaining 90 percent of the
outstanding stock of Grand Valley Corporation.

14. QUARTERLY INFORMATION (UNAUDITED)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------------------------------
3/31/95 6/30/95 9/30/95 12/31/95
--------- --------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
1995
Net revenues....................... $ 33,060 $ 31,277 $ 27,217 $ 35,070
Gross margin....................... 8,611 8,039 6,476 7,882
Income (loss) from operations...... 4,327 3,997 (11,389) 2,659
Net income (loss).................. 3,014 2,957 (11,848) 3,637
Net income (loss) per share........ 0.11 0.13 (0.47) 0.14
</TABLE>

F-20
<PAGE>

BARRETT RESOURCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
----------------------------------------
3/31/94 6/30/94 9/30/94 12/31/94
--------- --------- --------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
1994
Net revenues......................... $ 25,543 $ 24,420 $ 24,222 $ 33,076
Gross margin......................... 8,572 7,499 6,027 6,990
Income from operations............... 5,217 3,869 2,834 4,517
Net income........................... 3,799 2,610 2,081 2,809
Net income per share................. 0.15 0.12 0.08 0.11
<CAPTION>
THREE MONTHS ENDED
----------------------------------------
3/31/93 6/30/93 9/30/93 12/31/93
--------- --------- --------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
1993
Net revenues......................... $ 30,258 $ 26,157 $ 22,836 $ 24,831
Gross margin......................... 8,832 8,759 6,902 7,346
Income from operations............... 6,163 5,649 4,845 4,386
Income before cumulative effect of
change in method of accounting for
income taxes........................ 3,828 3,492 3,934 3,068
Net income........................... 3,172 3,492 3,934 3,068
Earnings per share:
From continuing operations......... 0.16 0.14 0.16 0.12
Net income......................... 0.13 0.14 0.16 0.12
</TABLE>

15. SUBSEQUENT EVENTS (UNAUDITED)

On April 10, 1996, the Company acquired for $2.7 million additional gas and
oil interests located in the Piceance Basin from Zenith. In addition, GVC was
merged into and with a subsidiary of the Company in exchange for 350,000
shares of the Company's Common Stock. Through this merger, the Company
increased its interest in the Grand Valley Gathering System to approximately
39.5%.

Mr. C. Robert Buford, a director of the Company, owned 89 percent of the
outstanding stock of Zenith. Prior to the merger of GVC into the Company, Mr.
Buford owned 10 percent of GVC outstanding stock and his three adult children
owned the remaining 90 percent. A Special Committee of the Board of Directors
of the Company negotiated the terms of these transactions and obtained a
fairness opinion regarding such terms from an investment banking firm.

At the Company's June 5, 1996 Annual Meeting of Stockholders, the
stockholders approved an amendment to the Company's 1994 Stock Option Plan
increasing from 400,000 to 1,000,000 the number of shares of the Company's
Common Stock issuable pursuant to options granted under such plan. The
stockholders also approved an amendment to the Company's Non-Discretionary
Stock Option Plan increasing from 100,000 to 200,000 the number of shares of
the Company's Common Stock issuable pursuant to options granted under such
plan.

F-21
<PAGE>

SUPPLEMENTAL GAS AND OIL INFORMATION

The following is information pertaining to the Company's gas and oil
producing activities for the years ended December 31, 1995, 1994 and 1993.

Costs incurred in gas and oil property acquisition, exploration, and
development activities:

<TABLE>
<CAPTION>
1993 1994 1995
-------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Acquisition of evaluated properties............... $ 6,119 $35,234 $ 7,429
Acquisition of unevaluated properties............. 1,013 8,446 8,383
Exploration costs................................. 12,593 36,232 23,272
Development costs................................. 21,538 20,190 33,029
Other, principally proceeds from mineral convey-
ances............................................ (15,680) (173) (426)
-------- ------- -------
Total additions to gas and oil properties......... $ 25,583 $99,929 $71,687
======== ======= =======
</TABLE>

GAS AND OIL RESERVE INFORMATION (UNAUDITED):

The following reserve related information for 1995 is based on estimates
prepared by the Company. The 1995 reserve information for the Company,
exclusive of the reserves owned by its subsidiary, Plains, were reviewed by
Ryder Scott, an independent reservoir engineer. The 1995 reserve information
for Plains was reviewed by Netherland, Sewell & Associates, Inc., an
independent reservoir engineer. The Company's 1994 and 1993 reserves,
exclusive of Plains were prepared by the Company and reviewed by Ryder Scott
as of September 30, of each year. The 1994 and 1993 proved developed reserve
estimates of Plains were prepared by Netherland, Sewell & Associates, Inc.
whereas the proved undeveloped reserve estimates were prepared by Plains.
Reserve estimates are inherently imprecise and are continually subject to
revisions based on production history, results of additional exploration and
development, prices of gas and oil and other factors.

PROVED DEVELOPED AND UNDEVELOPED RESERVES:

<TABLE>
<CAPTION>
1993 1994 1995
--------------------- --------------------- ---------------------
GAS (MMCF) OIL (MBBL) GAS (MMCF) OIL (MBBL) GAS (MMCF) OIL (MBBL)
---------- ---------- ---------- ---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
PROVED RESERVES:
Beginning of year....... 370,621 10,553 364,791 6,947 458,820 11,444
Revisions of previous
estimates.............. (5,418) (3,426) (5,640) 772 (3,805) 1,209
Purchase of minerals in
place.................. 6,794 217 38,717 2,533 3,983 831
Extensions and discover-
ies.................... 28,482 1,208 94,276 2,547 102,329 1,232
Production.............. (31,712) (1,293) (33,282) (1,293) (47,692) (1,702)
Sale of minerals in
place.................. (3,976) (312) (42) (62) (104) (47)
------- ------ ------- ------ ------- ------
End of year............. 364,791 6,947 458,820 11,444 513,531 12,967
======= ====== ======= ====== ======= ======
PROVED DEVELOPED RE-
SERVES:
Beginning of year....... 350,131 7,398 342,287 5,548 393,051 7,848
End of year............. 342,287 5,548 393,051 7,848 419,672 11,669
</TABLE>

F-22
<PAGE>

The following is the standardized measure of discounted future net cash
flows relating to proved gas and oil reserves in which the Company has an
interest.

<TABLE>
<CAPTION>
1993 1994 1995
--------- --------- ----------
(IN THOUSANDS)
<S> <C> <C> <C>
Future cash inflows......................... $ 789,693 $ 931,404 $1,132,711
Future production costs..................... (266,920) (310,485) (355,756)
Future development costs.................... (22,349) (41,972) (46,888)
Future income tax expenses.................. (135,165) (152,890) (207,922)
--------- --------- ----------
Future net cash flows....................... $ 365,259 $ 426,057 $ 522,145
10% annual discount for estimated timing of
cash flows................................. (162,173) (183,436) (212,271)
--------- --------- ----------
Standardized measure of discounted future
net cash flows............................. $ 203,086 $ 242,621 $ 309,874
========= ========= ==========
</TABLE>

The future income tax expenses have been computed considering the tax basis
of the gas and oil properties, and net operating and other loss carryforwards.

The following are the principal sources of changes in the standardized
measure of discounted future net cash flows:

<TABLE>
<CAPTION>
1993 1994 1995
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Net change in sales price and production costs.. $ 12,283 $(22,409) $ 24,558
Changes in estimated future development costs... 11,160 14,492 10,301
Sales and transfers of gas and oil produced,
net of production costs........................ (53,594) (50,571) (62,294)
Net change due to extensions and discoveries.... 20,739 60,613 85,524
Net change due to purchases and sales of miner-
als in place................................... (1,210) 32,726 7,424
Net change due to revisions in quantities....... (18,272) (588) (1,393)
Net change in income taxes...................... (4,711) (10,202) (33,172)
Accretion of discount........................... 26,965 27,589 23,112
Other, principally revisions in estimates of
timing
of production.................................. 5,859 (12,115) 13,193
-------- -------- --------
Net changes..................................... $ (781) $ 39,535 $ 67,253
Balance, beginning of year...................... 203,867 203,086 242,621
-------- -------- --------
Balance, end of year............................ $203,086 $242,621 $309,874
======== ======== ========
</TABLE>

F-23
<PAGE>

UNDERWRITING

Subject to the terms and conditions of the Underwriting Agreement, the
Company has agreed to sell to each of the U.S. Underwriters named below, and
each of such U.S. Underwriters, for whom Goldman, Sachs & Co., Salomon
Brothers Inc, Howard, Weil, Labouisse, Friedrichs Incorporated and Petrie
Parkman & Co., Inc. are acting as representatives, has severally agreed to
purchase from the Company, the respective number of shares of Common Stock set
forth opposite its name below:

<TABLE>
<CAPTION>
NUMBER OF
SHARES OF
UNDERWRITER COMMON STOCK
----------- ------------
<S> <C>
Goldman, Sachs & Co............................................. 546,006
Salomon Brothers Inc............................................ 546,006
Howard, Weil, Labouisse, Friedrichs Incorporated................ 546,006
Petrie Parkman & Co., Inc....................................... 546,006
George K. Baum & Company........................................ 77,998
Bear, Stearns & Co. Inc. ....................................... 120,000
A.G. Edwards & Sons, Inc. ...................................... 120,000
First Albany Corporation........................................ 77,998
Furman Selz LLC................................................. 77,998
Hanifen, Imhoff Inc. ........................................... 77,998
Johnson Rice & Company L.L.C. .................................. 77,998
Legg Mason Wood Walker Incorporated............................. 77,998
Lehman Brothers Inc. ........................................... 120,000
PaineWebber Incorporated........................................ 120,000
Principal Financial Securities, Inc............................. 77,998
Prudential Securities Incorporated.............................. 120,000
Rauscher Pierce Refsnes, Inc. .................................. 77,998
Southcoast Capital Corporation.................................. 77,998
Stephens Inc.................................................... 77,998
Wasserstein Perella Securities, Inc. ........................... 120,000
Williams MacKay Jordan & Co., Inc. ............................. 77,998
Wm Smith Securities Incorporated................................ 77,998
---------
Total......................................................... 3,840,000
=========
</TABLE>

Under the terms and conditions of the Underwriting Agreement, the U.S.
Underwriters are committed to take and pay for all of the shares offered
hereby, if any are taken.

The U.S. Underwriters propose to offer the shares of Common Stock in part
directly to the public at the initial public offering price set forth on the
cover page of this Prospectus and in part to certain securities dealers at
such price less a concession of $.76 per share. The U.S. Underwriters may
allow, and such dealers may reallow, a concession not in excess of $.10 per
share to certain brokers and dealers. After the shares of Common Stock are
released for sale to the public, the offering price and other selling terms
may from time to time be varied by the representatives.

The Company has entered into an underwriting agreement (the "International
Underwriting Agreement") with the underwriters of the international offering
(the "International Underwriters") providing for the concurrent offer and sale
of 960,000 shares of Common Stock in an international offering outside the
United States. The offering price and aggregate underwriting discounts and
commissions per share for the two offerings are identical. The closing of the
offering made hereby is a condition to the closing of the international
offering, and vice versa. The representatives of the International
Underwriters are Goldman Sachs International, Salomon Brothers International
Limited, Howard, Weil, Labouisse, Friedrichs Incorporated and Petrie Parkman &
Co., Inc.

U-1
<PAGE>

Pursuant to an Agreement between the U.S. and International Underwriting
Syndicates (the "Agreement Between") relating to the two offerings, each of
the U.S. Underwriters named herein has agreed that, as a part of the
distribution of the shares offered hereby and subject to certain exceptions,
it will offer, sell or deliver the shares of Common Stock, directly or
indirectly, only in the United States of America (including the States and the
District of Columbia), its territories, its possessions and other areas
subject to its jurisdiction (the "United States") and to U.S. persons, which
term shall mean, for purposes of this paragraph: (a) any individual who is a
resident of the United States or (b) any corporation, partnership or other
entity organized in or under the laws of the United States or any political
subdivision thereof and whose office most directly involved with the purchase
is located in the United States. Each of the International Underwriters has
agreed pursuant to the Agreement Between that, as a part of the distribution
of the shares offered as a part of the international offering, and subject to
certain exceptions, it will (i) not, directly or indirectly, offer, sell or
deliver shares of Common Stock (a) in the United States or to any U.S. persons
or (b) to any person who it believes intends to reoffer, resell or deliver the
shares in the United States or to any U.S. persons, and (ii) cause any dealer
to whom it may sell such shares at any concession to agree to observe a
similar restriction.

Pursuant to the Agreement Between, sales may be made between the U.S.
Underwriters and the International Underwriters of such number of shares of
Common Stock as may be mutually agreed. The price of any shares so sold shall
be the initial public offering price, less an amount not greater than the
selling concession.

The Company has granted to the U.S. Underwriters an option exercisable for
30 days after the date of this Prospectus to purchase up to an aggregate of
480,000 additional shares of Common Stock solely to cover over-allotments, if
any. If the U.S. Underwriters exercise their over-allotment option, the U.S.
Underwriters have severally agreed, subject to certain conditions, to purchase
approximately the same percentage thereof that the number of shares to be
purchased by each of them, as shown in the foregoing table, bears to the
3,840,000 shares of Common Stock offered. The Company has granted the
International Underwriters a similar option to purchase up to an aggregate of
120,000 additional shares of Common Stock.

The Company, its directors and certain of its executive officers, and their
affiliates, have agreed that during the period beginning from the date of this
Prospectus and continuing to and including the date 120 days after the date of
the Prospectus, they will not offer, sell, contract to sell or otherwise
dispose of any securities of the Company (other than pursuant to the employee
stock option plans existing, or on the conversion or exchange of convertible
or exchangeable securities outstanding, on the date of this Prospectus) which
are substantially similar to the shares of the Common Stock or which are
convertible or exchangeable into securities which are substantially similar to
the shares of Common Stock without the prior written consent of the
representatives, except for the shares of Common Stock offered in connection
with the concurrent U.S. and international offerings.

The Company has agreed to indemnify the several Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933.

This Prospectus may be used by underwriters and dealers in connection with
offers and sales of the Common Stock, including shares initially sold in the
international offering, to persons located in the United States.

Goldman, Sachs & Co. provided Plains, and Petrie Parkman & Co., Inc.
provided the Company, with investment banking services in connection with the
merger of Plains and the Company. Howard, Weil, Labouisse, Friedrichs
Incorporated provided the Company with an opinion that the terms of the recent
acquisitions from Zenith and GVC were fair to the Company.

Phibro Energy, a division of Salomon Inc, which is the parent company of
Salomon Brothers Inc, has engaged in swap transactions concerning natural gas
pricing with the Company. The Company does not pay Phibro or Salomon Brothers
Inc any compensation, other than its obligations pursuant to the swap
arrangement, in connection with this transaction. The Company may enter into
additional transactions with Phibro in the future.

U-2
<PAGE>

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRE-
SENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY
SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFOR-
MATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.

---------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary....................................................... 3
Risk Factors............................................................. 8
The Company.............................................................. 10
Use of Proceeds.......................................................... 10
Price Range of Common Stock.............................................. 11
Dividend Policy.......................................................... 11
Capitalization........................................................... 12
Selected Consolidated Financial Data..................................... 13
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 15
Business and Properties.................................................. 21
Management............................................................... 37
Beneficial Owners of Securities.......................................... 41
Description of Capital Stock............................................. 42
Legal Matters............................................................ 43
Experts.................................................................. 43
Available Information.................................................... 43
Incorporation of Certain Documents by Reference.......................... 44
Certain Definitions...................................................... 44
Index to Consolidated Financial Statements............................... F-1
Underwriting............................................................. U-1
</TABLE>

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

4,800,000 SHARES

BARRETT RESOURCES CORPORATION

COMMON STOCK
(PAR VALUE $0.01 PER SHARE)

---------------

[LOGO OF BARRETT RESOURCES CORPORATION APPEARS HERE]

---------------

GOLDMAN, SACHS & CO.

SALOMON BROTHERS INC

HOWARD, WEIL, LABOUISSE, FRIEDRICHS
INCORPORATED

PETRIE PARKMAN & CO.

REPRESENTATIVES OF THE UNDERWRITERS

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------