La Jolla, California (Platts)--11May2009

The current oil and gas industry downturn, which some analysts call the
worst since the 1980s, is likely to get worse before it gets better, the Texas
Alliance of Energy Producers said Monday in unveiling its latest Texas
PetroIndex.

"Five months into this cycle, deep negatives in oil and gas wellhead
prices, the rig count, drilling permits, and production values suggest that
the current recessionary trend will continue to pick up steam in the coming
months," Alliance economist Karr Ingham said in a statement.

"Considering the depth and rapidity of the slowdown, there's no reason to
believe it will be shorter than the past two economic cycles chronicled by the
TPI" in 1997-1999 and 2001-2002," Ingham said.

If so, that would place recovery "well into 2010," he said, even assuming
a rebound in the US economy later this year and a subsequent increase in
demand for energy products.

The first Texas oil and gas industry recession chronicled by TPI lasted
19 months, from November 1997 through June 1999. The second downturn lasted
about 12 months, from August 2001 to August 2002.

Ingham said employment in Texas' oil and gas industry remained
"relatively strong" in March, as roughly 226,000 people were employed in
petroleum jobs there. Texas oil and gas industry employment peaked in
December of last year at over 240,000.

The Texas PetroIndex, which Ingham developed, represents a composite
index based upon a set of upstream economic indicators. In March 2009, the
PetroIndex declined to 258.7, down from 264.6 in February and from the
September and October 2008 peaks of 285.4.

The Alliance is the US' largest state association of independent oil and
gas producers.

--Starr Spencer, starr_spencer@platts.com