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These pro forma amounts may not be representativeof future disclosures since the estimated fair value of stock options is amortized to expense over the vesting period and additional options may be granted in future years. 

## TREASURY STOCK 

Treasury stock purchases ar accounted for under the cost method whereby the cost of the acquired stock is recorded as treasury stock. Gains and losses on the subsequent reissuance of shares are credited or charged to additional paid-in-capital using the average-cost method. 

## NOTE 2 DISCONTINUED OPERATIONS 

On September 30, 2002, the Company’ distribution of 100 percent of the common stock of Cimarex Energy Co. and the merger of Key Production Company, Inc. with Cimar ex was completed. In connection with the distribution, approximately 26.6 million shares of the Cimarex Ener gy Co. common stock on a diluted basis were distributed to shareholders of the Company of recor on September 27, 2002. The Cimarex Energy Co. stock distribution was recorded as a dividend and resulted in a decrease to consolidated shareholders’ equity of approximately $152.2 million. The Company does not own any common stock of Cimarex Energy Co. 

Under terms of a tax sharing agreement, each party has agreed to indemnify the other in respect of all taxes for which it is responsible under the tax sharing agreement. Cimarex is responsible for all taxes related to the exploration and production business for all past and futur e periods, including all taxes arising from the Cimarex business prior to the time Cimarex was formed, and agr ees to hold the Company harmless in respect of those 

