and full-time supervision.

Publicly offered limited

partnerships investing in income producing oil and gas
properties also offer a vehicle that will permit these
small plans to diversify their investments even further.
One of the concerns I have in this business is
the need to offer a broad range of prudent investments.
A prudent investment is one that will meet the test of
time and the test of quality and those characteristics
cannot easily be defined. For instance, there are some
mutual funds which do not meet these requirements in my
opinion. There are many other investments which are not
subject to the unrelated business income tax which in my
opinion would not meet the fiduciary requirements under
ERISA. On the other hand, investments in many oil and
gas limited partnerships would constitute a prudent

investment under ERISA.

This legislation will make prudent diversification possible and will be of particular interest to the kind of plan we serve. There are millions of small employers in this country, and a great many of them will welcome this change as an opportunity to diversify their plan investments and hopefully achieve a better rate of return, and thus, a better retirement for their employees.

This legislation will give opportunities for greater diversification and will allow those of us in the marketplace more sources of supply for this type of product.

WHY DAMSON
INSTITUTIONAL
OIL & GAS

INCOME FUNDS?

The information in this bulletin is restricted to broker/dealer use only. It may not be reproduced in any form or manner and may not be shown to any prospective offeree. An offer may be made to a prospective investor only through a current prospectus and authorized sales literature. Each Damson oil and gas income partnership is a separate entity and there is no assurance that subsequent results will be the same.

A"

you need to sell Damson Institutional Oil & Gas Income Funds is an understanding of the oil and gas outlook and the investment potential within the institutional market. Answer these questions and you'll increase your sales: WHY OIL AND GAS? WHY DAMSON OIL? WHY DAMSON INSTITUTIONAL OIL & GAS INCOME FUNDS?

"Brokers...found out the buying public was interested in the cash yield promised by income funds. They haven't put down the phone since." That was the conclusion of the Oil And Gas Investor in December, 1982. In fact, oil and gas income fund sales increased by over 30% last year and are projected to top $1.2 billion in 1983, a ten time increase over sales in 1980. As the March, 1983 National Tax Shelter Digest discovered, “among the major tax shelter investments, oil and gas income funds have grown at the most significant rate over the last three years."

WHY OIL & GAS?

*The U.S. is the largest consumer of oil and gas in the world-approximately 14.7 million barrels a day by February, 1983–but the U.S. is currently producing only 10 million barrels a day, leaving a 4.7 million barrel a day shortfall.

* Consider the contrast in domestic consumption vs. production between 1962 and 1983:

*Many economists believe that the current price reductions in oil represent only a temporary condition, the result of a world wide recession accompanied by cutbacks in industrial production and an energy cost-conscious population–this situation is expected to reverse itself by the mid to late 1980s-(According to the International Energy Agency), “an oil shortage is likely to develop after 1985 unless more is done to reduce dependence on imported oil." (New York Times, October 11, 1982)

* In the meantime, many forecasters see the current situation as a scenario for increasing oil prices in the future-“(Declining prices and oversupply) could do more damage to the already faltering efforts to develop alternative energy sources...conservation efforts might also be undermined. People would suddenly find it less expensive to drive big cars and more attractive to turn up their thermostats. Businesses would think twice about buying costly new energy-efficient equipment. Some economists fear that the industrial nations could once again become dangerously dependent on unstable and unreliable foreign oil supplies.” (Time, February 7, 1983)

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*The increasing value of gas-gas is now selling at an approximate average price of $2.00 per cubic feet while the BTU equivalency with the price of oil (at $30 a barrel) is $5 per cubic feet-gas prices are expected to rise toward this BTU equivalency as deregulation of gas occurs in 1985-in anticipation of deregulation, Damson has generally invested 70-80% of its funds in natural gas-"Natural gas is the single most important domestic source of energy in the United States” (Glenn C. Loury, Professor of Economics, University of Michigan concluded in a recent study)

WHY DAMSON OIL?

A major factor in U.S. oil and gas limited partnerships, Damson:

* Has raised over $350 million in income fund subscriptions in the last year alone * Manages over $1 billion in future net revenues for its own account and its fully vested limited partnerships

*As of February, 1983, Damson had purchased interests for its limited partners in over 4800 wells located in 612 fields in 23 states

*Is more than just a fund management company-Damson is also an independent oil and gas exploration and production company with headquarters in Houston and regional offices throughout the oil and gas producing states

*Damson is offered many of the major producing properties on the market and applies exacting standards to its acquisition review-from September, 1977 through January, 1983, out of a total of 3300 properties initially reviewed, only 396 merited further consideration-the result was 66 successful purchases

*Because of our continued success in income fund sales, Damson is in a strong position to take advantage of the current availability of excellent high yielding properties-According to President Barrie M. Damson, “We intend to take advantage of opportunities in what we believe to be an excellent buyer's market"

*An example is Damson's acquisition from Petroleum Corporation ot Texas (“Petco”) in February, 1983–for approximately $160 million, Damson purchased for itself and its limited partners interests in over 2100 producing oil and gas wells located on approximately 425 properties in 11 states with future net revenues of approximately $544 million (escalated) and $312 million (unescalated)

*Robert Stanger of the Stanger Report is one of the many economic forecasters who shares Damson's view of the current market: “The price of purchasing existing reserves is extraordinarily attractive, probably 40% less than the price a year ago” (Oil and Gas Investor, December, 1982)

WHY DAMSON INSTITUTIONAL OIL & GAS
INCOME FUNDS?

*Damson has the only oil and gas income fund on the market which is geared specifically for institutional investors—“Damson Oil Corporation has introduced a unique program structured to accommodate both taxable and nontaxable institutions.” (Institutional Investor, July, 1982)