OUR CORPORATE GOVERNANCE PRINCIPLES:

       Our management and board of directors remain committed to conducting
business consistent with good corporate governance practices. In 1998, our board
of directors established a nominating and governance committee whose members
currently are Isaac Arnold, Jr. who acts as Chairperson, Robert L. Gerry III,
James T. Jongebloed and Sheryl K. Pressler.

       In 1998 the nominating and governance committee recommended, and the full
board of directors adopted, the "Nuevo Energy Company Corporate Governance
Guidelines." In 2003, the committee recommended and the board of directors
approved changes to the guidelines to be consistent with recently enacted
legislative and regulatory requirements. The guidelines are posted on our
website and published in our proxy in order to inform stockholders of the
board's current thinking with respect to selected corporate governance issues.
The board will continue to assess the effectiveness of the guidelines, and it is
likely that changes to the guidelines will be considered from time to time.
Compliance with the Corporate Governance Guidelines is reviewed annually in
connection with the preparation of our proxy and each director has confirmed his
or her compliance with the guidelines.

BOARD MISSION & OBJECTIVES

        Mission Statement

       The company's primary objective is to maximize stockholder value while
adhering to the laws of the jurisdictions wherein it operates and at all times
observing the highest ethical standards. The company will pursue this objective
primarily through participation in the energy industry.

        Corporate Authority & Responsibility

       All corporate authority resides in the board of directors as the
representative of the stockholders. Authority is delegated to management by the
board in order to implement the company's mission. Such delegated authority
includes the authorization of spending limits and the authority to hire
employees and terminate their services. The board retains responsibility to
recommend candidates to the stockholders for election to the board of directors.
The board retains responsibility for selection and evaluation of the CEO,
oversight of the succession plan, determination of senior management
compensation, approval of the annual budget, assurance of adequate systems,
procedures and controls, as well as assisting in the preparation and approval of
the strategic plan. Additionally, the board provides advice and counsel to
senior management.

DIRECTORS

        Personal Characteristics & Core Competencies of Directors

       Individual directors should possess all of the following personal
characteristics:

       INTEGRITY AND ACCOUNTABILITY - Character is the primary consideration in
       evaluating any board member. Directors should demonstrate high ethical
       standards and integrity in their personal and professional dealings and
       be willing to act on and remain accountable for their boardroom
       decisions.

       INFORMED JUDGMENT - Board members should have the ability to provide
       wise, thoughtful counsel on a broad range of issues. Directors should
       possess high intelligence and wisdom and apply it in decision making.

       FINANCIAL LITERACY - One of the important roles of the board is to
       monitor the company's financial performance. Board members should be
       financially literate. Directors should know how to read a balance sheet,
       income statement and cash flow statement, and understand the use of
       financial ratios and other indices for evaluating company performance.

       MATURE CONFIDENCE -- The board functions best when directors value board
       and team performance over individual performance. Openness to other
       opinions and the willingness to listen should rank as highly as the
       ability to communicate persuasively. Board members should approach others
       assertively, responsibly and supportively and raise tough questions in a
       manner that encourages open discussion.

       HIGH PERFORMANCE STANDARDS - In today's highly competitive world, only
       companies capable of performing at the highest levels are likely to
       prosper. Board members should have a history of achievements that reflect
       high standards for themselves and others.

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       PASSION - Directors should be passionate about the performance of the
       company, both in absolute terms and relative to its peers. That passion
       should manifest itself in engaged debate about the future of the company
       and an esprit de corps among the board that both challenges and inspires
       the company's employees.

       CREATIVITY - Success in the energy business will ultimately go to the
       participants who adapt quickly to changing environments and implement
       creative solutions to the significant challenges faced by industry
       participants. Board members should possess the creative talents needed to
       augment those of management.

        Core Competencies of the Board as a Whole

       To adequately fulfill the board's complex roles, from overseeing the
audit and monitoring managerial performance to responding to crises and
approving the company's strategic plan, a host of core competencies need to be
represented on the board. The board as a whole should possess the following core
competencies, with each member contributing knowledge, experience and skills in
one or more domains.

       ACCOUNTING AND FINANCE - Among the most important missions of the board
       is ensuring that stockholder value is both enhanced through corporate
       performance and protected through adequate internal financial controls.
       The board should have one or more directors with specific expertise in
       financial accounting.

       BUSINESS JUDGMENT - Stockholders rely on directors to make sensible
       choices on their behalf. The majority of directors should have a record
       of making good business decisions in the corporate sector.

       MANAGEMENT - To monitor corporate management, the board needs to
       understand management trends in general and industry trends in
       particular. The board should have one or more directors who understand
       and stay current on general management "best practices" and their
       application in complex, rapidly evolving business environments.

       CRISIS RESPONSE - Organizations inevitably experience both short and
       long-term crises. The ability to deal with crises can minimize
       ramifications and limit negative impact on firm performance. Boards
       should have one or more directors who have the ability and time to
       perform during periods of both short-term and prolonged crises.

       INDUSTRY KNOWLEDGE - Companies continually face new opportunities and
       threats that are unique to their industries. The board should have one or
       more members with appropriate and relevant industry-specific knowledge.

       INTERNATIONAL MARKETS - To succeed in an increasingly global economy, the
       board should have one or more directors who appreciate the importance of
       global business trends and who have first-hand knowledge of international
       business experience in those markets.

       LEADERSHIP - Ultimately, a company's performance will be determined by
       the directors' and CEO's ability to attract, motivate, and energize a
       high-performance leadership team. The board should have one or more
       directors who understand and possess empowerment skills and have a
       history of motivating high-performing talent.

       STRATEGY & VISION - A key board role is to approve and monitor company
       strategy to ensure the company's continued high performance. The board
       should have one or more directors with the skills and capacity to provide
       strategic insight and direction by encouraging innovation,
       conceptualizing key trends, evaluating strategic decisions, and
       continuously challenging the organization to sharpen its vision.

        Changes in Professional Responsibility

       The board should consider whether a change in an individual's
professional responsibilities directly or indirectly impacts that person's
ability to fulfill directorship obligations. To facilitate the board's
consideration, the board requires that the CEO and other inside directors submit
a resignation as a matter of course upon retirement, resignation, or other
significant change in professional roles and responsibilities. All directors
should submit a resignation as a matter of course upon retirement, a change in
employer, or other significant change in their professional roles and
responsibilities. If the board believes that a director will continue to make a
contribution to the organization, the continued membership of that director may
be supported.

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        Identification and Recruitment of Board Members

       One of the tasks of the nominating and governance committee is to
identify and recruit candidates to serve on the board of directors. A list of
candidates shall be presented to the board for nomination and to the
stockholders for consideration. The committee may at its discretion seek
third-party resources to assist in the process. The CEO will be included in the
process on a non-voting basis. The nominating and governance committee will make
the final recommendation to the board.

        Independent Directors

       A substantial majority of the board of directors shall be independent. An
independent director must meet the independence requirements of the NYSE and SEC
which generally requires the following:

       (1)   No director qualifies as "independent" unless the Board
             affirmatively determines that the director has no material
             relationship with the Company (either directly or as a partner,
             shareholder or officer of an organization that has a relationship
             with the Company), other than such director's capacity as a member
             of the Board, the Committee or any other Board committee.

       (2)   No director who is a former employee of the Company or any
             affiliate of the Company shall be considered "independent" until
             five years after such employment has ended. A director that was
             employed by a former parent or predecessor of the Company shall not
             be considered "independent" until five years after the relationship
             between the Company and the former parent or predecessor has ended.

       (3)   No director who is, or in the past five years has been, affiliated
             with or employed by a present or former External Auditor of the
             Company (or present or former external auditor of any of the
             Company's affiliates) shall be considered "independent" until five
             years after the end of either the affiliation or the auditing
             relationship.

       (4)   No director shall be considered "independent" if such director is,
             or in the past five years has been, employed by any company for
             which any officer of the Company serves or served as a member of
             its compensation committee (or, in the absence of a compensation
             committee, the board committee performing equivalent functions, or,
             in the absence of such committee, the board of directors) during
             the time that such director is or was so employed.

       (5)   Directors with immediate family members in the categories described
             in Section 2, 3 and 4 are likewise subject to the applicable
             five-year "cooling off" provisions of those Sections for purposes
             of determining "independence." However, employment of an immediate
             family member of a director in a non-officer position (as defined
             with reference to Rule 16a-1(f) under the Securities Exchange Act
             of 1934, as amended, or any successor rule) does not preclude the
             Board from determining that such director is "independent." The
             term "immediate family member" includes a person's spouse, parents,
             children, siblings, mother and father-in-law, sons and
             daughters-in-law, brothers and sisters-in-law, and anyone (other
             than such person's employees) who shares such person's home.

       The committee shall annually review and make a presentation to the board
for its determination of the independence of each director.

        Outside Directorships

       The CEO and senior management of Nuevo should limit outside directorships
to no more than three; non-employee directors who are employed on a full-time
basis should limit other directorships to three or four; and retired executives
should limit other directorships to five or six.

       Directors are expected to attend all board and committee meetings in
person or by phone. Directors shall be prepared by reviewing in advance all
materials and be present at the meeting in person or by phone until its
adjournment.

        Compensation of Directors

       In order to align the interests of directors and stockholders, directors
will be compensated in the form of cash and company equity only, with equity
constituting a substantial portion of the total up to 100%.

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        Direct Investment in the Company Stock by Directors

       Since a significant ownership stake leads to a stronger alignment of
interests between directors and stockholders, each director is required to
personally invest at least $100,000 in company stock within 3 years of joining
the board. Exceptions to this requirement may only be made by the board under
compelling mitigating circumstances.

        Service Limitations of Directors

       In order to replenish the board with fresh approaches to managing the
company, the maximum board tenure shall be 15 years.

       A board member may not stand for reelection after age 70, but need not
resign until the end of his or her term.

       In order to retain freshness in the process and to give new management
the unfettered ability to provide new leadership, a retiring CEO shall not
continue to serve on the board.

BOARD ORGANIZATION

        Board Size

       In general, smaller boards are more cohesive, work better together and
tend to be more effective monitors than larger boards. Therefore, the board
shall be composed of six to twelve members. However, in order to accommodate the
availability of an outstanding candidate the number of positions on the board
may be expanded.

        Committee Structure

       It is the general policy of the company that all major decisions will be
considered by the board as a whole. As a consequence, the committee structure of
the board is limited to those committees considered to be basic to or required
for the operation of the company as a publicly owned entity. Standing committees
shall include audit, compensation, and nominating and governance. All of the
committees shall be composed solely of independent directors. The board may form
other committees as it determines appropriate.

        Independent Chair

       The board believes that the company is best served by unifying the
positions of Chairman and CEO. This structure provides a single leader with a
single vision for the company and results in a more effective organization.

BOARD OPERATIONS

        Board Access to Senior Management

       Board members have full access to senior management and to information
about the company's operations. Except in unusual circumstances, the CEO should
be advised of significant contacts with senior management.

        Board Ability to Retain Advisors

       The board shall retain advisors as it believes to be appropriate. If
management is retaining advisors to assist the board, such decision must be
ratified by the board. Individual directors should not retain their own advisors
except in exceptional circumstances.

        Material in Advance of Meetings

       The board must be given sufficient information to fully exercise its
governance functions. This information comes from a variety of sources,
including management reports, a comparison of performance to plans, security
analysts' reports, articles in various business publications, etc. Generally,
board members will receive information prior to board meetings so they will have
an opportunity to reflect properly on the items to be considered at the meeting.

       The board will ensure that adequate time is provided for full discussion
of important items and that management presentations are scheduled in a manner
that permits a substantial proportion of board meeting time to be available for
open discussion.
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        Executive Session

       Time will be allotted at the end of each regularly scheduled board
meeting for an executive session involving only the independent directors. The
Chair of the nominating and governance committee or other independent director
designated annually by the majority of independent directors shall preside at
the executive session.

        Selection and Evaluation of CEO

       The selection and evaluation of the chief executive officer and
concurrence with the CEO's selection and evaluation of the company's top
management team are the most important functions of the board. In its broader
sense, "selection and evaluation" includes considering compensation, planning
for succession and, when appropriate, replacing the CEO or other members of the
top management team. The performance of the CEO will be reviewed at least
annually without the presence of the CEO or other inside directors. The board
should have an understanding with the CEO with respect to criteria on which he
or she will be evaluated, and the results of the evaluation will be communicated
to the CEO.

        Management Development

       The CEO will report annually to the board on the company's program for
management development.

        Succession Plan

       CEO succession is a board-driven, collaborative process. Although the
current CEO has an important role to play, the board shall develop its own plan
for succession while collaborating with the CEO in deciding the timing and the
necessary qualifications for making a final decision.

        Performance Evaluation

       The nominating and governance committee shall perform an annual
evaluation of the committee's performance and shall oversee the evaluation of
the board and executive management.

        Outside Contacts

       The board believes that the management speaks for the company. Individual
board members may, from time to time at the request of management, meet or
otherwise communicate with various constituencies that are involved with the
company. If comments from the board are appropriate, they should, in most
circumstances, come from the chairman; however, this does not preclude
directors, in the exercise of their fiduciary duties and subject to
confidentiality constraints, from communicating with stockholders or others.

STOCKHOLDER RIGHTS

        Annual Election of Directors

       In order to create greater alignment between the board's and our
stockholder's interests and to promote greater accountability to the
stockholders, directors shall be elected annually.

        Stockholder Rights Plan

       The company believes that in the hands of a properly aligned and properly
governed board, a Terminable Stockholder Rights Plan is in the best interests of
all stockholders. Because the board acknowledges that conditions change, the
nominating and governance committee of the board will undertake a complete
review of the efficacy of the company's stockholder rights plan every three
years.