Operations Overview

Our diversified operations provide stable production and cash flow from our long-lived offshore producing fields for reinvesting into our multi-year onshore drilling program targeting low risk, high-impact plays.

Our three major areas of operation are in the Permian Basin of West Texas, the Haynesville Shale play in northern Louisiana and offshore in the U.S. Gulf of Mexico.

Since 1950, we have operated onshore and offshore primarily in the Gulf Coast region.

Highlights:

• Increased our total net proved reserves to an estimated 13.6 million barrels of oil equivalent (MMboe), of which approximately 60% are oil or liquids-based;
• Grew onshore proved reserves to 50% of total proved reserves at December 31, 2010, up from only 16% at year-end 2009 and zero at the end of 2008;
• Drilled 20 gross wells in our onshore Wolfberry oil play in the Permian Basin and drilled our first horizontal well in the Haynesville Shale;
• Increased onshore oil production from the Permian Basin as of June 30, 2011 to an average of 1,200 Boe per day, an increase of over 118% over year-end 2010;
• Reduced the face amount of our total outstanding debt to $107 million, representing a decrease of 62% from a face amount of $281 million at year-end 2008; and
• Raised $73.3 million in net proceeds from an offering of our common stock in February 2011.
• Proven undeveloped (PUD) reserves made up 51% of our total proved reserves.