Gulf Coast Region – South Texas and South Louisiana Basins

The Gulf Coast Region comprises approximately 37% of our estimated proved reserves as of December 31, 2006. In the Gulf Coast Region, our primary activities include developing the Newton, Midway Loop and Opossum Hollow Fields.

Newton Field. The Newton Field is located in Newton County, Texas and represents an important growth platform for the Company in the Gulf Coast Region. We have an interest in 21,000 net acres with a 100% working interest. The wells in the Newton Field produce from 13 different sands in the Wilcox formation. The field is a large structural anticline that is defined by extensive well and seismic control identifying that the Wilcox sands are consistent across the structure. At year end, proved reserves in the Newton Field were 43.6 Bcfe.

We have experienced successful exploratory drilling on a seismically defined Wilcox structure north of the Newton Field. We will drill three wells on this new feature targeting the Lower Wilcox sands. In addition, we have targeted shallow seismic anomalies in the Yegua and Frio formations and plan further drilling activities.

Midway Loop Field. The Midway Loop Field is located in Polk and Tyler Counties, Texas. We have an interest in 21,400 gross acres, with an average 38% working interest. The wells in this field produce from the Austin Chalk and are drilled horizontally with dual laterals that reach up to 6,000 of displacement in each lateral. As of December 31, 2006 our proved reserves totaled 28.5 Bcfe.

Opossum Hollow (“CCOH”) Field. The Opossum Hollow Field is located in McMullen County, Texas, and the Company has an average working interest of 98%. The field currently produces from the Wilcox Formation. In 2006 we drilled a successful deep Sligo formation test and have identified additional locations. As of December 31, 2006 we had proved reserves of 1.4 Bcfe.