Energy XXI Reports Fiscal First-Quarter Results

Quarterly Volumes Grow 90% To More Than 26,000 BOE/d; Cash Flow More Than Quadruples To Nearly $77 Million


HOUSTON, Nov. 13, 2007 (PRIME NEWSWIRE) -- Energy XXI (Bermuda) Limited (Nasdaq:EXXI) (AIM: EXXS, EXXI) today announced fiscal first-quarter financial and operating results for the period ended Sept. 30, 2007.

"Energy XXI achieved a 25 percent increase in production volumes relative to the immediately preceding quarter, and a 90 percent increase relative to the prior year's fiscal first quarter," Energy XXI Chairman and CEO John Schiller said. "Our volumes remained on an upward trajectory in October, averaging 26,500 barrels of oil equivalent per day (BOE/d), despite the shut-in of our Rabbit Island field due to maintenance on a third-party natural gas pipeline. The shut-in affected about 2,000 BOE/d of net production beginning in mid-October and is expected to last through November."

For the 2008 fiscal first-quarter, revenues were $143.6 million and earnings before interest, taxes, depreciation, depletion and amortization (EBITDA) totaled $102.4 million, compared with revenues of $65.8 million and EBITDA of $45.1 million in the 2007 fiscal first quarter. Net income was $1.9 million, or $.02 per diluted share, compared with net income of $1.9 million, or $.02 per diluted share, in the 2007 fiscal first quarter.

Net cash provided by operating activities totaled $76.7 million for the 2008 fiscal first quarter, compared with $17.7 million in the 2007 fiscal first quarter. Discretionary cash flow was $79.0 million in the 2008 fiscal first quarter, compared with $40.3 million in the 2007 fiscal first quarter.

For the 2008 fiscal first quarter, sales volumes averaged 26,200 BOE/d, compared with 13,800 BOE/d in the 2007 fiscal first quarter. The net realized price received for the company's production in the 2008 fiscal first quarter averaged $59.63 per BOE, including $3.94 per BOE contributed by hedging, compared with a net realized price of $52.03 per BOE, including $1.68 per BOE contributed by hedging, in the 2007 fiscal first quarter.

Capital Expenditures

During the 2008 fiscal first quarter, capital expenditures, excluding acquisitions, totaled $79.5 million. In addition, producing property acquisitions totaled $33.4 million, including $29.9 million involving a partnership with Castex Energy. The fiscal-year 2008 capital budget, excluding acquisitions, is unchanged at approximately $260 million.

1st Quarter Operational Highlights

During the fiscal first quarter, Energy XXI was successful in four of five exploration wells and one of three development wells. Further detail on the exploration and development program is provided in the attached Operations Report.

"Volume growth last year was driven by a very active development drilling program, particularly at our South Timbalier 21 field offshore Louisiana, whereas growth this year revolves around the optimization of production at the former Pogo properties acquired in June," Energy XXI President and Chief Operating Officer Steve Weyel said. "We have made good progress with the newly added properties, which continue to achieve volume growth ahead of our expectations, without having drilled a single well. We plan to ramp up the offshore drilling program later in the year, but for now we are concentrating on operating enhancements, getting higher rates from the existing producing wells while improving the on-line performance of the acquired facilities."

Conference Call Today at 10 a.m. EST, 3 p.m. London Time

Energy XXI will host its first-quarter conference call today, Tuesday, Nov. 13, 2007, at 10 a.m. EST (3 p.m. London time). The dial-in number is 1 (913) 312-0868 in the U.S. and 08000 517 166 in the U.K., and the confirmation code is 7144886. For complete instructions on how to actively participate in the conference call, or to listen to the live audio webcast or a replay, please refer to www.energyxxi.com.

Forward-Looking Statements

All statements included in this release relating to future plans, projects, events or conditions and all other statements other than statements of historical fact included in this release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based upon current expectations and are subject to a number of risks, uncertainties and assumptions, including changes in long-term oil and gas prices or other market conditions affecting the oil and gas industry, reservoir performance, the outcome of commercial negotiations and changes in technical or operating conditions, among others, that could cause actual results, including project plans and related expenditures and resource recoveries, to differ materially from those described in the forward-looking statements. Energy XXI assumes no obligation and expressly disclaims any duty to update the information contained herein except as required by law.

Competent Person Disclosure

The technical information contained in this announcement relating to operations adheres to the standard set by the Society of Petroleum Engineers. Tom O'Donnell, Vice President of Corporate Development, a registered Petroleum Engineer, is the qualified person who has reviewed and approved the technical information contained in this announcement.

About the Company

Energy XXI is an independent oil and natural gas exploration and production company whose growth strategy emphasizes acquisitions, enhanced by its value-added organic drilling program. The company's properties are primarily located in the U.S. Gulf of Mexico waters and the Gulf Coast onshore. Collins Stewart Europe Limited and Tristone Capital Limited are Energy XXI listing brokers in the United Kingdom. In the United States, BMO Capital Markets, Collins Stewart, Dahlman Rose & Co., Jefferies & Company, Natixis Bleichroeder and Sterne Agee & Leach, Inc. are market makers. To learn more, visit the Energy XXI website at www.energyxxi.com

The Energy XXI logo is available at http://www.primenewswire.com/newsroom/prs/?pkgid=3587



                     ENERGY XXI (BERMUDA) LIMITED
                     CONSOLIDATED BALANCE SHEETS
               (In Thousands, except share information)

                                            September 30,     June 30,
                                                 2007           2007
                                            --------------------------
                                            (Unaudited)
 ASSETS
 Current Assets
  Cash and cash equivalents                 $    12,000    $    19,784
  Accounts receivable
   Oil and natural gas sales                     56,396         55,763
   Joint interest billings                       23,104         14,377
   Insurance and other                           20,365            958
  Prepaid expenses and other
   current assets                                34,485         21,870
  Royalty deposits                                9,305          2,175
  Derivative financial instruments               10,729         17,131
                                            --------------------------
     Total Current Assets                       166,384        132,058
                                            --------------------------
 Property and Equipment, net of
  accumulated depreciation, depletion,
  and amortization
   Oil and natural gas properties
    - full cost method of accounting          1,530,248      1,491,685
   Other property and equipment                   3,153          3,097
                                            --------------------------
     Total Property and Equipment             1,533,401      1,494,782
                                            --------------------------
 Other Assets
  Derivative financial instruments                1,767            616
  Debt issuance costs, net of
   accumulated amortization                      19,857         20,986
                                            --------------------------
     Total Other Assets                          21,624         21,602
                                            --------------------------
     Total Assets                           $ 1,721,409    $ 1,648,442
                                            ==========================
 LIABILITIES
 Current Liabilities
  Accounts payable                          $    80,372    $    79,563
  Advances from joint interest partners           1,716          2,026
  Accrued liabilities                            54,951         33,459
  Deferred income taxes                           1,044          1,044
  Derivative financial instruments                9,356          1,480
  Note payable                                   14,739             --
  Current maturities of long-term debt            5,432          5,508
                                            --------------------------
     Total current liabilities                  167,610        123,080
  Long-term debt, less current maturities     1,080,234      1,045,511
  Deferred income taxes                          11,099         14,788
  Asset retirement obligations                   65,978         63,364
  Derivative financial instruments                5,950          4,573
                                            --------------------------
     Total Liabilities                        1,330,871      1,251,316
                                            --------------------------
 Stockholders' Equity
  Preferred stock, $0.01 par value,
   2,500,000 shares authorized and
   no shares issued at September
   30, 2007 and June 30, 2007                        --             --
  Common stock, $0.001 par value,
   400,000,000 shares authorized and
   84,511,906 and 84,203,444 issued
   and outstanding at September 30, 2007
   and June 30, 2007, respectively                   84             84
  Additional paid-in capital                    363,305        363,206
  Retained earnings                              32,960         31,072
  Accumulated other comprehensive
   income (loss), net of tax expense             (5,811)         2,764
                                            --------------------------
     Total Stockholders' Equity                 390,538        397,126
                                            --------------------------
     Total Liabilities and
      Stockholders' Equity                  $ 1,721,409    $ 1,648,442
                                            ==========================


                     ENERGY XXI (BERMUDA) LIMITED
                   CONSOLIDATED STATEMENTS OF INCOME
             (In Thousands, except per share information)
                              (Unaudited)
                                                Three Months Ended
                                                    September 30,
                                              ----------------------
                                                  2007         2006
                                              ----------------------
 Revenues
  Oil sales                                   $  87,573    $  35,152
  Natural gas sales                              56,035       30,665
                                              ----------------------
    Total Revenues                              143,608       65,817
                                              ----------------------

 Costs and Expenses
  Lease operating expense                        30,693       14,681
  Production taxes                                1,960          811
  Depreciation, depletion and amortization       73,253       27,744
  Accretion of asset retirement obligation        1,760          871
  General and administrative expense              5,771        5,018
  Loss (gain) on derivative
   financial instruments                          1,042         (705)
                                              ----------------------
    Total Costs and Expenses                    114,479       48,420
                                              ----------------------

 Operating Income                                29,129       17,397
                                              ----------------------

 Other Income (Expense)
  Interest income                                   498          426
  Interest expense                              (26,811)     (14,859)
                                              ----------------------
    Total Other Income (Expense)                (26,313)     (14,433)
                                              ----------------------

 Income Before Income Taxes                       2,816        2,964

 Provision for Income Taxes                         929        1,031
                                              ----------------------
 Net Income                                   $   1,887    $   1,933
                                              ======================

 Earnings Per Share
   Basic                                      $    0.02    $    0.02
   Diluted                                    $    0.02    $    0.02

 Weighted Average Number of Common
  Stock Outstanding
   Basic                                         84,135       83,662
   Diluted                                       94,321       83,833


                     ENERGY XXI (BERMUDA) LIMITED
                 CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (In Thousands)
                              (Unaudited)
                                                  Three Months Ended
                                                      September 30,
                                                 ---------------------
                                                    2007         2006
                                                 ---------------------
 Cash Flows From Operating Activities
  Net income                                     $  1,887    $   1,933
  Adjustments to reconcile net income
   to net cash provided by (used in)
   operating activities:
    Deferred income tax expense                       929        1,031
    Change in derivative financial instruments        (22)       3,331
    Accretion of asset retirement obligations       1,760          871
    Depletion, depreciation, and amortization      73,253       27,744
    Write-off and amortization of debt
     issuance costs                                 1,120        5,367
    Common stock issued to Directors
     for services                                      67           --
    Changes in operating assets and
     liabilities
      Accounts receivable                         (21,252)     (20,120)
      Prepaid expenses and other
       current assets                             (19,745)     (10,380)
      Accounts payable and other
       liabilities                                 38,675        7,884
                                                 ---------------------
      Net Cash Provided by Operating Activities    76,672       17,661
                                                 ---------------------
 CASH FLOWS FROM INVESTING ACTIVITIES
  Acquisitions                                     (3,521)    (301,177)
  Capital expenditures                            (79,489)     (48,509)
  Insurance payments received                          --        4,581
  Proceeds from the sale of oil and natural
   gas properties                                      --        1,400
  Other                                                 2        2,540
                                                 ---------------------
   NET CASH USED IN INVESTING ACTIVITIES          (83,008)    (341,165)
                                                 ---------------------
 CASH FLOWS FROM FINANCING ACTIVITIES
  Proceeds from the issuance of common stock           32       20,385
  Proceeds from long-term debt                     20,000      269,000
  Payments on long-term debt                      (20,000)     (14,625)
  Payments on put financing                        (1,490)        (833)
  Debt issuance costs                                  --       (4,741)
  Other                                                10           --
                                                 ---------------------
   NET CASH (USED IN) PROVIDED BY
    FINANCING ACTIVITIES                           (1,448)     269,186
                                                 ---------------------
 NET DECREASE IN CASH AND CASH EQUIVALENTS         (7,784)     (54,318)

 CASH AND CASH EQUIVALENTS, beginning of period    19,784       62,389
                                                 ---------------------
 CASH AND CASH EQUIVALENTS, end of period        $ 12,000    $   8,071
                                                 =====================


                     ENERGY XXI (BERMUDA) LIMITED
              RECONCILIATION OF GAAP TO NON-GAAP MEASURES
             (In Thousands, except per share information)
                              (Unaudited)


 As required under Regulation G of the Securities Exchange Act of
 1934, provided below are reconciliations of net income to the
 following non-GAAP financial measures: EBITDA and discretionary cash
 flow. The company uses these non-GAAP measures as key metrics for the
 management of the company and to demonstrate the company's ability to
 internally fund capital expenditures and service debt. The non-GAAP
 measures are useful in comparisons of oil and gas exploration and
 production companies as they exclude non-operating fluctuations in
 assets and liabilities.

                                                  Three Months Ended
                                                     September 30,
                                                ----------------------
                                                   2007         2006
                                                ----------------------
 Net Income as Reported                         $   1,887    $   1,933

    Total other (income) expense                   26,313       14,433
    Depreciation, depletion and amortization       73,253       27,744
    Provision for income taxes                        929        1,031
                                                ----------------------
 EBITDA                                         $ 102,382    $  45,141
                                                ======================
 EBITDA Per Share
   Basic                                        $    1.22    $    0.54
   Diluted                                      $    1.09    $    0.54

 Weighted Average Number of
  Common Stock Outstanding
   Basic                                           84,135       83,662
   Diluted                                         94,321       83,833

 ---------------------------------------------------------------------

 Net Income as Reported                         $   1,887    $   1,933

    Deferred income tax expense                       929        1,031
    Change in derivative financial instruments        (22)       3,331
    Accretion of asset retirement obligations       1,760          871
    Depletion, depreciation, and amortization      73,253       27,744
    Write-off and amortization of debt
     issuance costs                                 1,120        5,367
    Common stock issued to Directors
     for services                                      67           --
                                                ----------------------
 Discretionary Cash Flow                        $  78,994    $  40,277
                                                ======================


                     ENERGY XXI (BERMUDA) LIMITED
                    CONSOLIDATED OPERATING RESULTS
                            (In Thousands)
                              (Unaudited)
                                                               Twelve
                               Quarter Ended                   Months
               ---------------------------------------------    Ended
               Sept 30,  Dec 31,  Mar 31, June 30,  Sept 30,   Sept 30,
                 2006     2006     2007     2007      2007       2007
               -------  -------  -------  --------  --------  --------
 Operating
  Revenues     $65,817  $79,143  $77,608  $118,716  $143,608  $419,075
               -------  -------  -------  --------  --------  --------
 Operating
  Expenses
 Lease operating
  expense
   Insurance
    expense      2,662    2,653    4,866     2,489     5,058    15,066
   Workover
    expense      1,322     (495)   1,910     5,532     4,832    11,779
   Other lease
    operating
    expense     10,697   10,629    9,575    17,145    20,803    58,152
               -------  -------  -------  --------  --------  --------
   Total lease
    operating
    expense     14,681   12,787   16,351    25,166    30,693    84,997

 Production
  taxes            811      407    1,691       686     1,960     4,744
 DD&A           27,744   31,711   28,600    57,873    73,253   191,437

 General and ad-
  ministrative   5,018    5,573    5,733    10,183     5,771    27,260

 Other - net       166       18     (675)    1,545     2,802     3,690
               -------  -------  -------  --------  --------  --------
 Total operating
  expenses      48,420   50,496   51,700    95,453   114,479   312,128
               -------  -------  -------  --------  --------  --------
 Operating
  Income       $17,397  $28,647  $25,908  $ 23,263  $ 29,129  $106,947
               =======  =======  =======  ========  ========  ========
 Sales Volumes
  per Day
   Natural gas
   (MMcf)         47.1     52.1     42.1      60.0      83.5      59.5
   Crude oil
   (MBbls)         5.9      7.0      7.5      10.9      12.3       9.4
   Total (MBOE)   13.8     15.7     14.5      20.9      26.2      19.3

 Average Sales
  Price
   Natural gas
    per Mcf    $  6.28  $  6.67  $  7.77  $   7.78  $   5.83  $   6.85
   Hedge gain
    per Mcf       0.80     0.67     1.43      0.80      1.46      1.11
               -------  -------  -------  --------  --------  --------
   Total natural
    gas per
     Mcf       $  7.08  $  7.34  $  9.20  $   8.58  $   7.29  $   7.96
               =======  =======  =======  ========  ========  ========

 Crude oil
  per Bbl      $ 67.16  $ 56.77  $ 56.24  $  67.46  $  79.19  $  67.10
 Hedge gain
 (loss) per Bbl  (2.48)   11.14     7.36      5.21     (1.52)     4.54
               -------  -------  -------  --------  --------  --------
  Total crude
   oil per Bbl $ 64.68  $ 67.91  $ 63.60  $  72.67  $  77.67  $  71.64
               =======  =======  =======  ========  ========  ========
  Hedge gain
   per BOE     $  1.68  $  7.19  $  7.95  $   5.03  $   3.94  $   5.64
               =======  =======  =======  ========  ========  ========

 Operating
  Revenues per
  BOE          $ 52.03  $ 54.71  $ 59.54  $  62.53  $  59.63  $  59.38
               -------  -------  -------  --------  --------  --------
 Operating
  Expenses per
  BOE
 Lease operating
  expense
   Insurance
    expense       2.10     1.83     3.73      1.31      2.10      2.13
   Workover
    expense       1.04    (0.34)    1.47      2.91      2.00      1.67
   Other lease
    operating
    expense       8.46     7.35     7.34      9.03      8.64      8.24
               -------  -------  -------  --------  --------  --------
  Total lease
   operating
   expense       11.60     8.84    12.54     13.25     12.74     12.04

 Production
  taxes           0.64     0.28     1.30      0.36      0.81      0.67
 DD&A            21.93    21.92    21.94     30.48     30.42     27.13
 General and ad-
  ministrative    3.97     3.85     4.40      5.37      2.40      3.86
 Other - net      0.14     0.02    (0.52)     0.82      1.16      0.53
               -------  -------  -------  --------  --------  --------
 Total operating
  expenses       38.28    34.91    39.66     50.28     47.53     44.23
               -------  -------  -------  --------  --------  --------
 Operating
  Income per
  BOE          $ 13.75  $ 19.80  $ 19.88  $  12.25  $  12.10  $  15.15
               =======  =======  =======  ========  ========  ========


                     ENERGY XXI (BERMUDA) LIMITED
           SUMMARY OF HEDGE POSITIONS AS OF NOVEMBER 13, 2007

                       Natural Gas (000 MMBTU)
  ------------------------------------------------------------
                                                Average
                                        ---------------------
  Qtr     Instrument             Volume   Sub    Floor   Cap
  ----    -------------          ------  -----   -----  -----
  Q208    Swaps                   2,762           8.22   8.22
          3-Way Collars             540   5.71    7.48  10.09
          Collars                   400           8.26  10.75
          Puts                      100           8.00
          Put Spreads             1,100   6.00    8.00

  Q308    Swaps                   3,210           8.60   8.60
          3-Way Collars           1,500   5.70    7.45  10.10
          Collars                   570           8.26  10.74
          Puts                      140           8.00
          Put Spreads             1,540   6.00    8.00

  Q408    Swaps                   2,730           8.64   8.64
          3-Way Collars           1,420   5.68    7.42  10.10
          Collars                   460           8.24  10.78
          Puts                      120           8.00
          Put Spreads             1,390   6.00    8.00

  Q109    Swaps                   1,480           8.78   8.78
          3-Way Collars           1,340   5.66    7.38  10.11
          Collars                   390           8.22  10.81
          Puts                      120           8.00
          Put Spreads             1,280   6.00    8.00

  Q209    Swaps                   1,820           8.77   8.77
          3-Way Collars           1,250   5.63    7.34  10.12
          Collars                   360           8.21  10.82
          Puts                      110           8.00
          Put Spreads             1,170   6.00    8.00

  Q309    Swaps                   1,920           8.62   8.62
          3-Way Collars           1,040   6.00    8.09   9.97

  Q409    Swaps                   1,720           8.46   8.46
          3-Way Collars             930   6.00    8.10   9.96

  Q110    Swaps                   1,530           8.46   8.46
          3-Way Collars             820   6.00    8.11   9.96

  Q210    Swaps                   1,390           8.46   8.46
          3-Way Collars             740   6.00    8.12   9.95

  Q310    Swaps                   1,700           8.12   8.12
          3-Way Collars             180   6.00    8.50   9.80

  Q410    Swaps                   1,500           8.12   8.12
          3-Way Collars             180   6.00    8.50   9.80

  Q111    Swaps                   1,380           8.12   8.12
          3-Way Collars             180   6.00    8.50   9.80

  Q211    Swaps                   1,280           8.12   8.12
          3-Way Collars             180   6.00    8.50   9.80

  -----------------------------------------------------------
                         Crude Oil (000 BBL)
  -----------------------------------------------------------
                                                Average
                                        ---------------------
  Qtr     Instrument             Volume   Sub    Floor   Cap
  ----    -------------          ------  -----   -----  -----
  Q208    Swaps                     383          76.60  76.60
          3-Way Collars             181  46.88   56.88  63.72
          Collars                   191          64.46  76.98
          Puts                       24          60.00

  Q308    Swaps                     505          71.98  71.98
          3-Way Collars             240  54.25   67.30  78.49
          Collars                   162          64.79  76.56
          Puts                       33          60.00

  Q408    Swaps                     398          70.14  70.14
          3-Way Collars             208  54.13   67.19  78.50
          Collars                   189          65.46  76.36
          Puts                       30          60.00

  Q109    Swaps                     364          70.38  70.38
          3-Way Collars             205  54.12   67.44  78.99
          Collars                    55          60.00  78.00
          Puts                       27          60.00

  Q209    Swaps                     320          70.37  70.37
          3-Way Collars             184  54.02   67.40  79.09
          Collars                    51          60.00  78.00
          Puts                       26          60.00

  Q309    Swaps                     325          70.85  70.85
          3-Way Collars             170  53.94   67.24  78.94

  Q409    Swaps                     303          70.86  70.86
          3-Way Collars             137  53.69   67.37  79.66

  Q110    Swaps                     277          70.97  70.97
          3-Way Collars             111  53.38   67.52  80.49

  Q210    Swaps                     257          71.01  71.01
          3-Way Collars              87  52.93   67.70  81.64

  Q310    Swaps                     238          70.86  70.86
          3-Way Collars              68  52.35   67.35  82.05

  Q410    Swaps                     215          70.89  70.89
          3-Way Collars              60  52.00   67.00  82.04

  Q111    Swaps                     193          70.93  70.93
          3-Way Collars              52  51.54   66.54  82.03

  Q211    Swaps                     171          70.96  70.96
          3-Way Collars              45  50.95   65.95  82.02

 Includes production for November 2007 and later

 All prices are weight-averaged by contract volume

                     FY 2008 1st Quarter Operations Report

                 EXXI Fiscal 1st Quarter 2008 Drilling Results

                  Exploration     Development       Total
                 --------------  -------------   -------------
                  Gross    Net    Gross    Net   Gross    Net
                 ------  ------  -------  -----  ------  ------
 Operated
         Oil       1         1        1      1       2       2
         Gas       1         1        0      0       1       1
         Dry       0         0        2      2       2       2

 Non-Operated
         Oil       0         0        0      0       0       0
         Gas       2      1.25        0      0       2    1.25
         Dry       1       0.5        0      0       1     0.5
                 ------  ------  -------  -----  ------  ------
    Total          5      3.75        3      3       8    6.75
                 ------  ------  -------  -----  ------  ------

                  Exploration     Development       Total
                 --------------  -------------   -------------
 Success Rate
  (Net)               87%             33%             63%
                 --------------  -------------   -------------

                   Exploration     Development       Total
                 --------------  -------------   -------------
 Onshore                     4               2               6
 Offshore                    1               1               2
                         ======           ====           ======
    Total                    5               3               8

Gulf of Mexico Shelf Highlights

South Timbalier 21 (100% WI)

During the fiscal first quarter, South Timbalier 21 net production averaged 8,250 BOE/d as flush production volumes delivered by last year's accelerated drilling program dissipated. The current one-rig program is designed to essentially offset natural field declines from the more normalized 7,000 - 8,000 BOE/d range.

Activity during the quarter included the company's first exploration well in the field. Beaujolais, spud 07/17/07, TD'd at 14,066' and encountered approximately 40' of net pay in the primary D-15 through D-18 sand objectives, 20' of net pay in the S-4 interval and 16' of net pay in the D-7 and D-9 sands. The well is being dual completed in the D-15 and D-18 sands and is expected to be on production in December.

Pinot, the first of three planned South Timbalier development wells in the FY 2008 budget, spud 10/25/07 and is drilling ahead toward a planned TD of 11,375'.

Acquired Pogo Properties

Gulf of Mexico shelf properties acquired in June from Pogo Producing Company averaged 7,800 BOE/d in the fiscal first quarter, and entered the second quarter producing more than 10,000 BOE/d. Volumes from these properties have improved as extensive repair and maintenance work has been completed and efforts to optimize production have been undertaken. Evaluation of the properties is ongoing, and the company is encouraged by newly identified exploration and exploitation opportunities on and near existing producing facilities.

South Louisiana Onshore Highlights

Bayou Carlin

* C. M. Peterson Jr. #1 (31.25% WI) (Laphroaig Discovery), St. Mary Parish - Commenced production Aug. 15; ramped up in October to 40 MMcf/d and 742 BOPD through a 26/64" choke with 11,750 psig FTP.

Lake Salvador

* Devon-Mar #1 (37.5% WI), Lafourche Parish - Spud 9/12/07; reached TD of 12,480' MD on 10/06/07; three amplitude-supported objectives in the Middle Miocene Cib Op sands were found to be very high porosity wet sandstones; although the well was plugged and abandoned, the physical property logs acquired by this well will be valuable in calibrating the seismic attributes in the Lake Salvador Seismic Project.

Golden Meadow

* LaTerre Co. Inc. #1 (50% WI) (W. Lake Verret Discovery), Lafourche Parish - Spud 04/24/07; reached TD of 15,800' on 06/17/07; encountered 46' net pay; completed in the Cib. Carst. E Sand on 10/12/07 with production of 462 BOPD and 4.4 MMcf/d through a 10/64 choke with a FTP of 9,250 psig.

* LL&E #232 (25% WI), Lafourche Parish - Spud 09/22/07; reached TD of 14,000' on 10/12/07; encountered more than 100' of gross pay in the main Duval sand objective; completion operations scheduled for November.

South Lake Verret

* Jeanerette Lumber & Shingle 34-1 (100% WI), St. Martin Parish - Spud 08/08/07; reached TD of 15,069' on 09/07/07; encountered three zones of interest in the Operc 9 section; a completion rig will be brought in to test these zones.

Cote de Mer

* McIlhenny #1 well (35% WI) (Cote de Mer Prospect), Vermilion Parish - Spud 02/07/07; experienced uncontrolled release of gas on 06/11/07 at about 20,400' MD; washed out drill string to 18,600'; wellbore being evaluated for continued drilling operations while control operations are completed.

GLOSSARY

Barrel - unit of measure for oil and petroleum products, equivalent to 42 U.S. gallons.

BOE - barrels of oil equivalent, used to equate natural gas volumes to liquid barrels at a general conversion rate of 6,000 cubic feet of gas per barrel.

BOE/d - barrels of oil equivalent per day.

Field - an area consisting of a single reservoir or multiple reservoirs all grouped on, or related to, the same individual geological structural feature or stratigraphic condition. The field name refers to the surface area, although it may refer to both the surface and the underground productive formations.

FTP - flowing tubing pressure.

MBOE - thousand barrels of oil equivalent.

MMBOE - million barrels of oil equivalent.

MD - measured depth.

Net Pay - cumulative hydrocarbon-bearing formations.

Spud - to begin drilling a well.

TD - target total depth of a well.

TD'd - to finish drilling a well.

TVD - total vertical depth.

Workover - operations on a producing well to restore or increase production. A workover may be performed to stimulate the well, remove sand or wax from the wellbore, to mechanically repair the well, or for other reasons.



            

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