2007 Significant Highlights

• Profitable operations accomplished with a net income of $3.2 million.
  
  
• Successful trading activities earning realized trading gains of $862 thousand and an annualized rate of return of approximately 10%.
  
  
• Improved discounted proved oil and gas reserve values of $94 million, an increase of 85% as compared to prior year.
  
  
• Decreased depletion rate per unit as a result of increased reserve volumes.
  
  
• Successful completion of the first phase of pilot wells at our Indiana-Posey coalbed methane prospect. This pilot tested one of six coal seam targets identified in the Posey area.  Pilot results indicated higher gas content and better permeability than our core work analysis completed in 2005.  Promising pilot results resulted in our election to proceed to the next phase of pilot wells.
  
  
• Successful completion of first phase of core work on our Ohio-Triangle coalbed methane prospect.  
  
  
• Significant progress on increasing the profitability and value of our operated Main Pass 35 field.