U.S. Oil and Gas Interests

Gulf Coast Oil and Gas Operations
As of December 31, 2007, our net production rate was averaging approximately 1,000 barrels of oil equivalent (“boe”) per day.

Oil and Gas Production Update

Main Pass, Plaquemines Parish — Louisiana
We have a 90% interest in Main Pass and are the field operator. This field contains a seven-platform facility complex including separation, injection, compression, processing and transportation terminals for oil, water and gas.  The field also contains 76 wellbores (69 oil and 7 saltwater disposal), of which 31 are active, and an eight-mile oil transport line with pump facilities.  Our Main Pass 35 facility is located approximately two miles offshore in the Gulf Coast of Louisiana.  Production has been increased to approximately 525 gross boe per day in 2007.  The production increase is attributable to all compressors being operational and the successful completion of repairs to three wells. During 2007, we were able to increase certain production and handling fees associated with the throughput of third-party volumes into our Main Pass facility.  A third-party engineering firm has been assigned to assess additional operations to further increase production in the Field. We continue our geological and geophysical study in the area, utilizing our license to 21 square miles of 3D seismic data, covering the area held by production leases.

Lapeyrouse Field, Terrebonne Parish — Louisiana
We hold an average non-operated working interest of approximately 18.26 % in the production from nine wells in this field. Current gross field production is averaging approximately 800 boe per day.  In 2007, the operator of this field changed. The new operator began diagnostic efforts late in 2007 to return shut-in wells to production via possible recompletion designs. The first of two compression facilities were installed late in 2007.

Lake Raccourci Field, Lafourche Parish — Louisiana
We hold an average 40% operated working interest in each of our Lake Raccourci wells. Gross production for this field averaged 800 boe per day in 2007 as gas lift repair efforts late during the year proved successful in returning the major oil producing well back to uninterrupted production. Current gross field production is 750 boe per day.

Point-a-la-Hache Field, Plaquemines Parish — Louisiana
We maintain a 25% operated working interest in one producing well in this field. Average gross production for 2007 was 100 boe per day.

Creole Field, Terrebonne Parish – Louisiana
We acquired a 15% non-operated working interest in this offshore field in late 2006. The field included a producing dual-completed well with facilities which averaged 110 boe per day as of December 31, 2007.

Both wells that were drilled in 2007 were tied in and began producing in the third quarter of 2007. Multiple stacked pays in these wells indicate favorable future recompletion potential. Gross daily production from the three wells (six completions) averaged 492 boe per day during the fourth quarter 2007.

East Lake Verret, Assumption Parish – Louisiana
We have an average 5% non-operated working interest in this field. Our first development well on this project was successfully completed and placed into production in the first quarter 2007 averaging 123 gross boe per day. A second well was spud at year-end 2006 and was also completed in the first quarter 2007. This well encountered multiple stacked pays and was tested in the initial zone for nearly 583 gross barrels of oil per day and was put on production in the second quarter 2007. Due to stacked pays, favorable recompletion potential is expected in the future productive life of these wells. The operator proposed the drilling of a third well in the third quarter, but we declined participation after deeming the prospect did not meet our risk/reward criteria. Gross daily production from both wells averaged 428 boe per day during the fourth quarter 2007.

Point-au-Fer Field, Terrebonne Parish — Louisiana
We own a 12.5% non-operated working interest in this approximate 56 square mile area. Gross production for this field is approximately 317 boe per day. Several prospects have been identified in the area, and we expect to have additional drilling and workover activity in 2008.

BP2D Texas Gulf Coast Project, Various Counties – Texas
The first shallow Yegua well in the project, the Boquillas # 1, was spud early in the fourth quarter of 2007.  We hold approximately 25% non-operated working interest in the Boquillas # 1. A number of other locations have been identified and a drilling program will be determined pending the results of this initial well.

An 85 square mile 3D seismic survey in the northeastern portion of the project area has been proposed, but we declined participation after deeming the 3D portion of the project did not meet our risk/reward criteria.

Allen Ranch Field, Colorado County — Texas
We own an 11.25% non-operated working interest in this area. Gross production for this field averaged 400 boe per day early in 2007 primarily from the  initial well, the Hancock Gas Unit # 1, which is the only well currently producing from the field. After demonstrating significant commercial production in several horizons, the Hancock Gas Unit #2, was damaged in the course of a remedial workover. Remedial activity to remove debris was performed early in 2007 and mechanical failures were determined. Despite this setback, we continue to be aggressive in further developing this field. As planned, the first of two field extension wells was drilled in the second quarter 2007 and completed in the third quarter 2007. Gas facilities/pipeline tie in efforts are underway with production to commence in first quarter 2008. Due to a change in operator, a fracture stimulation of this well is planned for first quarter 2008.

Coalbed Methane Prospects — Indiana and Ohio
We hold three significant exploration and development agreements in Indiana and Ohio, of which two prospects provide for an area of mutual interest of approximately 400,000 acres, and one provides for approximately 20,000 acres. The agreements provide for a phased delineation, pilot and development program, with corresponding staged expenditures. Contracted third parties with a long track record in successful Coalbed Methane development provide expert advice for these projects.

On the Indiana Posey Prospect, we have completed Phase I – Core Samples work on the Indiana Prospect which consisted of obtaining and analyzing coal samples. Based on the positive outcome of the coring analysis, we elected into Phase II, which consists of exploratory work.  During 2007, we drilled the first five pilot wells. All five pilot wells were completed with production testing for pump-down and pressure monitoring. With all lines and facility equipment in place, pump-down for desorption began in all five pilot wells. Also, a water disposal well was drilled and completed with water injection initiated in late 2007.  Some gas production has begun and is being used throughout the field for fuel gas needs.  The extent of water influx is under evaluation to enhance desorption efforts.

In October 2007, we elected to proceed with a second pilot well project. Following an evaluation period of these pilot wells, we will evaluate a Phase III – Development election and funding of a development well program as contemplated by the agreements.

On the Ohio Cumberland Prospect, we have completed Phase I – Core Samples work on the Ohio Prospect which consisted of obtaining and analyzing coal samples. With regard to Phase II, we made an additional $500 thousand prospect acquisition payment and intend to fund a $1.28 million project in 2008 for the first of two pilot well projects on the Cumberland Prospect.

On the Triangle Prospect Area in Ohio, the Phase I – Core Holes work was successfully completed during 2007. The core samples were desorbed, analyzed and permeability tested in late 2007. These results along with core results were evaluated by the operator and deemed to be positive in late 2007. We are currently evaluating a decision to proceed and fund a Phase II of pilot wells on this prospect in 2008.