The Mid-Continent Area is the larger of the Company’s two core areas and, as of December 31, 2004, accounted for 73.7% of its proved reserves and 69.4% of its PV-10 value. The Company owns an interest in 3,114 wells in the Mid-Continent, of which it operates 1,047. The Company’s three largest properties and 13 of its 20 largest properties, in terms of PV-10 value, are located in this area. During the nine months ended September 30, 2005, the Company’s net average daily production in the Mid-Continent Area was approximately 46.6 MMcfe per day, or 71.5% of the total net average daily production. This area is characterized by stable, long-life shallow decline reserves. The Company produces and drills in most of the basins in the region and has significant holdings and activity in the area.

The Permian Basin Area is the second of the Company’s two core areas and, as of December 31, 2004, accounted for 13.7% of the Company’s proved reserves and 15.3% of its PV-10 value. The Company owns an interest in 450 properties in the Permian Basin, of which it operates 246. Six of the Company’s 20 largest properties, in terms of PV-10 value, are located in this area. During the nine months ended September 30, 2005, the Company’s net average daily production in the Permian Basin Area was approximately 8.1 MMcfe per day. Similar to the Mid-Continent Area, it is characterized by its stable long life shallow decline reserves.

East Texas is one of the Company’s four growth areas and, as of December 31, 2004, accounted for 5.1% of its proved reserves and 5.9% of its PV-10 value. The Company owns an interest in 170 properties in East Texas, of which it operates 138. These reserves are characterized by shorter life and higher initial potential.

North Texas is the second of the Company’s four growth areas and, as of December 31, 2004, accounted for 3.3% of its proved reserves and 4.8% of its PV-10 value. The Company owns an interest in 107 properties in North Texas, of which it operates 74. One of the Company’s three proprietary 3-D seismic shoots has been completed in this area.

The Rocky Mountains is the Company’s third growth area and, as of December 31, 2004, accounted for 2.1% of its proved reserves and 2.3% of its PV-10 value. The Company owns 97 properties in the Rocky Mountains Area, of which it operates 36. Unlike the Company’s core areas, this area is not as well developed and holds potential for material upside growth.

The Company’s fourth growth area is the Gulf Coast and, as of December 31, 2004, accounted for 1.9% of its proved reserves and 2.2% of its PV-10 value. The Company owns 195 properties in the Gulf Coast, of which it operates 99. Unlike the Company’s core areas, the Gulf Coast Area is characterized by shorter life and high initial potential production.

Lease operating expenses increased $7.4 million, or 40%, from 2004 due to increases in the number of producing wells and higher oilfield service costs.

Production taxes and gas handling charges increased by $5.5 million from 2004.

Depreciation, depletion and amortization increased $11.5 million, or 100%, primarily due to an increase in DD&A on oil and gas properties of $10.7 million.

General and administrative expenses expense increased by $2.2 million, or 48%, from 2004.

Interest expense increased $4.2 million, or 102%, from 2004 primarily due to an increase of approximately $79 million in the average amount of outstanding debt in 2005.