The South Ellwood field is approximately seven miles long and is part of a regional east-west trend of similar geologic structures running along the northern flank of the Santa Barbara channel and extending to the Ventura basin. This trend encompasses several fields with more than 100 million barrels of recoverable oil. The Monterey formation is the primary oil reservoir in the field, producing sour oil with a gravity of approximately 21 degrees. As of September 30, 2005, the Company had 17 producing and two injection wells in the field.

The Santa Clara Federal Unit, which is located approximately ten miles offshore in the Santa Barbara channel near Oxnard, California, represented approximately 28% of the Company’s total proved reserves as of September 1, 2005. The Company’s operations in the unit are conducted from two platforms, platform Gail in the Sockeye field and platform Grace in the Santa Clara field.

The Dos Cuadras field is located in federal waters approximately five miles offshore California in the Santa Barbara channel. The principal operations in the field consist of primary and waterflood production from the Repetto formation. The gravity of this production is approximately 27 degrees. As of September 30, 2005, there were 88 producing wells and 15 injection wells in the field. During September 2005, average net production at the field was 838 Bbl/d of oil and 652 Mcf/d of natural gas.

The Willows and Grimes fields are located in Colusa, Glenn and Sutter Counties north of Sacramento, California. Natural gas production in the Grimes field is from the Forbes formation and production in the Willows field is from the Forbes and Kione formations. Depths range from 2,800 feet in the Willows field to 8,900 feet in the Grimes field. The Company had 109 producing wells and two injection wells in the fields as of September 30, 2005.

The Sacramento Delta fields are located in Solano County, approximately 60 miles southwest of Sacramento, California. Natural gas production is primarily from the Markley, Suisun and Domengine formations, ranging in depth from 3,000 to 7,500 feet. As of September 30, 2005, the Company had 18 producing wells and one injection well in the fields. During September 2005, average net production from the fields was 4,215 Mcf/d.

The Dutch Slough field is located in Contra Costa County, California. The field produces natural gas from the Hamilton, Anderson, Martinez and McCormick formations at depths ranging from 6,500 to 8,300 feet. Average net production from the field was 881 Mcf/d in September 2005. As of September 30, 2005, there were four producing wells in the field.

The Union Island field is located in San Joaquin County, California. The field produces natural gas from the Winters formation at a depth of approximately 9,700 feet. As of September 30, 2005, there were five producing wells in the field. Average net production from the field was 1,578 Mcf/d in September 2005.

The Arbuckle field is located in Colusa County, California. The field produces from the Forbes formation at depths ranging from 4,400 to 7,200 feet. Average net production at the field during September 2005 was 608 Mcf/d of natural gas.

Production expenses increased $2.7 million, or 7.7%, to $38.0 million for the nine months ended September 30, 2005 from $35.3 million for the nine months ended September 30, 2004.

Transportation expenses fell by $0.5 million, or 24%, to $1.7 million for the nine months ended September 30, 2005 from $2.2 million for the nine months ended September 30, 2004.

Interest expense, net of interest income and capitalized interest, increased $9.1 million, or 846%, to $10.2 million for the nine months ended September 30, 2005 from $1.1 million for the nine months ended September 30, 2004.

Net income for the nine months ended September 30, 2005 was $129,000, compared to $18.3 million for the nine months ended September 30, 2004.