We
generally seek to obtain lease operator status and control over field operations,
and in particular seek to control decisions regarding 3-D survey design parameters
and drilling and completion methods. As of December 31, 2005, we operated 106
producing oil and natural gas wells. Although we initially did not act as operator
for most of our projects in the Barnett Shale area, we now generally seek to control
operations for most new exploration and development in that area, taking advantage
of our technical staff experience in horizontal drilling and hydraulic fracturing.
We emphasize preplanning in project development to
lower capital and operational costs and to efficiently integrate potential well
locations into the existing and planned infrastructure, including gathering systems
and other surface facilities. In constructing surface facilities, we seek to use
reliable, high quality, used equipment in place of new equipment to achieve cost
savings. We also seek to minimize cycle time from drilling to hook-up of wells,
thereby accelerating cash flow and improving ultimate project economics. We
seek to use advanced production techniques to exploit and expand our reserve base.
Following the discovery of proved reserves, we typically continue to evaluate
our producing properties through the use of 3-D seismic data to locate undrained
fault blocks and identify new drilling prospects and perform further reserve analysis
and geological field studies using computer aided exploration techniques. We have
integrated our 3-D seismic data with reservoir characterization and management
systems through the use of geophysical workstations which are compatible with
industry standard reservoir simulation programs. SIGNIFICANT
PROJECT AREAS This section is an explanation and
detail of some of the relevant project groupings from our overall inventory of
productive wells, seismic data and prospects. Our operations are focused primarily
in the onshore Gulf Coast area extending from South Louisiana to South Texas and
the Barnett Shale trend in North Texas. Our other areas of interest are in East
Texas, the Rocky Mountains and the U.K. North Sea and other shale trends in West
Texas/New Mexico, Mississippi/Alabama, Kentucky and Arkansas. The table below
highlights our main areas of activity: 
Onshore
Gulf Coast Area For purposes of presentation, we
divide our onshore Gulf Coast area into four main producing areas: Wilcox, Frio/Vicksburg,
Southeast Texas and South Louisiana. Our onshore Gulf Coast area generally contains
geologically complex natural gas objectives well-suited for drilling using 3-D
seismic evaluation. In our onshore Gulf Coast area,
we have a total inventory of 104 leased exploratory drillsites, ten of which are
field extension wells based on initial drilling success. We are pursuing acreage
on an additional 70 seismically defined prospects. We plan to | 
