LaRoche Petroleum Consultants, Ltd. determined 276.0 Bcfe, or 79% of our proved reserves, for the year ended December 31, 2007, which reserves were located on our Barnett Shale properties. Fairchild & Wells, Inc. determined 47.9 Bcfe, or 14% of our proved reserves, for the year ended December 31, 2007, which reserves were located on our properties in the Camp Hill Field. Ryder Scott Company Petroleum Engineers determined 23.7 Bcfe, or 7% of our proved reserves, for the year ended December 31, 2007, which reserves were located on our Gulf Coast and all other remaining properties.

Oil and Natural Gas Reserve Replacement

Finding and developing sufficient amounts of natural gas and crude oil reserves at economical costs are critical to our long-term success. Given the inherent decline of hydrocarbon reserves resulting from the production of those reserves, it is important for an exploration and production company to demonstrate a long-term trend of more than offsetting produced volumes with new reserves that will provide for future production. Management uses the reserve replacement ratio, as defined below, as an indicator of our ability to replenish annual production volumes and grow our reserves, thereby providing some information on the sources of future production. We believe reserve replacement information is frequently used by analysts, investors and others in the industry to evaluate the performance of companies like ours. The reserve replacement ratio is calculated by dividing the sum of reserve additions from all sources (revisions, extensions, discoveries, other additions, acquisitions and sales of reserves in place) by the actual production for the corresponding period. The values for these reserveadditions are derived directly from the proved reserves table above. We do not use unproved reserve quantities in calculating our reserve replacement ratio. It should be noted that the reserve replacement ratio is a statistical indicator that has limitations. As an annual measure, the ratio is limited because it typically varies widely based on the extent and timing of new discoveriesand property acquisitions. Its predictive and comparative value is also limited for the same reasons. In addition, since the ratio does not take into consideration the cost or timing of future production of new reserves, it cannot be used as a measure of valuecreation. The ratio does not distinguish between changes in reserve quantities that are producing and those that will require additional time and funding to begin producing. In that regard, it might be noted that percentage of reserves that were producing varied from 38.2% in 2007, to 25.0% in 2006, and to 19.1% in 2005. Set forth below is our reserve replacement ratio for the years ended December 31, 2007, 2006 and 2005.

Volumes, Prices and Oil & Natural Gas Operating Expense

The following table sets forth certain information regarding the production volumes of, average sales prices received for and average production costs associated with our sales of oil and natural gas for the periods indicated.

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⁽¹⁾ Includes direct lifting costs (labor, repairs and maintenance, materials and supplies), workover costs and the administrative costs of production offices, insurance and property and severance taxes.