indebtedness, dividends to shareholders, liens, investments, mergers, acquisitions, asset dispositions, repurchase or redemptionof our common stock, speculative commodity transactions, transactions with affiliates and other matters.

The Senior Credit Facility is subject to customary events of default, the occurrence and continuation of which could result in the acceleration of amounts due under the facility by the agent or the lenders.

At December 31, 2007, we were in compliance with all of our debt covenants.

Public Offerings in 2008 and 2007; and Private Placements of Common Stock in 2006 and 2005.

In February 2008, we sold 2,587,500 shares of our common stock in an underwritten public offering at a price of $54.50 per share. With a portion of the proceeds we repaid $85.0 million of borrowings then outstanding under the Senior Credit Facility. We plan to use the remaining proceeds to fund in part our 2008 capital expenditure program.

In September 2007, we sold 1,800,000 shares of our common stock to certain qualified investors in a registered direct offering at a price of $41.40 per share. We used the net proceeds to repay $54 million of outstanding borrowings under the Senior Credit Facility and to fund in part our 2007 capital expenditure program.

In July 2006, we sold 1,350,000 shares of our common stock to institutional investors at a price of $26.00 per share in a private placement (the “2006 Private Placement”). The net proceeds, after deducting placement agents’ fees but before paying offering expenses, of approximately $33.7 million were principally used to fund a portion of our 2006 capital expenditures program. In connection with the 2006 Private Placement, we entered into Subscription and Registration Rights Agreements (the “Subscription and Registration Rights Agreements”) with the investors in the 2006 Private Placement. The Subscription and Registration Rights Agreements provide registration rights with respect to the shares purchased in the 2006 Private Placement. We filed a resale shelf registration statement in connection with the 2006 Private Placement that has been declaredeffective by the SEC. We are generally subject to specified penalties in the event we do not maintain the effectiveness of theregistration statement. We are subject to certain covenants under the terms of the Subscription and Registration Rights Agreements, including the requirement that the registration statement be kept effective for resale of shares for two years. Incertain situations, we are required to indemnify the investors in the 2006 Private Placement, including without limitation, forcertain liabilities under the Securities Act.

In the second quarter of 2005, we sold 1,200,000 shares of our common stock to institutional investors at a price of $15.25 per share in a private placement (the “2005 Private Placement”), a 4.7% discount to the close price on the Nasdaq stock market for our common stock the day prior to pricing. The net proceeds from the 2005 Private Placement, after the placement agents’ fees but before offering expenses, were approximately $17.2 million. We used the proceeds from the 2005 Private Placement to fund a portion of our 2005 capital expenditure program, including our drilling programs in the Barnett Shale and onshore Gulf Coast areas.

Lease Option Arrangements

Due to the limited capital available in the first half of 2006 to fund all of the Company’s ongoing lease acquisition efforts in the Barnett Shale and Other Shale plays, the Company elected to enter into several lease option agreements with a number of third parties and with Steven A. Webster, the Company’s chairman (collectively, the “counterparties”). The terms and conditions of the leasing arrangement (agreement terms are described below) with Mr. Webster are consistent with the leasing arrangements the Company has entered into with the other third parties. These leasing arrangements provide the Company the option to purchase leases from the counterparties, over an option period, generally 90 days, for the counterparties’ original cost of the leases plus an option fee. Strategically, these leasing arrangements have allowed the Company to temporarily control important acreage positions during periods that the Company has lacked sufficient capital to directly acquire such oil and gas leases.

Since May 2006, the Company has acquired certain oil and gas leases through the aforementioned lease option arrangement with Mr. Webster. The acquisitions were made pursuant to a land option agreement between Mr. Webster and the Company dated January 25, 2006. The terms and conditions of this leasing arrangement with Mr. Webster are consistent with leasing arrangements the Company has entered into with the other third parties. Under the option agreement, Mr. Webster agreed to acquire oil and gas leases in areas where the Company is actively leasing or that it deems prospective. On or before the 90th day from the date that Mr. Webster acquires any lease in these areas, the Company has the option to acquire these leases from Mr. Webster for 110% of Mr. Webster’s purchase price or, on the 90th day, pay a non-refundable 10% option extension fee to add a second 90-day option period. On or before the end of this second 90-day option period, the Company has the option to pay Mr. Webster 110% of his original purchase price to acquire the lease. If, at the end of the second option period, the Company has not exercised its purchase option, Mr. Webster will retain ownership of the oil and gas leases. In addition to the