Sale of Louisiana Natural Gas Assets

In October 2007 we entered into an agreement to sell our Louisiana natural gas assets to a privately held company for approximately $180 million (before closing adjustments) plus any amounts received in the future from a net profits interest. In late December 2007, we closed on approximately 70% of that sale with net proceeds of approximately $108.6 million (including estimated final purchase price adjustments) and closed on the remaining 30% on February 20, 2008, with net proceeds at the second closing of approximately $48.9 million. The operating net revenue, net of capital expenditures, between the August 1, 2007 effective date and the respective closing dates were adjustments to the purchase price, along with other minor closing adjustments. The potential net profits interest relates to a well in the South Chauvin Field and is only earned if operating income from that well exceeds certain levels, which we believe could potentially increase the ultimate sales price by up to 10%.

Production attributable to the sold properties averaged approximately 30.6 MMcfe/d (82% natural gas) during the fourth quarter of 2007, representing approximately 10% of our total fourth quarter production and approximately 4% of our total proved reserve quantities as of December 31, 2006.