Net Oil and Gas Producing Properties at December 31, 2008.

Name, State		% aAverage Working Interest		Total Net Acres		Proved Reserves (BOE) in millions		Proved Developed Reserves (BOE) in millions		% of Total Proved Reserves		Proved Undeveloped Reserves (BOE) in millions		% of Total Proved Reserves	Average Depth of Producing Reservoir (feet)
S. Midway, CA		98		2,127		52.7		42.8		17%		9.9		4%	1,700
	E. Texas, TX		100		4,508		50.0		39.8		12		20.2	8		13,000
	Piceance, CO		41		3,157		41.8		13.2		5		28.6	12		9,300
	N. Midway, CA		100		1,597		38.9		16.2		7		22.7	9		1,500
	Uinta, UT		98		36,635		23.3		10.9		5		12.4	5		6,000
DJ, CO		51		67,418		21.5		13.2		5		8.3		3	2,600
S. Cal, CA		100		1,598		17.7		8.7		4		9.0		4	1,200
	Totals				117,040		245.9		134.8		55%		111.1	45%

 

Properties

We have six asset teams as follows: South Midway-Sunset (S. Midway), North Midway-Sunset including diatomite (N. Midway), Southern California including Poso Creek and Placerita (S. Cal), Piceance, Uinta, and E. Texas. Our S. Midway and S. Cal asset teams are primarily focused on production and generate significant cash flow to fund the drilling inventory in our N. Midway, Piceance, E. Texas and Uinta projects. Our DJ basin assets in CO were sold on April 1, 2009.

California

S. Midway - We own and operate working interests in 38 properties, including 23 owned in fee. Production from this field relies on thermal EOR methods, primarily cyclic steaming to place steam effectively into the remaining oil column. This is our most mature thermally enhanced asset.

2008 - Capital was focused on adding 20 horizontal wells below existing horizontal wells and further development at Ethel D including drilling 32 producers and the initiation of a pilot steam flood.

2009 - Efforts will be focused on drilling 10 additional, deeper horizontal wells, evaluation of the Ethel D steam flood pilot and lowering operating costs through optimization of well servicing and steam placement.

N. Midway - We began the full scale development of our N. Midway diatomite asset in late 2006 and have drilled 190 wells on this property. The delineation drilling in 2008 increased our original oil in place estimates by 35% to 330 million barrels. We are targeting ultimate recovery between 23% and 40% similar to other diatomite developments in California.

2008 - Capital was focused on drilling approximately 85 diatomite wells, completing major infrastructure upgrades that will support future development, increasing steam injection and further refining our thermal recovery techniques. Production from our diatomite asset increased by 86% in 2008, averaging approximately 1,840 Bbl/D.

2009 - We plan to invest $37 million to drill an additional 44 diatomite wells and install additional steam generation facilities. Additionally, we are seeking operating and capital cost reductions through initiatives such as steam management to improve our steam oil ratio and improved project management to reduce overall well costs. Production is expected to increase over 50% averaging approximately 3,000 Bbl/D.

S. Cal - We acquired the Poso Creek properties in the San Joaquin Valley in early 2003 for approximately $3 million and have proceeded with a successful thermal EOR redevelopment. In the Placerita field in Los Angeles County, we own and operate working interests in thirteen properties, including nine leases and four fee properties. Production relies on thermal recovery methods, primarily steam flooding.

2008 – Capital was directed at a 28 well program at Poso Creek and further expansion of the steam flood including the installation of a fourth steam generator and expansion of our water processing facilities. Average production increased from 1,950 Bbl/D in 2007 to 3,100 Bbl/D in 2008. A fifth steam generator was purchased and installed allowing further steam flood expansion into 2009.

2009 - Production at Poso Creek will increase as the steam flood patterns we developed in 2008 continue to respond. We expect to focus our efforts in 2009 on improving steam-oil ratios and lowering operating expenses.

Rocky Mountain/Mid-Continent

Piceance - In 2006, we made two separate acquisitions in Piceance in Colorado, targeting the Williams Fork section of the Mesaverde formation. We acquired a 50% working interest in 6,300 gross acres in the Garden Gulch property and a 5% non-operating working interest on 6,300 gross acres and a net operating working interest of 95% in 4,300 gross acres in the North Parachute Ranch property. We spent $312 million to acquire a majority working interest in several blocks of undeveloped acreage located in the Grand Valley field. We believe we have accumulated a sizable resource base with over 900 drilling locations which will allow us to add significant proved reserves over the next several years.

2008 - Production averaged 20,750 Mcf/D in 2008 in comparison to 10,200 Mcf/D in 2007. We operated a four rig drilling program for most of the year and drilled 54 gross (27 net) wells at Garden Gulch and 18 gross (17 net) wells at North Parachute. Significant progress was made during 2008 in reducing the days required to drill wells. During the last three months of drilling activity, the number of drilling days on our mesa wells averaged 10 days on Garden Gulch and 11 days in North Parachute, a 40% reduction in drilling times compared to early 2008.

2009 – Our focus in 2009 will be on reducing our drilling and completion cost structure along with evaluating reservoir parameters and completion practices to improve ultimate recoveries. We believe our focus on cost reduction and improvement of ultimate recovery will allow for attractive returns to continue the development of our over 900 well drilling inventory. We have an inventory of approximately 40 completions and recompletions that we will be evaluating for supplemental capital should commodity prices warrant.

Uinta - The Brundage Canyon leasehold in Duchesne County, northeastern Utah consists of approximately 30,000 undeveloped gross acres which include federal, tribal and private leases. We are targeting the Green River formation that produces both light oil and natural gas. Along with an industry partner, we also hold a 163,000 gross acre block in the Lake Canyon project, which is located immediately west of our Brundage Canyon producing properties. We will drill and operate the shallow wells, targeting light oil and natural gas in the Green River formation and retain up to a 75% working interest. Our partner will drill and operate deep wells that will target hydrocarbons in the Mesaverde and Wasatch formations. We will hold up to a 25% working interest in these deep wells. The Ute Tribe has the option to participate in each well and obtain a 25% working interest which would reduce our and our partner’s participation.

2008 – Production averaged 6,142 BOE/D in 2008 compared to 5,743 BOE/D in 2007. We drilled 51 gross (50 net) wells in the Uinta project which included 39 wells at Brundage Canyon, 8 wells in the Ashley Forest and 4 Green River wells at Lake Canyon. The Ashley Forest results continue to be encouraging with the 2008 wells achieving recoveries similar to Brundage Canyon. Three of our Lake Canyon wells are waiting on completion which is scheduled for mid-2009.

2009 – In 2009 capital is primarily directed at facility upgrades, pursuing the remaining three Lake Canyon completions and the completion of the Ashley Forest Environmental Impact Study (EIS) which we anticipate in the first half of 2009

East Texas

E. Texas – On July 15, 2008, we acquired a 100% working interest in natural gas producing properties on 4,500 net acres in Limestone and Harrison counties in East Texas for approximately $650 million. In Limestone County, we are targeting seven productive sands including the Cotton Valley and Bossier sands at depths between 8,000 and 13,000 feet. In Harrison County, we are targeting five productive sands with average depths between 6,500 and 13,000 feet and have upside potential in the Haynesville and Bossier Shales. We assumed operations from the seller on November 1, 2008.

2008 - We executed a five rig program in 2008 and 19 wells have been drilled and put on production since closing (4 in Harrison and 15 in Limestone). We also drilled three wells which are awaiting completion during 2009.

2009 - We plan to run one rig during 2009 and will drill approximately five vertical wells in the Oakes field during the year and plan to begin drilling horizontal wells in the Haynesville Shale Darco field in the third quarter of 2009.