Net Oil and Gas Producing Properties at December 31, 2009.

Name, State		% Average Working Interest		Total Net Acres		Proved Reserves (MMBOE) (1)		Proved Developed Reserves (MMBOE)		% of Total Proved Developed Reserves		Proved Undeveloped Reserves (MMBOE)		% of Total Proved Undeveloped Reserves
S. Midway, CA		98		3,062		59.6		49.5		39%		10.1		9%
	N. Midway, CA		100		2,230		52.2		26.4		21		25.8	23
	Uinta, UT		98		36,635		22.9		9.8		8		13.1	12
	E. Texas		99		4,508		40.0		27.3		22		12.7	12
	Piceance, CO		55		3,157		60.6		12.5		10		48.1	44
	Totals				49,593		235.3		125.5		100%		109.8	100%

(1) MMBOE – Million BOEs

 

Properties

We currently have six asset teams as follows; South Midway-Sunset (S. Midway), North Midway-Sunset including diatomite (N. Midway), Permian, Uinta, E. Texas and Piceance. Our S. Midway asset team is primarily focused on production and generates significant cash flow to fund our planned drilling inventory in our N. Midway, Piceance, E. Texas and Uinta projects.

California

S. Midway - We own and operate properties in the South Midway-Sunset Field in the San Joaquin Valley. Production from our properties in the South Midway-Sunset 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 with production from our Ethel D properties having commenced 100 years ago. We have planned a five-year, 150-well drilling program at Ethel D to develop the significant undeveloped reserves remaining on this asset. In 2008, we added 20 horizontal wells below existing horizontal wells at the South Midway-Sunset Field, and we further developed Ethel D by drilling 32 producers and initiating a pilot steam flood. In 2009 we drilled 19 horizontal wells and 18 vertical producers at the South Midway-Sunset Field. These wells have been placed deeper and closer to the oil-water contact. All of these wells are currently on production and are performing in line with expectations. We also accelerated our continuous steam support for these horizontal wells by drilling six vertical steam injectors. At Ethel D, we have been encouraged by the performance of our steam flood pilots and expanded the flood in the fourth quarter of 2009. In 2010 at Homebase and Formax we will be completing our horizontal drilling program and expanding the continuous steam injection project by drilling 15 horizontal wells and 10 vertical steam injectors. Capital will also be focused on further thermal development at Ethel D by drilling 24 producers.

In 2003, we acquired the Poso Creek properties in the San Joaquin Valley and have proceeded with a successful thermal EOR redevelopment. Average production from these properties increased from 50 BOE/D at acquisition in 2003 to 3,200 BOE/D in 2009. In 2009, we expanded the steam flood by drilling eight new injectors. To provide steam to these wells we also installed a fifth steam generator. In 2010 we will continue to expand the steam flood at Poso Creek drilling 10 producers and three steam flood injectors.

N. Midway - In 2009, total proved reserves from the N. Midway diatomite asset were 35.3 MMBOE, representing a 15% increase from 2008. In 2008, total proved reserves and production from the N. Midway diatomite asset were 30.6 MMBOE and 0.7 MMBOE, respectively, representing an increase from 2007 of 162% in proved reserves and 86% in production. We expect significant proved reserve additions from this asset. In 2008, we drilled approximately 85 diatomite wells, completed major infrastructure upgrades that will support future development, increased steam injection and further refined our thermal recovery techniques. During 2009 we drilled 51 diatomite wells and installed additional steam generation and water treating facilities. Average production in 2009 was 3,100 BOE/D. During the fourth quarter of 2009, we initiated a four-pattern steam flood pilot on our recently acquired McKittrick property. In 2010, capital will be focused on drilling an additional 100 diatomite wells, major infrastructure upgrades that will support future development, increasing steam injection, and further refining our thermal recovery techniques. In addition, capital will be invested in the initiation of four-pilot steam floods at McKittrick, N. Midway, and Placerita.

Texas

Permian – On January 8, 2010, we entered into an agreement to acquire certain properties primarily in the Wolfberry trend in W. Texas from a private seller for total cash consideration of $126 million. At December 31, 2009, we estimate that the properties included total proved reserves of 11.2 MMBOE, of which 85% were crude oil and 23% were proved developed. We expect to close in the first quarter of 2010, subject to customary closing conditions. We have identified over 130 drilling locations on forty acre spacing in the Wolfberry trend targeting the Spraberry, Dean, Wolfcamp and Strawn formations. We plan to test twenty acre down spacing in late 2010 which would provide an additional 150 drilling locations on twenty acre spacing. We would operate approximately 70% of, and would have an average 68.5% working interest (54.1% net revenue interest) in, the properties acquired in the Wolfberry trend.

E. Texas – In 2008, we acquired certain interests in natural gas producing properties in the E. Texas Cotton Valley on 4,500 net acres in Limestone and Harrison Counties for approximately $668 million in cash. The E. Texas assets established a core area in a low risk repeatable area and provided an inventory of drilling and recompletion projects. 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 and Haynesville Shale with average depths between 6,500 and 13,000 feet. Production from our E. Texas Assets averaged 24 MMcf/D in 2009. We currently operate a one rig program, and we began drilling our first horizontal Haynesville well in Harrison County in the fourth quarter of 2009. During 2009 we drilled 11 vertical wells in E. Texas. In 2010, we plan to run a one rig program to horizontally drill in the Haynesville Shale in Harrison County.

Rocky Mountain/Mid-Continent

Piceance - We have two properties in the Piceance basin in Colorado targeting the Williams Fork section of the Mesaverde formation. We have a 62.5% working interest in 6,300 gross acres on our Garden Gulch property and a net operating working interest of 95% in 4,300 gross acres and a 5% non-operating working interest on 6,300 gross acres on our North Parachute Ranch property. We have accumulated a sizable resource base which should allow us to add significant proved reserves over the next several years. Total production in Piceance averaged 19 MMcf/D during 2009 and 20.8 MMcf/D in 2008. We operated a four rig drilling program for most of 2008 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. By the end of 2008, the number of drilling days averaged 10 days on Garden Gulch and 11 days in North Parachute, a 40% reduction in drilling times compared to early 2008. During 2009, we began a 20 well completion program testing new completion designs and have seen encouraging results in line with our expectations. During 2009 we added water handling infrastructure which reduced our operating costs in the Piceance basin. "See Item 1A. Risk Factors – We may be unable to meet our drilling obligations" for a discussion of our drilling obligations relating to our Piceance basin properties. In 2010, we plan to run a one rig program.

Uinta - In 2003, we established our initial acreage position in the Uinta basin, targeting the Green River formation that produces both light oil and natural gas. We acquired the Brundage Canyon leasehold in Duchesne County, northeastern Utah, which consists of working interests in approximately 55,000 gross acres which include federal, tribal and private leases. In 2004, we acquired working interests in approximately 163,000 gross acres in the Lake Canyon project, which is located immediately west of our Brundage Canyon producing properties. Total production in Uinta averaged 4,929 BOE/D in 2009 compared to 6,142 BOE/D in 2008. In 2008, we drilled 51 gross (50 net) wells, which included 47 wells at Brundage Canyon, including eight Ashley Forest wells, and four Green River wells at Lake Canyon. In 2009, capital was primarily directed at facility upgrades, pursuing the remaining three Lake Canyon completions, and the Ashley Forest Environmental Impact Study (EIS). Implementation of a water flood pilot in Brundage Canyon had initial start up in the beginning of the fourth quarter of 2009. While the Ashley Forest Development EIS continues to progress with approval now expected in 2010, we obtained a category exemption for 25 wells in the Ashley Forest. In 2010, we plan to run a one rig program in the Uinta basin focused toward developing areas of higher oil potential.