##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 Form 10-Q
 
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 2007
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 Commission file number 1-32747
 MARINER ENERGY, INC.
 (Exact name of registrant as specified in its charter)
 Delaware
    
    86-0460233(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification Number)
 One BriarLake Plaza, Suite 2000
2000 West Sam Houston Parkway South
Houston, Texas 77042  (Address of principal executive offices and zip code)
 (713) 954-5500  (Registrants telephone number, including area code)
 
 þ o
  o o þ
 o þ




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##### 



TABLE OF CONTENTS
 PART IItem 1. Condensed Consolidated Financial Statements
    
    
    3Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    26Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    33Item 4. Controls and Procedures
    
    
    34PART IIItem 1A. Risk Factors
    
    
    35Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    36Item 6. Exhibits
    
    
    36Certification of CEO Pursuant to Section 302Certification of CFO Pursuant to Section 302Certification of CEO Pursuant to Section 906Certification of CFO Pursuant to Section 906
  2




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##### Table of Contents



PART I
 
 Item 1. Condensed Consolidated Financial Statements
 MARINER ENERGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
 September 30,
    
    
    December 31,2007
    
    
    2006Current Assets:Cash and cash equivalents
    
    $
    5,582
    
    
    $
    9,579Receivables, net of allowances of $1,710 and $726
as of September 30, 2007 and December 31, 2006,
respectively
    
    
    165,318
    
    
    
    149,692Insurance receivables
    
    
    27,926
    
    
    
    61,001Derivative asset
    
    
    22,246
    
    
    
    54,488Prepaid seismic
    
    
    20,209
    
    
    
    20,835Prepaid expenses and other
    
    
    24,806
    
    
    
    12,846Total current assets
    
    
    266,087
    
    
    
    308,441Property and Equipment:Proved oil and gas properties, full-cost method
    
    
    2,813,354
    
    
    
    2,345,041Unproved properties, not subject to amortization
    
    
    26,716
    
    
    
    40,246Total oil and gas properties
    
    
    2,840,070
    
    
    
    2,385,287Other property and equipment
    
    
    14,965
    
    
    
    13,512Accumulated depreciation, depletion and amortization
    
    
    (657,626
    )
    
    
    (386,737
    )Total property and equipment, net
    
    
    2,197,409
    
    
    
    2,012,062Restricted cash
    
    
    
    
    
    
    31,830Goodwill
    
    
    288,504
    
    
    
    288,504Derivative asset
    
    
    1,596
    
    
    
    17,153Insurance receivables
    
    
    60,215
    
    
    
    Other Assets, net of amortization
    
    
    21,523
    
    
    
    22,163TOTAL ASSETS
    
    $
    2,835,334
    
    
    $
    2,680,153Current Liabilities:Accounts payable
    
    $
    4,498
    
    
    $
    1,822Accrued liabilities
    
    
    113,657
    
    
    
    74,880Accrued capital costs
    
    
    129,879
    
    
    
    99,028Deferred income tax
    
    
    2,850
    
    
    
    26,857Derivative liability
    
    
    2,925
    
    
    
    Abandonment liability
    
    
    31,136
    
    
    
    29,660Accrued interest
    
    
    21,607
    
    
    
    7,480Total current liabilities
    
    
    306,552
    
    
    
    239,727Long-Term Liabilities:Abandonment liability
    
    
    169,776
    
    
    
    188,310Derivative liability
    
    
    6,686
    
    
    
    Deferred income tax
    
    
    315,146
    
    
    
    262,888Long-term debt, bank credit facility
    
    
    33,000
    
    
    
    354,000Long-term debt, senior unsecured notes
    
    
    600,000
    
    
    
    300,000Other long-term liabilities
    
    
    37,624
    
    
    
    32,637Total long-term liabilities
    
    
    1,162,232
    
    
    
    1,137,835Commitments and Contingencies (see Note 7)Stockholders Equity:Preferred stock, $.0001 par value; 20,000,000
shares authorized, no shares issued and outstanding
at September 30, 2007 and December 31, 2006
    
    
    
    
    
    
    Common stock, $.0001 par value; 180,000,000 shares
authorized, 87,203,610 shares issued and
outstanding at September 30, 2007; 180,000,000
shares authorized, 86,375,840 shares issued and
outstanding at December 31, 2006
    
    
    9
    
    
    
    9Additional paid-in capital
    
    
    1,049,041
    
    
    
    1,043,923Accumulated other comprehensive income
    
    
    8,245
    
    
    
    43,097Accumulated retained earnings
    
    
    309,255
    
    
    
    215,562Total stockholders equity
    
    
    1,366,550
    
    
    
    1,302,591TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    2,835,334
    
    
    $
    2,680,153
 The accompanying notes are an integral part of these consolidated financial statements
 3




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##### Table of Contents



MARINER ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Revenues:Oil
    
    $
    69,842
    
    
    $
    59,427
    
    
    $
    196,971
    
    
    $
    141,102Natural gas
    
    
    111,455
    
    
    
    120,546
    
    
    
    386,069
    
    
    
    270,308Natural gas liquids
    
    
    14,317
    
    
    
    9,715
    
    
    
    34,879
    
    
    
    24,580Other revenues
    
    
    870
    
    
    
    778
    
    
    
    3,211
    
    
    
    2,401Total revenues
    
    
    196,484
    
    
    
    190,466
    
    
    
    621,130
    
    
    
    438,391Costs and Expenses:Lease operating expense
    
    
    35,066
    
    
    
    28,744
    
    
    
    110,119
    
    
    
    62,863Severance and ad valorem taxes
    
    
    3,085
    
    
    
    2,262
    
    
    
    8,963
    
    
    
    5,710Transportation expense
    
    
    2,215
    
    
    
    1,754
    
    
    
    5,520
    
    
    
    4,031General and administrative expense
    
    
    9,572
    
    
    
    7,577
    
    
    
    31,089
    
    
    
    25,050Other miscellaneous expense
    
    
    4,214
    
    
    
    
    
    
    
    4,214
    
    
    
    Depreciation, depletion and amortization
    
    
    91,136
    
    
    
    82,416
    
    
    
    283,769
    
    
    
    192,222Total costs and expenses
    
    
    145,288
    
    
    
    122,753
    
    
    
    443,674
    
    
    
    289,876OPERATING INCOME
    
    
    51,196
    
    
    
    67,713
    
    
    
    177,456
    
    
    
    148,515Other Income (Expense):Interest income
    
    
    475
    
    
    
    237
    
    
    
    997
    
    
    
    486Interest expense, net of amounts capitalized
    
    
    (14,003
    )
    
    
    (11,724
    )
    
    
    (40,223
    )
    
    
    (26,392
    )Other income (expense)
    
    
    
    
    
    
    
    
    
    
    5,058
    
    
    
    Income before taxes
    
    
    37,668
    
    
    
    56,226
    
    
    
    143,288
    
    
    
    122,609Provision for income taxes
    
    
    (15,140
    )
    
    
    (19,836
    )
    
    
    (49,595
    )
    
    
    (44,385
    )NET INCOME
    
    $
    22,528
    
    
    $
    36,390
    
    
    $
    93,693
    
    
    $
    78,224Earnings per share:Net income per sharebasic
    
    $
    0.26
    
    
    $
    0.43
    
    
    $
    1.09
    
    
    $
    1.07Net income per sharediluted
    
    $
    0.26
    
    
    $
    0.43
    
    
    $
    1.09
    
    
    $
    1.06Weighted average shares outstandingbasic
    
    
    85,701,696
    
    
    
    85,493,237
    
    
    
    85,615,542
    
    
    
    73,270,309Weighted average shares outstandingdiluted
    
    
    85,964,108
    
    
    
    85,581,108
    
    
    
    85,808,112
    
    
    
    73,694,727
 The accompanying notes are an integral part of these consolidated financial statements
 4




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MARINER ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 Nine MonthsEnded September 30,2007
    
    
    2006Operating Activities:Net income
    
    $
    93,693
    
    
    $
    78,224Adjustments to reconcile net income to net cash provided by operating activities:Allowance for doubtful receivables
    
    
    984
    
    
    
    (163
    )Deferred income tax
    
    
    48,164
    
    
    
    44,243Depreciation, depletion and amortization
    
    
    283,769
    
    
    
    192,222Amortization of deferred financing costs
    
    
    2,019
    
    
    
    2,736Ineffectiveness of derivative instruments
    
    
    2,645
    
    
    
    (1,439
    )Stock compensation
    
    
    5,892
    
    
    
    9,016Changes in operating assets and liabilities:Receivables
    
    
    (16,610
    )
    
    
    (25,227
    )Insurance receivables
    
    
    (27,140
    )
    
    
    (41,916
    )Prepaid expenses and other
    
    
    (11,400
    )
    
    
    12,226Other assets
    
    
    1,746
    
    
    
    (3,935
    )Accounts payable and other liabilities
    
    
    18,692
    
    
    
    (98,342
    )Net realized loss on derivative contracts acquired
    
    
    
    
    
    
    5,144Net cash provided by operating activities
    
    
    402,454
    
    
    
    172,789Investing Activities:Additions to properties and equipment
    
    
    (411,840
    )
    
    
    (404,670
    )Property conveyances
    
    
    2,017
    
    
    
    2,012Purchase price adjustment
    
    
    
    
    
    
    (20,808
    )Restricted cash designated for investment
    
    
    31,830
    
    
    
    Net cash used in investing activities
    
    
    (377,993
    )
    
    
    (423,466
    )Financing Activities:Repayment of term note
    
    
    
    
    
    
    (4,000
    )Credit facility (repayments) borrowings, net
    
    
    (321,000
    )
    
    
    162,000Debt and working capital acquired from Forest Energy Resources, Inc.
    
    
    
    
    
    
    (176,200
    )Proceeds from note offering
    
    
    300,000
    
    
    
    300,000Repurchase of stock
    
    
    (1,421
    )
    
    
    (14,027
    )Deferred offering costs
    
    
    (6,685
    )
    
    
    (12,343
    )Net realized loss on derivative contracts acquired
    
    
    
    
    
    
    (5,144
    )Proceeds from exercise of stock options
    
    
    648
    
    
    
    709Net cash (used in) provided by financing activities
    
    
    (28,458
    )
    
    
    250,995(Decrease) Increase in Cash and Cash Equivalents
    
    
    (3,997
    )
    
    
    318Cash and Cash Equivalents at Beginning of Period
    
    
    9,579
    
    
    
    4,556Cash and Cash Equivalents at End of Period
    
    $
    5,582
    
    
    $
    4,874Supplemental Disclosure of Cash Flow Information:Cash paid during the year for:Interest (net of amount capitalized)
    
    $
    21,592
    
    
    $
    10,401Income taxes
    
    $
    550
    
    
    $
    
 The accompanying notes are an integral part of these consolidated financial statements
 5




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MARINER ENERGY, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 1. Summary of Significant Accounting Policies
 Operations
 Interim Financial Statements
 Use of Estimates
 Principles of Consolidation
 Reclassifications
 Income Taxes
  6




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Recent Accounting Pronouncements
   2. Acquisitions and Dispositions
 Forest Gulf of Mexico Operations
 7




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##### Table of Contents



(In millions)Oil and natural gas properties
    
    $
    1,211.4Abandonment liabilities
    
    
    (165.2
    )Long-term debt
    
    
    (176.2
    )Fair value of oil and natural gas derivatives
    
    
    (17.5
    )Deferred tax liability
    
    
    (199.4
    )Other assets and liabilities
    
    
    (24.5
    )Goodwill
    
    
    261.4Net Assets Acquired
    
    $
    890.0
    Interest in Cottonwood
 3. Long-Term Debt
 Bank Credit Facility
  8




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
    
    maintain a ratio of consolidated current assets plus the unused borrowing base to
consolidated current liabilities of not less than 1.0 to 1.0; and
    
    maintain a ratio of total debt to EBITDA, as defined in the credit agreement, of not
more than 2.5 to 1.0.
   Senior Notes 1 2 1 2 1 2 1 2
 9




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1 2
   1 2 1 2
 1 2
 71/2% Notes
    
    8% NotesApril 15, 2010 at 103.750%
    
    May 15, 2012 at 104.000%April 15, 2011 at 101.875%
    
    May 15, 2013 at 102.667%April 15, 2012 and thereafter at 100.000%
    
    May 15, 2014 at 101.333%May 15, 2015 and thereafter at 100.000%
 1 2 1 2
   
    
    make investments;
    
    incur additional indebtedness or issue preferred stock;
    
    create certain liens;
 10




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
    
    sell assets;
    
    enter into agreements that restrict dividends or other payments from its subsidiaries
to itself;
    
    consolidate, merge or transfer all or substantially all of its assets;
    
    engage in transactions with affiliates;
    
    pay dividends or make other distributions on capital stock or subordinated
indebtedness; and
    
    create unrestricted subsidiaries.
 1 2
 JEDI Term Promissory Note
 Capitalized Interest
 Bank Debt Issuance Costs
 4. Oil and Gas Properties
   11




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5. Accrual for Future Abandonment Liabilities
   (In millions)Abandonment
liability as of December 31, 2006 (1)
    
    $
    218.0Liabilities Incurred
    
    
    1.8Liabilities Settled
    
    
    (45.5
    )Accretion Expense
    
    
    12.9Revisions to previous estimates
    
    
    13.7Abandonment Liability as of September 30, 2007 (2)
    
    $
    200.9
 
   6. Stockholders Equity
   WeightedAverage
    
    Aggregate IntrinsicExercise
    
    Value (1)Shares
    
    Price
    
    (In thousands)Outstanding at beginning of year
    
    
    802,322
    
    
    $
    13.77Granted
    
    
    
    
    
    
    Exercised (2)
    
    
    (50,222
    )
    
    $
    12.90Forfeited
    
    
    (17,165
    )
    
    $
    14.75Outstanding at September 30, 2007
    
    
    734,935
    
    
    $
    13.96
    
    
    $
    5,075
 
 (1)
    
    Based upon the difference between the market price of the common stock on the last trading
date of the quarter and the option exercise price of in-the-money options.(2)
    
    Options were exercised for cash proceeds of $647,723. 12




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Restricted Shares underStock Incentive PlanSeptember 30,2007
    
    2006Total unvested shares at beginning of period: January 1
    
    
    875,380
    
    
    
    Shares granted
    
    
    876,954
    
    
    
    796,171Shares vested
    
    
    (228,691
    )
    
    
    (1,500
    )Shares forfeited
    
    
    (34,105
    )
    
    
    (22,441
    )Total unvested shares at end of period: September 30
    
    
    1,489,538
    
    
    
    772,230Available for future grant as options or restricted stock
    
    
    4,084,584
    
    
    
    4,967,914
  Restricted Shares underEquity Participation PlanSeptember 30,2007
    
    2006Total unvested shares at beginning of period: January 1
    
    
    
    
    
    
    2,267,270Shares granted
    
    
    
    
    
    
    Shares vested
    
    
    
    
    
    
    (2,267,270
    )Shares forfeited
    
    
    
    
    
    
    Total unvested shares at end of period: September 30
    
    
    
    
    
    
    Available for future grant under Equity Participation Plan
    
    
    
    
    
    
    
 7. Commitments and Contingencies
 Minimum Future Lease Payments
 (In millions)2008
    
    $
    1.62009
    
    
    1.72010
    
    
    2.02011
    
    
    2.02012 and thereafter
    
    
    10.6
 Hedging Program
 13




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Three Months Ended September
    
    
    Nine Months Ended September30,
    
    
    30,2007
    
    
    2006
    
    
    2007
    
    
    2006(In millions)
    
    
    (In millions)Cash Gain (Loss) on Settlements
    
    $
    11.5
    
    
    $
    3.5
    
    
    $
    42.0
    
    
    $
    (8.3
    )Gain (Loss) on Hedge Ineffectiveness (1)
    
    
    (0.6
    )
    
    
    2.5
    
    
    
    (2.6
    )
    
    
    1.4Non-cash Gain (Loss) on hedges acquired (2)
    
    
    
    
    
    
    4.4
    
    
    
    
    
    
    
    8.3Total
    
    $
    10.9
    
    
    $
    10.4
    
    
    $
    39.4
    
    
    $
    1.4
 
 (1)
    
    Unrealized gain (loss) recognized in natural gas revenue related to the ineffective portion
of open contracts that are not eligible for deferral under SFAS 133 due primarily to the basis
differentials between the contract price and the indexed price at the point of sale.(2)
    
    Relating to the hedges acquired through the Forest transaction.  September 30,Weighted Average
    
    2007 Fair ValueFixed Price Swaps
    
    Quantity
    
    
    Fixed Price
    
    Gain/(Loss)(In millions)Crude Oil (Bbls)October 1December 31, 2007
    
    
    303,600
    
    
    $
    69.20
    
    
    $
    (3.4
    )January 1December 31, 2008
    
    
    992,350
    
    
    $
    69.34
    
    
    
    (7.1
    )January 1December 31, 2009
    
    
    1,280,750
    
    
    $
    68.93
    
    
    
    (6.0
    )Natural Gas (MMbtus)October 1December 31, 2007
    
    
    4,750,972
    
    
    $
    8.72
    
    
    
    8.2January 1December 31, 2008
    
    
    10,833,979
    
    
    $
    8.87
    
    
    
    10.2January 1December 31, 2009
    
    
    8,052,820
    
    
    $
    8.30
    
    
    
    Total
    
    
    
    
    
    
    
    
    
    $
    1.9
 September 30,Weighted Average
    
    
    Weighted Average
    
    2007 Fair ValueCostless Collars
    
    Quantity
    
    
    Floor
    
    
    Cap
    
    Gain/(Loss)(In millions)Crude Oil (Bbls)October 1December 31, 2007
    
    
    415,288
    
    
    $
    59.20
    
    
    $
    83.14
    
    
    $
    (2.2
    )January 1December 31, 2008
    
    
    1,195,495
    
    
    $
    61.66
    
    
    $
    86.80
    
    
    
    (0.7
    )Natural Gas (MMbtus)October 1December 31, 2007
    
    
    3,914,600
    
    
    $
    6.94
    
    
    $
    12.08
    
    
    
    6.7January 1December 31, 2008
    
    
    12,347,000
    
    
    $
    7.83
    
    
    $
    14.60
    
    
    
    8.5Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    12.3
  Weighted AverageFixed Price Swaps
    
    Quantity
    
    Fixed PriceCrude Oil (Bbls)January 1December 31, 2008
    
    
    1,271,202
    
    
    $
    86.54January 1December 31, 2009
    
    
    891,460
    
    
    $
    86.54Natural Gas (MMbtus)January 1December 31, 2008
    
    
    29,749,868
    
    
    $
    8.30January 1December 31, 2009
    
    
    23,589,264
    
    
    $
    8.54
  Other Commitments
 14




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MMS Proceedings
   Kerr-McGee Oil & Gas Corp. v. Burton
 Insurance Matters Hurricanes Katrina and Rita (2005)
   15




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Hurricane Ivan (2004)
  Litigation
 Letters of Credit
  16




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##### Table of Contents



8. Net Income per Share
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006(In thousands, except per share data)Numerator:Net Income
    
    $
    22,528
    
    
    $
    36,390
    
    
    $
    93,693
    
    
    $
    78,224Denominator:Weighted average shares outstanding
    
    
    85,702
    
    
    
    85,493
    
    
    
    85,616
    
    
    
    73,270Add dilutive securities
    
    
    262
    
    
    
    88
    
    
    
    192
    
    
    
    425Total weighted average shares
outstanding and dilutive
securities
    
    
    85,964
    
    
    
    85,581
    
    
    
    85,808
    
    
    
    73,695Earnings per sharebasic:
    
    $
    0.26
    
    
    $
    0.43
    
    
    $
    1.09
    
    
    $
    1.07Earnings per sharediluted:
    
    $
    0.26
    
    
    $
    0.43
    
    
    $
    1.09
    
    
    $
    1.06
   9. Comprehensive Income
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006(in thousands)
    
    
    (in thousands)Net Income
    
    $
    22,528
    
    
    $
    36,390
    
    
    $
    93,693
    
    
    $
    78,224Other comprehensive income (loss):Derivative contracts settled
and reclassified, net of
income taxes of $3,841,
$3,651, $13,820 and $527
    
    
    7,107
    
    
    
    6,781
    
    
    
    25,571
    
    
    
    979Change in unrealized
mark-to-market (losses) gains
arising during period, net of
income taxes of $4,375,
($31,383), $33,733 and
($53,493)
    
    
    (8,094
    )
    
    
    52,555
    
    
    
    (60,423
    )
    
    
    92,679Change in accumulated
other comprehensive income
(loss)
    
    
    (987
    )
    
    
    59,336
    
    
    
    (34,852
    )
    
    
    93,658Comprehensive income
    
    $
    21,541
    
    
    $
    95,726
    
    
    $
    58,841
    
    
    $
    171,882
 17




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##### Table of Contents



10. Supplemental Guarantor Information
  1 2
  18




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##### Table of Contents



MARINER ENERGY, INC. AND SUBSIDIARIES
 CONDENSED CONSOLIDATING BALANCE SHEET
September 30, 2007
(In thousands except share data)
(Unaudited)
 ConsolidatedParent
    
    
    Subsidiary
    
    
    
    
    
    
    MarinerCompany
    
    
    Guarantors
    
    
    Eliminations
    
    
    Energy, Inc.Current Assets:Cash and cash equivalents
    
    $
    5,582
    
    
    $
    
    
    
    $
    
    
    
    $
    5,582Receivables, net
    
    
    88,748
    
    
    
    76,570
    
    
    
    
    
    
    
    165,318Insurance receivables
    
    
    3,950
    
    
    
    23,976
    
    
    
    
    
    
    
    27,926Derivative asset
    
    
    22,246
    
    
    
    
    
    
    
    
    
    
    
    22,246Prepaid seismic
    
    
    20,209
    
    
    
    
    
    
    
    
    
    
    
    20,209Prepaid expenses and other
    
    
    22,587
    
    
    
    2,219
    
    
    
    
    
    
    
    24,806Total current assets
    
    
    163,322
    
    
    
    102,765
    
    
    
    
    
    
    
    266,087Property and Equipment:Proved oil and gas properties, full-cost method
    
    
    1,262,205
    
    
    
    1,551,149
    
    
    
    
    
    
    
    2,813,354Unproved properties, not subject to amortization
    
    
    26,250
    
    
    
    466
    
    
    
    
    
    
    
    26,716Total oil and gas properties
    
    
    1,288,455
    
    
    
    1,551,615
    
    
    
    
    
    
    
    2,840,070Other property and equipment
    
    
    14,915
    
    
    
    50
    
    
    
    
    
    
    
    14,965Accumulated depreciation, depletion and amortization
    
    
    (356,666
    )
    
    
    (300,960
    )
    
    
    
    
    
    
    (657,626
    )Total property and equipment, net
    
    
    946,704
    
    
    
    1,250,705
    
    
    
    
    
    
    
    2,197,409Investment in subsidiaries
    
    
    982,839
    
    
    
    
    
    
    
    (982,839
    )
    
    
    Intercompany receivable
    
    
    59,889
    
    
    
    
    
    
    
    (59,889
    )
    
    
    Intercompany note receivable
    
    
    176,200
    
    
    
    
    
    
    
    (176,200
    )
    
    
    Goodwill
    
    
    
    
    
    
    288,504
    
    
    
    
    
    
    
    288,504Derivative asset
    
    
    1,596
    
    
    
    
    
    
    
    
    
    
    
    1,596Insurance receivables
    
    
    2,663
    
    
    
    57,552
    
    
    
    
    
    
    
    60,215Other Assets, Net of Amortization
    
    
    21,523
    
    
    
    
    
    
    
    
    
    
    
    21,523TOTAL ASSETS
    
    $
    2,354,736
    
    
    $
    1,699,526
    
    
    $
    (1,218,928
    )
    
    $
    2,835,334Current Liabilities:Accounts payable
    
    $
    4,498
    
    
    $
    
    
    
    $
    
    
    
    $
    4,498Accrued liabilities
    
    
    84,592
    
    
    
    29,065
    
    
    
    
    
    
    
    113,657Accrued capital costs
    
    
    71,244
    
    
    
    58,635
    
    
    
    
    
    
    
    129,879Deferred income tax
    
    
    2,850
    
    
    
    
    
    
    
    
    
    
    
    2,850Derivative liability
    
    
    2,925
    
    
    
    
    
    
    
    
    
    
    
    2,925Abandonment liability
    
    
    10,251
    
    
    
    20,885
    
    
    
    
    
    
    
    31,136Accrued interest
    
    
    21,607
    
    
    
    
    
    
    
    
    
    
    
    21,607Total current liabilities
    
    
    197,967
    
    
    
    108,585
    
    
    
    
    
    
    
    306,552Long-Term Liabilities:Abandonment liability
    
    
    45,985
    
    
    
    123,791
    
    
    
    
    
    
    
    169,776Derivative liability
    
    
    6,686
    
    
    
    
    
    
    
    
    
    
    
    6,686Deferred income tax
    
    
    70,645
    
    
    
    244,501
    
    
    
    
    
    
    
    315,146Intercompany payable
    
    
    
    
    
    
    59,889
    
    
    
    (59,889
    )
    
    
    Long-term debt, bank credit facility
    
    
    33,000
    
    
    
    
    
    
    
    
    
    
    
    33,000Long-term debt, senior unsecured notes
    
    
    600,000
    
    
    
    
    
    
    
    
    
    
    
    600,000Other long-term liabilities
    
    
    33,903
    
    
    
    3,721
    
    
    
    
    
    
    
    37,624Intercompany note payable
    
    
    
    
    
    
    176,200
    
    
    
    (176,200
    )
    
    
    Total long-term liabilities
    
    
    790,219
    
    
    
    608,102
    
    
    
    (236,089
    )
    
    
    1,162,232Commitments and Contingencies (see Note 7)Stockholders Equity:Preferred stock, $.0001 par value; 20,000,000
shares authorized, no shares issued and outstanding
at September 30, 2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Common stock, $.0001 par value; 180,000,000 shares
authorized, 87,203,610 shares issued and
outstanding at September 30, 2007
    
    
    9
    
    
    
    5
    
    
    
    (5
    )
    
    
    9Additional paid-in capital
    
    
    1,049,041
    
    
    
    886,142
    
    
    
    (886,142
    )
    
    
    1,049,041Accumulated other comprehensive income
    
    
    8,245
    
    
    
    
    
    
    
    
    
    
    
    8,245Accumulated retained earnings
    
    
    309,255
    
    
    
    96,692
    
    
    
    (96,692
    )
    
    
    309,255Total stockholders  equity
    
    
    1,366,550
    
    
    
    982,839
    
    
    
    (982,839
    )
    
    
    1,366,550TOTAL LIABILITIES AND STOCKHOLDERS  EQUITY
    
    $
    2,354,736
    
    
    $
    1,699,526
    
    
    $
    (1,218,928
    )
    
    $
    2,835,334
 19




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##### Table of Contents



MARINER ENERGY, INC. AND SUBSIDIARIES
 CONDENSED CONSOLIDATING BALANCE SHEET
December 31, 2006
(In thousands except share data)
(Unaudited)
 ConsolidatedParent
    
    
    Subsidiary
    
    
    
    
    
    
    MarinerCompany
    
    
    Guarantors
    
    
    Eliminations
    
    
    Energy, Inc.Current Assets:Cash and cash equivalents
    
    $
    9,579
    
    
    $
    
    
    
    $
    
    
    
    $
    9,579Receivables, net
    
    
    51,118
    
    
    
    98,574
    
    
    
    
    
    
    
    149,692Insurance receivables
    
    
    4,673
    
    
    
    56,328
    
    
    
    
    
    
    
    61,001Derivative financial instruments
    
    
    54,488
    
    
    
    
    
    
    
    
    
    
    
    54,488Prepaid seismic
    
    
    19,468
    
    
    
    1,367
    
    
    
    
    
    
    
    20,835Prepaid expenses and other
    
    
    10,927
    
    
    
    1,919
    
    
    
    
    
    
    
    12,846Total current assets
    
    
    150,253
    
    
    
    158,188
    
    
    
    
    
    
    
    308,441Property and Equipment:Proved oil and gas properties, full-cost method
    
    
    922,385
    
    
    
    1,422,656
    
    
    
    
    
    
    
    2,345,041Unproved properties, not subject to amortization
    
    
    39,885
    
    
    
    361
    
    
    
    
    
    
    
    40,246Total oil and gas properties
    
    
    962,270
    
    
    
    1,423,017
    
    
    
    
    
    
    
    2,385,287Other property and equipment
    
    
    13,444
    
    
    
    68
    
    
    
    
    
    
    
    13,512Accumulated depreciation, depletion and amortization
    
    
    (233,087
    )
    
    
    (153,650
    )
    
    
    
    
    
    
    (386,737
    )Total property and equipment, net
    
    
    742,627
    
    
    
    1,269,435
    
    
    
    
    
    
    
    2,012,062Investment in subsidiaries
    
    
    945,108
    
    
    
    
    
    
    
    (945,108
    )
    
    
    Intercompany receivable
    
    
    153,793
    
    
    
    
    
    
    
    (153,793
    )
    
    
    Intercompany note receivable
    
    
    176,200
    
    
    
    
    
    
    
    (176,200
    )
    
    
    Restricted cash
    
    
    31,830
    
    
    
    
    
    
    
    
    
    
    
    31,830Goodwill
    
    
    
    
    
    
    288,504
    
    
    
    
    
    
    
    288,504Derivative financial instruments
    
    
    17,153
    
    
    
    
    
    
    
    
    
    
    
    17,153Other Assets, Net of Amortization
    
    
    22,163
    
    
    
    
    
    
    
    
    
    
    
    22,163TOTAL ASSETS
    
    $
    2,239,127
    
    
    $
    1,716,127
    
    
    $
    (1,275,101
    )
    
    $
    2,680,153Current Liabilities:Accounts payable
    
    $
    1,822
    
    
    $
    
    
    
    $
    
    
    
    $
    1,822Accrued liabilities
    
    
    61,779
    
    
    
    13,101
    
    
    
    
    
    
    
    74,880Accrued capital costs
    
    
    60,146
    
    
    
    38,882
    
    
    
    
    
    
    
    99,028Deferred income tax
    
    
    26,857
    
    
    
    
    
    
    
    
    
    
    
    26,857Abandonment liability
    
    
    9,312
    
    
    
    20,348
    
    
    
    
    
    
    
    29,660Accrued interest
    
    
    7,355
    
    
    
    125
    
    
    
    
    
    
    
    7,480Total current liabilities
    
    
    167,271
    
    
    
    72,456
    
    
    
    
    
    
    
    239,727Long-Term Liabilities:Abandonment liability
    
    
    48,509
    
    
    
    139,801
    
    
    
    
    
    
    
    188,310Deferred income tax
    
    
    36,701
    
    
    
    226,187
    
    
    
    
    
    
    
    262,888Intercompany payable
    
    
    
    
    
    
    153,793
    
    
    
    (153,793
    )
    
    
    Long-term debt, bank credit facility
    
    
    354,000
    
    
    
    
    
    
    
    
    
    
    
    354,000Long-term debt, senior unsecured notes
    
    
    300,000
    
    
    
    
    
    
    
    
    
    
    
    300,000Other long-term liabilities
    
    
    30,055
    
    
    
    2,582
    
    
    
    
    
    
    
    32,637Intercompany note payable
    
    
    
    
    
    
    176,200
    
    
    
    (176,200
    )
    
    
    Total long-term liabilities
    
    
    769,265
    
    
    
    698,563
    
    
    
    (329,993
    )
    
    
    1,137,835Commitments and Contingencies (see Note 7)Stockholders Equity:Preferred stock, $.0001 par value; 20,000,000
shares authorized, no shares issued and outstanding
at December 31, 2006
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Common stock, $.0001 par value; 180,000,000 shares
authorized, 86,375,840 shares issued and
outstanding at December 31, 2006
    
    
    9
    
    
    
    5
    
    
    
    (5
    )
    
    
    9Additional paid-in capital
    
    
    1,043,923
    
    
    
    886,142
    
    
    
    (886,142
    )
    
    
    1,043,923Accumulated other comprehensive income
    
    
    43,097
    
    
    
    
    
    
    
    
    
    
    
    43,097Accumulated retained earnings
    
    
    215,562
    
    
    
    58,961
    
    
    
    (58,961
    )
    
    
    215,562Total stockholders  equity
    
    
    1,302,591
    
    
    
    945,108
    
    
    
    (945,108
    )
    
    
    1,302,591TOTAL LIABILITIES AND STOCKHOLDERS  EQUITY
    
    $
    2,239,127
    
    
    $
    1,716,127
    
    
    $
    (1,275,101
    )
    
    $
    2,680,153
 20




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##### Table of Contents



MARINER ENERGY, INC. AND SUBSIDIARIES
 CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
Three Months Ended September 30, 2007
(In thousands)
(Unaudited)
 ConsolidatedParent
    
    
    Subsidiary
    
    
    
    
    
    
    MarinerCompany
    
    
    Guarantors
    
    
    Eliminations
    
    
    Energy, Inc.Revenues:Oil
    
    $
    36,293
    
    
    $
    33,549
    
    
    $
    
    
    
    $
    69,842Natural gas
    
    
    56,985
    
    
    
    54,470
    
    
    
    
    
    
    
    111,455Natural gas liquids
    
    
    8,462
    
    
    
    5,855
    
    
    
    
    
    
    
    14,317Other revenues
    
    
    870
    
    
    
    
    
    
    
    
    
    
    
    870Total revenues
    
    
    102,610
    
    
    
    93,874
    
    
    
    
    
    
    
    196,484Costs and Expenses:Lease operating expense
    
    
    12,324
    
    
    
    22,742
    
    
    
    
    
    
    
    35,066Severance and ad valorem taxes
    
    
    2,156
    
    
    
    929
    
    
    
    
    
    
    
    3,085Transportation expense
    
    
    1,075
    
    
    
    1,140
    
    
    
    
    
    
    
    2,215General and administrative expense
    
    
    9,123
    
    
    
    449
    
    
    
    
    
    
    
    9,572Other miscellaneous expense
    
    
    278
    
    
    
    3,936
    
    
    
    
    
    
    
    4,214Depreciation, depletion and amortization
    
    
    41,892
    
    
    
    49,244
    
    
    
    
    
    
    
    91,136Total costs and expenses
    
    
    66,848
    
    
    
    78,440
    
    
    
    
    
    
    
    145,288OPERATING INCOME
    
    
    35,762
    
    
    
    15,434
    
    
    
    
    
    
    
    51,196Earnings of Affiliates
    
    
    8,174
    
    
    
    
    
    
    
    (8,174
    )
    
    
    Other Income (Expense):Interest income
    
    
    4,108
    
    
    
    
    
    
    
    (3,633
    )
    
    
    475Interest expense, net of amounts capitalized
    
    
    (13,900
    )
    
    
    (3,736
    )
    
    
    3,633
    
    
    
    (14,003
    )Income before taxes
    
    
    34,144
    
    
    
    11,698
    
    
    
    (8,174
    )
    
    
    37,668Provision for income taxes
    
    
    (11,616
    )
    
    
    (3,524
    )
    
    
    
    
    
    
    (15,140
    )NET INCOME
    
    $
    22,528
    
    
    $
    8,174
    
    
    $
    (8,174
    )
    
    $
    22,528
 21




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##### Table of Contents



MARINER ENERGY, INC. AND SUBSIDIARIES
 CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
Three Months Ended September 30, 2006
(In thousands)
(Unaudited)
 ConsolidatedParent
    
    
    Subsidiary
    
    
    
    
    
    
    MarinerCompany
    
    
    Guarantors
    
    
    Eliminations
    
    
    Energy, Inc.Revenues:Oil
    
    $
    29,775
    
    
    $
    29,652
    
    
    $
    
    
    
    $
    59,427Natural gas
    
    
    47,936
    
    
    
    72,610
    
    
    
    
    
    
    
    120,546Natural gas liquids
    
    
    5,886
    
    
    
    3,829
    
    
    
    
    
    
    
    9,715Other revenues
    
    
    778
    
    
    
    
    
    
    
    
    
    
    
    778Total revenues
    
    
    84,375
    
    
    
    106,091
    
    
    
    
    
    
    
    190,466Costs and Expenses:Lease operating expense
    
    
    12,175
    
    
    
    16,569
    
    
    
    
    
    
    
    28,744Severance and ad valorem taxes
    
    
    1,757
    
    
    
    505
    
    
    
    
    
    
    
    2,262Transportation expense
    
    
    1,201
    
    
    
    553
    
    
    
    
    
    
    
    1,754General and administrative expense
    
    
    6,947
    
    
    
    630
    
    
    
    
    
    
    
    7,577Depreciation, depletion and amortization
    
    
    34,064
    
    
    
    48,352
    
    
    
    
    
    
    
    82,416Total costs and expenses
    
    
    56,144
    
    
    
    66,609
    
    
    
    
    
    
    
    122,753OPERATING INCOME
    
    
    28,231
    
    
    
    39,482
    
    
    
    
    
    
    
    67,713Earnings of Affiliates
    
    
    35,719
    
    
    
    
    
    
    
    (35,719
    )
    
    
    Other Income (Expense):Interest income
    
    
    3,725
    
    
    
    
    
    
    
    (3,488
    )
    
    
    237Interest expense, net of amounts capitalized
    
    
    (11,449
    )
    
    
    (3,763
    )
    
    
    3,488
    
    
    
    (11,724
    )Income before taxes
    
    
    56,226
    
    
    
    35,719
    
    
    
    (35,719
    )
    
    
    56,226Provision for income taxes
    
    
    (19,836
    )
    
    
    
    
    
    
    
    
    
    
    (19,836
    )NET INCOME
    
    $
    36,390
    
    
    $
    35,719
    
    
    $
    (35,719
    )
    
    $
    36,390
 22




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##### Table of Contents



MARINER ENERGY, INC. AND SUBSIDIARIES
 CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
Nine Months Ended September 30, 2007
(In thousands)
(Unaudited)
 ConsolidatedParent
    
    
    Subsidiary
    
    
    
    
    
    
    MarinerCompany
    
    
    Guarantors
    
    
    Eliminations
    
    
    Energy, Inc.Revenues:Oil
    
    $
    100,525
    
    
    $
    96,446
    
    
    $
    
    
    
    $
    196,971Natural gas
    
    
    192,901
    
    
    
    193,168
    
    
    
    
    
    
    
    386,069Natural gas liquids
    
    
    20,545
    
    
    
    14,334
    
    
    
    
    
    
    
    34,879Other revenues
    
    
    3,111
    
    
    
    100
    
    
    
    
    
    
    
    3,211Total revenues
    
    
    317,082
    
    
    
    304,048
    
    
    
    
    
    
    
    621,130Costs and Expenses:Lease operating expense
    
    
    35,659
    
    
    
    74,460
    
    
    
    
    
    
    
    110,119Severance and ad valorem taxes
    
    
    6,135
    
    
    
    2,828
    
    
    
    
    
    
    
    8,963Transportation expense
    
    
    2,890
    
    
    
    2,630
    
    
    
    
    
    
    
    5,520General and administrative expense
    
    
    29,440
    
    
    
    1,649
    
    
    
    
    
    
    
    31,089Other miscellaneous expense
    
    
    278
    
    
    
    3,936
    
    
    
    
    
    
    
    4,214Depreciation, depletion and amortization
    
    
    127,382
    
    
    
    156,387
    
    
    
    
    
    
    
    283,769Total costs and expenses
    
    
    201,784
    
    
    
    241,890
    
    
    
    
    
    
    
    443,674OPERATING INCOME
    
    
    115,298
    
    
    
    62,158
    
    
    
    
    
    
    
    177,456Earnings of Affiliates
    
    
    37,731
    
    
    
    
    
    
    
    (37,731
    )
    
    
    Other Income (Expense):Interest income
    
    
    11,877
    
    
    
    1
    
    
    
    (10,881
    )
    
    
    997Interest expense, net of amounts capitalized
    
    
    (39,932
    )
    
    
    (11,172
    )
    
    
    10,881
    
    
    
    (40,223
    )Other income (expense)
    
    
    
    
    
    
    5,058
    
    
    
    
    
    
    
    5,058Income before taxes
    
    
    124,974
    
    
    
    56,045
    
    
    
    (37,731
    )
    
    
    143,288Provision for income taxes
    
    
    (31,281
    )
    
    
    (18,314
    )
    
    
    
    
    
    
    (49,595
    )NET INCOME
    
    $
    93,693
    
    
    $
    37,731
    
    
    $
    (37,731
    )
    
    $
    93,693
 23




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##### Table of Contents



MARINER ENERGY, INC. AND SUBSIDIARIES
 CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
Nine Months Ended September 30, 2006
(In thousands)
(Unaudited)
 ConsolidatedParent
    
    
    Subsidiary
    
    
    
    
    
    
    MarinerCompany
    
    
    Guarantors
    
    
    Eliminations
    
    
    Energy, Inc.Revenues:Oil
    
    $
    84,009
    
    
    $
    57,093
    
    
    $
    
    
    
    $
    141,102Natural gas
    
    
    109,230
    
    
    
    161,078
    
    
    
    
    
    
    
    270,308Natural gas liquids
    
    
    14,700
    
    
    
    9,880
    
    
    
    
    
    
    
    24,580Other revenues
    
    
    2,401
    
    
    
    
    
    
    
    
    
    
    
    2,401Total revenues
    
    
    210,340
    
    
    
    228,051
    
    
    
    
    
    
    
    438,391Costs and Expenses:Lease operating expense
    
    
    28,073
    
    
    
    34,790
    
    
    
    
    
    
    
    62,863Severance and ad valorem taxes
    
    
    5,205
    
    
    
    505
    
    
    
    
    
    
    
    5,710Transportation expense
    
    
    2,728
    
    
    
    1,303
    
    
    
    
    
    
    
    4,031General and administrative expense
    
    
    23,613
    
    
    
    1,437
    
    
    
    
    
    
    
    25,050Depreciation, depletion and amortization
    
    
    82,191
    
    
    
    110,031
    
    
    
    
    
    
    
    192,222Total costs and expenses
    
    
    141,810
    
    
    
    148,066
    
    
    
    
    
    
    
    289,876OPERATING INCOME
    
    
    68,530
    
    
    
    79,985
    
    
    
    
    
    
    
    148,515Earnings of Affiliates
    
    
    72,103
    
    
    
    
    
    
    
    (72,103
    )
    
    
    Other Income (Expense):Interest income
    
    
    4,432
    
    
    
    
    
    
    
    (3,946
    )
    
    
    486Interest expense, net of amounts capitalized
    
    
    (22,456
    )
    
    
    (7,882
    )
    
    
    3,946
    
    
    
    (26,392
    )Income before taxes
    
    
    122,609
    
    
    
    72,103
    
    
    
    (72,103
    )
    
    
    122,609Provision for income taxes
    
    
    (44,385
    )
    
    
    
    
    
    
    
    
    
    
    (44,385
    )NET INCOME
    
    $
    78,224
    
    
    $
    72,103
    
    
    $
    (72,103
    )
    
    $
    78,224
 24




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##### Table of Contents



MARINER ENERGY, INC. AND SUBSIDIARIES
 CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
Nine Months Ended September 30, 2007
(In thousands)
(Unaudited)
 ConsolidatedParent
    
    
    Subsidiary
    
    
    
    
    
    
    MarinerCompany
    
    
    Guarantors
    
    
    Eliminations
    
    
    Energy, Inc.Net cash provided by operating activities
    
    $
    251,459
    
    
    $
    188,726
    
    
    $
    (37,731
    )
    
    $
    402,454Investing Activities:Additions to properties and equipment
    
    
    (315,019
    )
    
    
    (96,821
    )
    
    
    
    
    
    
    (411,840
    )Property conveyances
    
    
    18
    
    
    
    1,999
    
    
    
    
    
    
    
    2,017Restricted cash designated for investment
    
    
    31,830
    
    
    
    
    
    
    
    
    
    
    
    31,830Net cash used in investing activities
    
    
    (283,171
    )
    
    
    (94,822
    )
    
    
    
    
    
    
    (377,993
    )Financing Activities:Credit facility repayments, net
    
    
    (321,000
    )
    
    
    
    
    
    
    
    
    
    
    (321,000
    )Proceeds from note offering
    
    
    300,000
    
    
    
    
    
    
    
    
    
    
    
    300,000Repurchase of stock
    
    
    (1,421
    )
    
    
    
    
    
    
    
    
    
    
    (1,421
    )Deferred offering costs
    
    
    (6,685
    )
    
    
    
    
    
    
    
    
    
    
    (6,685
    )Proceeds from exercise of stock options
    
    
    648
    
    
    
    
    
    
    
    
    
    
    
    648Net activity in investment from subsidiaries
    
    
    56,173
    
    
    
    (93,904
    )
    
    
    37,731
    
    
    
    Net cash provided by (used in) financing activities
    
    
    27,715
    
    
    
    (93,904
    )
    
    
    37,731
    
    
    
    (28,458
    )Decrease in Cash and Cash Equivalents
    
    
    (3,997
    )
    
    
    
    
    
    
    
    
    
    
    (3,997
    )Cash and Cash Equivalents at Beginning of Period
    
    
    9,579
    
    
    
    
    
    
    
    
    
    
    
    9,579Cash and Cash Equivalents at End of Period
    
    $
    5,582
    
    
    $
    
    
    
    $
    
    
    
    $
    5,582
 MARINER ENERGY, INC. AND SUBSIDIARIES
 CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
Nine Months Ended September 30, 2006
(In thousands)
(Unaudited)
 ConsolidatedParent
    
    
    Subsidiary
    
    
    
    
    
    
    MarinerCompany
    
    
    Guarantors
    
    
    Eliminations
    
    
    Energy, Inc.Net cash provided by operating activities
    
    $
    201,978
    
    
    $
    42,914
    
    
    $
    (72,103
    )
    
    $
    172,789Investing Activities:Additions to properties and equipment
    
    
    (266,848
    )
    
    
    (137,822
    )
    
    
    
    
    
    
    (404,670
    )Property conveyances
    
    
    2,012
    
    
    
    
    
    
    
    
    
    
    
    2,012Purchase price adjustment
    
    
    
    
    
    
    (20,808
    )
    
    
    
    
    
    
    (20,808
    )Net cash used in investing activities
    
    
    (264,836
    )
    
    
    (158,630
    )
    
    
    
    
    
    
    (423,466
    )Financing Activities:Repayment of term note
    
    
    (4,000
    )
    
    
    
    
    
    
    
    
    
    
    (4,000
    )Credit facility borrowings, net
    
    
    162,000
    
    
    
    
    
    
    
    
    
    
    
    162,000Debt and working capital acquired from Forest
Energy Resources, Inc.
    
    
    
    
    
    
    (176,200
    )
    
    
    
    
    
    
    (176,200
    )Proceeds from note offering
    
    
    300,000
    
    
    
    
    
    
    
    
    
    
    
    300,000Repurchase of stock
    
    
    (14,027
    )
    
    
    
    
    
    
    
    
    
    
    (14,027
    )Deferred offering costs
    
    
    (12,343
    )
    
    
    
    
    
    
    
    
    
    
    (12,343
    )Net realized loss on derivative contracts acquired
    
    
    
    
    
    
    (5,144
    )
    
    
    
    
    
    
    (5,144
    )Proceeds from exercise of stock options
    
    
    709
    
    
    
    
    
    
    
    
    
    
    
    709Net activity in investments from subsidiaries
    
    
    (369,163
    )
    
    
    297,060
    
    
    
    72,103
    
    
    
    Net cash provided by financing activities
    
    
    63,176
    
    
    
    115,716
    
    
    
    72,103
    
    
    
    250,995Increase in Cash and Cash Equivalents
    
    
    318
    
    
    
    
    
    
    
    
    
    
    
    318Cash and Cash Equivalents at Beginning of Period
    
    
    4,556
    
    
    
    
    
    
    
    
    
    
    
    4,556Cash and Cash Equivalents at End of Period
    
    $
    4,874
    
    
    $
    
    
    
    $
    
    
    
    $
    4,874
 25




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
   Overview
    Third Quarter 2007 Highlights
 Offshore
 Well Name
    
    Operator
    
    Working Interest
    
    Water Depth (Ft)
    
    LocationSabine Pass 8#1
    
    Mariner
    
    
    57
    %
    
    
    40
    
    
    Conventional ShelfViosca Knoll 917#1ST1
    
    Noble
    
    
    15
    %
    
    
    4,370
    
    
    Deepwater
   Onshore 
 26




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##### Table of Contents



Results of Operations
 Three Months Ended September 30, 2007 Compared to Three Months Ended September 30, 2006
  Three Months EndedSeptember 30,
    
    IncreaseSummary Operating Information:
    
    2007
    
    2006
    
    (Decrease)
    
    % Change(In thousands, except net production, average sales pricesand % change)Net Production:Oil (MBbls)
    
    
    988
    
    
    
    911
    
    
    
    77
    
    
    
    8.5
    %Natural gas (MMcf)
    
    
    15,520
    
    
    
    16,125
    
    
    
    (605
    )
    
    
    (3.8
    %)Natural gas liquids (MBbls)
    
    
    292
    
    
    
    183
    
    
    
    109
    
    
    
    59.6
    %Total natural gas equivalent (MMcfe)
    
    
    23,201
    
    
    
    22,686
    
    
    
    515
    
    
    
    2.3
    %Average daily production (MMcfe/d)
    
    
    252
    
    
    
    247
    
    
    
    5
    
    
    
    2.0
    %Average Sales Prices:Oil (per Bbl) (1)
    
    $
    70.68
    
    
    $
    65.25
    
    
    $
    5.43
    
    
    
    8.3
    %Natural gas (per Mcf) (1)
    
    
    7.18
    
    
    
    7.48
    
    
    
    (0.30
    )
    
    
    (4.0
    %)Natural gas liquids (per Bbl)
    
    
    49.02
    
    
    
    53.12
    
    
    
    (4.10
    )
    
    
    (7.7
    %)Total natural gas equivalent ($/Mcfe) (1)
    
    
    8.43
    
    
    
    8.36
    
    
    
    0.07
    
    
    
    0.8
    %Oil and Gas Revenues:Oil
    
    $
    69,842
    
    
    $
    59,427
    
    
    $
    10,415
    
    
    
    17.5
    %Natural gas
    
    
    111,455
    
    
    
    120,546
    
    
    
    (9,091
    )
    
    
    (7.5
    %)Natural gas liquids
    
    
    14,317
    
    
    
    9,715
    
    
    
    4,602
    
    
    
    47.4
    %Total oil and gas revenues
    
    
    195,614
    
    
    
    189,688
    
    
    
    5,926
    
    
    
    3.1
    %Other revenues
    
    
    870
    
    
    
    778
    
    
    
    92
    
    
    
    11.8
    %Total revenues
    
    
    196,484
    
    
    
    190,466
    
    
    
    6,018
    
    
    
    3.2
    %Expenses:Lease operating expense
    
    
    35,066
    
    
    
    28,744
    
    
    
    6,322
    
    
    
    22.0
    %Severance and ad valorem taxes
    
    
    3,085
    
    
    
    2,262
    
    
    
    823
    
    
    
    36.4
    %Transportation expense
    
    
    2,215
    
    
    
    1,754
    
    
    
    461
    
    
    
    26.3
    %General and administrative expense
    
    
    9,572
    
    
    
    7,577
    
    
    
    1,995
    
    
    
    26.3
    %Other
miscellaneous expense
    
    
    4,214
    
    
    
    
    
    
    
    4,214
    
    
    
    Depreciation, depletion and amortization
    
    
    91,136
    
    
    
    82,416
    
    
    
    8,720
    
    
    
    10.6
    %Net interest expense
    
    
    13,528
    
    
    
    11,487
    
    
    
    2,041
    
    
    
    17.8
    %Provision for income taxes
    
    
    15,140
    
    
    
    19,836
    
    
    
    (4,696
    )
    
    
    (23.7
    %)Net Income
    
    
    22,528
    
    
    
    36,390
    
    
    
    (13,862
    )
    
    
    (38.1
    %)
 
 (1)
    
    Average sales prices include the effects of hedging Net income
  Net production
 27




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##### Table of Contents



Oil and gas revenues
    Lease operating expense LOE
 Severance and ad valorem tax
 Transportation expense
 General and administrative (G&A) expense
 Other
miscellaneous expense
 Depreciation, depletion, and amortization (DD&A) expense
 Net interest expense
 Income
before taxes provision for income taxes
 28




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##### Table of Contents



Nine Months Ended September 30, 2007 Compared to Nine Months Ended September 30, 2006
  Nine Months EndedSeptember 30,
    
    IncreaseSummary Operating Information:
    
    2007
    
    2006
    
    (Decrease)
    
    % Change(In thousands, except
net production, average sales pricesand % change)Net Production:Oil (MBbls)
    
    
    3,116
    
    
    
    2,269
    
    
    
    847
    
    
    
    37.3
    %Natural gas (MMcf)
    
    
    49,388
    
    
    
    37,825
    
    
    
    11,563
    
    
    
    30.6
    %Natural gas liquids (MBbls)
    
    
    851
    
    
    
    511
    
    
    
    340
    
    
    
    66.5
    %Total natural gas equivalent (MMcfe)
    
    
    73,186
    
    
    
    54,503
    
    
    
    18,683
    
    
    
    34.3
    %Average daily production (MMcfe/d)
    
    
    268
    
    
    
    200
    
    
    
    68
    
    
    
    34.0
    %Average Sales Prices:Oil (per Bbl) (1)
    
    $
    63.22
    
    
    $
    62.18
    
    
    $
    1.04
    
    
    
    1.7
    %Natural gas (per Mcf) (1)
    
    
    7.82
    
    
    
    7.15
    
    
    
    0.67
    
    
    
    9.4
    %Natural gas liquids (per Bbl)
    
    
    41.00
    
    
    
    48.14
    
    
    
    (7.14
    )
    
    
    (14.8
    %)Total natural gas equivalent ($/Mcfe) (1)
    
    
    8.44
    
    
    
    8.00
    
    
    
    0.44
    
    
    
    5.5
    %Oil and Gas Revenues:Oil
    
    $
    196,971
    
    
    $
    141,102
    
    
    $
    55,869
    
    
    
    39.6
    %Natural gas
    
    
    386,069
    
    
    
    270,308
    
    
    
    115,761
    
    
    
    42.8
    %Natural gas liquids
    
    
    34,879
    
    
    
    24,580
    
    
    
    10,299
    
    
    
    41.9
    %Total oil and gas revenues
    
    
    617,919
    
    
    
    435,990
    
    
    
    181,929
    
    
    
    41.7
    %Other revenues
    
    
    3,211
    
    
    
    2,401
    
    
    
    810
    
    
    
    33.7
    %Total revenues
    
    
    621,130
    
    
    
    438,391
    
    
    
    182,739
    
    
    
    41.7
    %Expenses:Lease operating expense
    
    
    110,119
    
    
    
    62,863
    
    
    
    47,256
    
    
    
    75.2
    %Severance and ad valorem taxes
    
    
    8,963
    
    
    
    5,710
    
    
    
    3,253
    
    
    
    57.0
    %Transportation expense
    
    
    5,520
    
    
    
    4,031
    
    
    
    1,489
    
    
    
    36.9
    %General and administrative expense
    
    
    31,089
    
    
    
    25,050
    
    
    
    6,039
    
    
    
    24.1
    %Other
miscellaneous expense
    
    
    4,214
    
    
    
    
    
    
    
    4,214
    
    
    
    Depreciation, depletion and amortization
    
    
    283,769
    
    
    
    192,222
    
    
    
    91,547
    
    
    
    47.6
    %Net interest expense
    
    
    39,226
    
    
    
    25,906
    
    
    
    13,320
    
    
    
    51.4
    %Other (income) expense
    
    
    (5,058
    )
    
    
    
    
    
    
    (5,058
    )
    
    
    Provision for income taxes
    
    
    49,595
    
    
    
    44,385
    
    
    
    5,210
    
    
    
    11.7
    %Net Income
    
    
    93,693
    
    
    
    78,224
    
    
    
    15,469
    
    
    
    19.8
    %
 
 (1)
    
    Average sales prices include the effects of hedging Net income
  Net production
 29




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##### Table of Contents



Oil and gas revenues
    Other revenues
 Lease operating expense LOE
 Severance and ad valorem tax
 Transportation expense
 General and administrative (G&A) expense
 Other
miscellaneous expense
 Depreciation, depletion, and amortization (DD&A) expense
 Net interest expense
 Other (income) expense
 Income before taxes rovision for income taxes
 30




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##### Table of Contents



Liquidity and Capital Resources
    Capital Expenditures 
 Bank Credit Facility
 Future Uses of Capital.
 
    
    funding future capital expenditures;
    
    funding hurricane repairs and hurricane-related abandonment operations;
    
    financing any future acquisitions that Mariner may identify;
    
    paying routine operating and administrative expenses; and
    
    paying other commitments comprised largely of cash settlement of hedging obligations
and debt service.
 2007 Capital Expenditures.
 31




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##### Table of Contents



Future Capital Resources.
 
    
    cash flow from operations in future periods;
    
    proceeds under our bank credit facility;
    
    proceeds from insurance policies relating to hurricane repairs; and
    
    proceeds from future capital markets transactions as needed.
   Off-Balance Sheet Arrangements
 Letters of Credit
  32




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##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures about Market Risk
 Commodity Prices and Related Hedging Activities
   Three Months Ended September
    
    
    Nine Months Ended September30,
    
    
    30,2007
    
    
    2006
    
    
    2007
    
    
    2006(In millions)
    
    
    (In millions)Cash Gain (Loss) on Settlements
    
    $
    11.5
    
    
    $
    3.5
    
    
    $
    42.0
    
    
    $
    (8.3
    )Gain (Loss) on Hedge Ineffectiveness (1)
    
    
    (0.6
    )
    
    
    2.5
    
    
    
    (2.6
    )
    
    
    1.4Non-cash Gain (Loss) on hedges acquired (2)
    
    
    
    
    
    
    4.4
    
    
    
    
    
    
    
    8.3Total
    
    $
    10.9
    
    
    $
    10.4
    
    
    $
    39.4
    
    
    $
    1.4
 
 (1)
    
    Unrealized gain (loss) recognized in natural gas revenue related to the ineffective portion
of open contracts that are not eligible for deferral under SFAS 133 due primarily to the basis
differentials between the contract price and the indexed price at the point of sale.(2)
    
    Relating to the hedges acquired through the Forest transaction.  September 30,Weighted Average
    
    2007 Fair ValueFixed Price Swaps
    
    Quantity
    
    
    Fixed Price
    
    Gain/(Loss)(In millions)Crude Oil (Bbls)October 1December 31, 2007
    
    
    303,600
    
    
    $
    69.20
    
    
    $
    (3.4
    )January 1December 31, 2008
    
    
    992,350
    
    
    $
    69.34
    
    
    
    (7.1
    )January 1December 31, 2009
    
    
    1,280,750
    
    
    $
    68.93
    
    
    
    (6.0
    )Natural Gas (MMbtus)October 1December 31, 2007
    
    
    4,750,972
    
    
    $
    8.72
    
    
    
    8.2January 1December 31, 2008
    
    
    10,833,979
    
    
    $
    8.87
    
    
    
    10.2January 1December 31, 2009
    
    
    8,052,820
    
    
    $
    8.30
    
    
    
    Total
    
    
    
    
    
    
    
    
    
    $
    1.9
 33




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##### Table of Contents



September 30,Weighted Average
    
    Weighted Average
    
    2007 Fair ValueCostless Collars
    
    Quantity
    
    
    Floor
    
    Cap
    
    Gain/(Loss)(In millions)Crude Oil (Bbls)October 1December 31, 2007
    
    
    415,288
    
    
    $
    59.20
    
    
    $
    83.14
    
    
    $
    (2.2
    )January 1December 31, 2008
    
    
    1,195,495
    
    
    $
    61.66
    
    
    $
    86.80
    
    
    
    (0.7
    )Natural Gas (MMbtus)October 1December 31, 2007
    
    
    3,914,600
    
    
    $
    6.94
    
    
    $
    12.08
    
    
    
    6.7January 1December 31, 2008
    
    
    12,347,000
    
    
    $
    7.83
    
    
    $
    14.60
    
    
    
    8.5Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    12.3
  Weighted AverageFixed Price Swaps
    
    Quantity
    
    Fixed PriceCrude Oil (Bbls)January 1December 31, 2008
    
    
    1,271,202
    
    
    $
    86.54January 1December 31, 2009
    
    
    891,460
    
    
    $
    86.54Natural Gas (MMbtus)January 1December 31, 2008
    
    
    23,749,868
    
    
    $
    8.30January 1December 31, 2009
    
    
    23,589,264
    
    
    $
    8.54
  Interest Rate Market Risk 
 
 Item 4. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Controls Over Financial Reporting
  34




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##### Table of Contents



PART II  OTHER INFORMATION
 
 Item 1A. Risk Factors.
   
    
    the volatility of oil and natural gas prices;
    
    discovery, estimation, development and replacement of oil and natural gas reserves;
    
    cash flow, liquidity and financial position;
    
    business strategy;
    
    amount, nature and timing of capital expenditures, including future development costs;
    
    availability and terms of capital;
    
    timing and amount of future production of oil and natural gas;
    
    availability of drilling and production equipment;
    
    operating costs and other expenses;
    
    prospect development and property acquisitions;
    
    risks arising out of our hedging transactions;
    
    marketing of oil and natural gas;
    
    competition in the oil and natural gas industry;
    
    the impact of weather and the occurrence of natural events and natural disasters such
as loop currents, hurricanes, fires, floods and other natural events, catastrophic events
and natural disasters;
    
    governmental regulation of the oil and natural gas industry;
    
    environmental liabilities;
    
    developments in oil-producing and natural gas-producing countries;
 35




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##### Table of Contents




    
    timing of insurance recoveries and uninsured or underinsured losses in our oil and
natural gas operations;
    
    risks related to our level of indebtedness; and
    
    our acquisition of Forest Oil Corporations Gulf of Mexico operations including
strategic plans, expectations and objectives for future operations, and the realization of
expected benefits from the transaction.
 
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
 Issuer Purchases of Equity Securities
 Maximum Number (orTotal Number of
    
    Approximate DollarShares
    
    Value) ofTotal
    
    
    
    
    
    (or Units)
    
    Shares (or Units)Number of
    
    Average
    
    Purchased as
    
    that May Yet BeShares (or
    
    Price Paid
    
    Part of Publicly
    
    Purchased Under theUnits)
    
    per Share
    
    Announced Plans or
    
    Plans orPeriod
    
    Purchased
    
    (or Unit)
    
    Programs
    
    ProgramsJuly 1, 2007 to July 31, 2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    August 1, 2007 to August 31, 2007(1)
    
    
    1,437
    
    
    $
    20.31
    
    
    
    
    
    
    
    September 1, 2007 to September 30, 2007(1)
    
    
    4,468
    
    
    $
    19.38
    
    
    
    
    
    
    
    Total
    
    
    5,905
    
    
    $
    19.85
    
    
    
    
    
    
    
    
 
 (1)
    
    These shares were withheld upon the vesting of employee restricted stock grants in connection
with payment of required withholding taxes. 
 Item 6. Exhibits
 Number
    
    Description2.1*
    
    Agreement and Plan of Merger, dated as of September 9, 2005, among Forest Oil Corporation, SML
Wellhead Corporation, Mariner Energy, Inc. and MEI Sub, Inc. (incorporated by reference to Exhibit
2.1 to Mariners Registration Statement on Form S-4 (File No. 333-129096) filed on October 18,
2005).2.2*
    
    Letter Agreement, dated as of February 3, 2006, among Forest Oil Corporation, Forest Energy
Resources, Inc., Mariner Energy, Inc., and MEI Sub, Inc. amended the transaction agreements
(incorporated by reference to Exhibit 2.2 to Amendment No. 3 to Mariners Registration Statement
on Form S-4 (File No. 333-129096) filed on February 8, 2006).2.3*
    
    Letter Agreement, dated as of February 28, 2006, among Forest Oil Corporation, Forest Energy
Resources, Inc., Mariner Energy, Inc. and MEI Sub, Inc. amended the transaction agreements
(incorporated by reference to Exhibit 2.1 to Mariners Form 8-K filed on March 3, 2006).2.4*
    
    Letter Agreement, dated April 12, 2006, among Forest Oil Corporation, Mariner Energy Resources,
Inc. and Mariner Energy, Inc. amended the transaction agreements (incorporated by reference to
Exhibit 2.1 to Mariners Form 8-K filed on April 13, 2006).3.1*
    
    Second Amended and Restated Certificate of Incorporation of Mariner Energy, Inc., as amended
(incorporated by reference to Exhibit 3.1 to Mariners Registration Statement on Form S-8 (File
No. 333-132800) filed on March 29, 2006).3.2*
    
    Fourth Amended and Restated Bylaws of Mariner Energy, Inc. (incorporated by reference to Exhibit
3.2 to Mariners Registration Statement on Form S-4 (File No. 333-129096) filed on October 18,
2005).4.1*
    
    Indenture, dated as of April 30, 2007, among Mariner Energy, Inc., the guarantors party thereto
and Wells Fargo Bank, N.A., as trustee (incorporated by reference to Exhibit 4.1 to Mariners Form
8-K filed on May 1, 2007).4.2*
    
    Indenture, dated as of April 24, 2006, among Mariner Energy, Inc., the guarantors party thereto
and Wells Fargo Bank, N.A., as trustee (incorporated by reference to Exhibit 4.1 to Mariners Form
8-K filed on April 25, 2006).4.3*
    
    Exchange and Registration Rights Agreement, dated as of April 24, 2006, among Mariner Energy,
Inc., the guarantors party thereto and the initial purchasers party thereto (incorporated by
reference to Exhibit 4.2 to Mariners Form 8-K filed on April 25, 2006).4.4*
    
    Amended and Restated Credit Agreement, dated as of March 2, 2006, among Mariner Energy, Inc. and
Mariner Energy Resources, Inc., as Borrowers, the Lenders party thereto from time to time, as
Lenders, and Union Bank of California, N.A., as Administrative Agent and as Issuing Lender
(incorporated by reference to Exhibit 4.1 to Mariners Form 8-K filed on March 3, 2006).
 36




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##### Table of Contents



Number
    
    Description4.5*
    
    Amendment No. 1 and Consent, dated as of April 7, 2006, among Mariner Energy, Inc. and Mariner
Energy Resources, Inc., as Borrowers, the Lenders party thereto, and Union Bank of California,
N.A., as Administrative Agent for such Lenders and as Issuing Lender for such Lenders
(incorporated by reference to Exhibit 4.1 to Mariners Form 8-K filed on April 13, 2006).4.6*
    
    Amendment No. 2, dated as of October 13, 2006, among Mariner Energy, Inc. and Mariner Energy
Resources, Inc., as Borrowers, the Lenders party thereto, and Union Bank of California, N.A., as
Administrative Agent for such Lenders and as Issuing Lender for such Lenders (incorporated by
reference to Exhibit 4.1 to Mariners Form 8-K filed on October 18, 2006).4.7*
    
    Amendment No. 3 and Consent, dated as of April 23, 2007, among Mariner Energy, Inc. and Mariner
Energy Resources, Inc., as Borrowers, the Lenders party thereto, and Union Bank of California,
N.A., as Administrative Agent for such Lenders and as Issuing Lender for such Lenders
(incorporated by reference to Exhibit 4.1 to Mariners Form 8-K filed on April 24, 2007).4.8*
    
    Amendment No. 4, dated as of August 24, 2007, among Mariner Energy, Inc. and Mariner Energy
Resources, Inc., as Borrowers, the Lenders party thereto, and Union Bank of California, N.A., as
Administrative Agent for such Lenders and as Issuing Lender for such Lenders (incorporated by
reference to Exhibit 4.1 to Mariners Form 8-K filed on August 27, 2007).10.1*
    
    Underwriting Agreement, dated April 25, 2007, among J.P. Morgan Securities Inc., as Representative
of the several Underwriters listed in Schedule 1 thereto, Mariner Energy, Inc., Mariner Energy
Resources, Inc., Mariner LP LLC, and Mariner Energy Texas LP (incorporated by reference to Exhibit
1.1 to Mariners Form 8-K filed on April 26, 2007).10.2*
    
    Purchase Agreement, dated as of April 19, 2006, among Mariner Energy, Inc., Mariner LP LLC,
Mariner Energy Resources, Inc., Mariner Energy Texas LP and the initial purchasers party thereto
(incorporated by reference to Exhibit 10.1 to Mariners Form 8-K filed on April 25, 2006).31.1
    
    Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 *
    
    Incorporated by reference as indicated.  37




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##### Table of Contents



SIGNATURES
  Mariner Energy, Inc.By:
    
    /s/ Scott D. JoseyName: Scott D. JoseyTitle: Chairman of the Board,Chief Executive Officer and PresidentBy:
    
    /s/ John H. KarnesName: John H. KarnesTitle: Senior Vice President, Chief Financial Officerand Treasurer
 38




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##### Table of Contents



Index
to Exhibits
 Number
    
    Description2.1*
    
    Agreement and Plan of Merger, dated as of September 9, 2005, among Forest Oil Corporation, SML
Wellhead Corporation, Mariner Energy, Inc. and MEI Sub, Inc. (incorporated by reference to Exhibit
2.1 to Mariners Registration Statement on Form S-4 (File No. 333-129096) filed on October 18,
2005).2.2*
    
    Letter Agreement, dated as of February 3, 2006, among Forest Oil Corporation, Forest Energy
Resources, Inc., Mariner Energy, Inc., and MEI Sub, Inc. amended the transaction agreements
(incorporated by reference to Exhibit 2.2 to Amendment No. 3 to Mariners Registration Statement
on Form S-4 (File No. 333-129096) filed on February 8, 2006).2.3*
    
    Letter Agreement, dated as of February 28, 2006, among Forest Oil Corporation, Forest Energy
Resources, Inc., Mariner Energy, Inc. and MEI Sub, Inc. amended the transaction agreements
(incorporated by reference to Exhibit 2.1 to Mariners Form 8-K filed on March 3, 2006).2.4*
    
    Letter Agreement, dated April 12, 2006, among Forest Oil Corporation, Mariner Energy Resources,
Inc. and Mariner Energy, Inc. amended the transaction agreements (incorporated by reference to
Exhibit 2.1 to Mariners Form 8-K filed on April 13, 2006).3.1*
    
    Second Amended and Restated Certificate of Incorporation of Mariner Energy, Inc., as amended
(incorporated by reference to Exhibit 3.1 to Mariners Registration Statement on Form S-8 (File
No. 333-132800) filed on March 29, 2006).3.2*
    
    Fourth Amended and Restated Bylaws of Mariner Energy, Inc. (incorporated by reference to Exhibit
3.2 to Mariners Registration Statement on Form S-4 (File No. 333-129096) filed on October 18,
2005).4.1*
    
    Indenture, dated as of April 30, 2007, among Mariner Energy, Inc., the guarantors party thereto
and Wells Fargo Bank, N.A., as trustee (incorporated by reference to Exhibit 4.1 to Mariners Form
8-K filed on May 1, 2007).4.2*
    
    Indenture, dated as of April 24, 2006, among Mariner Energy, Inc., the guarantors party thereto
and Wells Fargo Bank, N.A., as trustee (incorporated by reference to Exhibit 4.1 to Mariners Form
8-K filed on April 25, 2006).4.3*
    
    Exchange and Registration Rights Agreement, dated as of April 24, 2006, among Mariner Energy,
Inc., the guarantors party thereto and the initial purchasers party thereto (incorporated by
reference to Exhibit 4.2 to Mariners Form 8-K filed on April 25, 2006).4.4*
    
    Amended and Restated Credit Agreement, dated as of March 2, 2006, among Mariner Energy, Inc. and
Mariner Energy Resources, Inc., as Borrowers, the Lenders party thereto from time to time, as
Lenders, and Union Bank of California, N.A., as Administrative Agent and as Issuing Lender
(incorporated by reference to Exhibit 4.1 to Mariners Form 8-K filed on March 3, 2006).




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##### Table of Contents



Number
    
    Description4.5*
    
    Amendment No. 1 and Consent, dated as of April 7, 2006, among Mariner Energy, Inc. and Mariner
Energy Resources, Inc., as Borrowers, the Lenders party thereto, and Union Bank of California,
N.A., as Administrative Agent for such Lenders and as Issuing Lender for such Lenders
(incorporated by reference to Exhibit 4.1 to Mariners Form 8-K filed on April 13, 2006).4.6*
    
    Amendment No. 2, dated as of October 13, 2006, among Mariner Energy, Inc. and Mariner Energy
Resources, Inc., as Borrowers, the Lenders party thereto, and Union Bank of California, N.A., as
Administrative Agent for such Lenders and as Issuing Lender for such Lenders (incorporated by
reference to Exhibit 4.1 to Mariners Form 8-K filed on October 18, 2006).4.7*
    
    Amendment No. 3 and Consent, dated as of April 23, 2007, among Mariner Energy, Inc. and Mariner
Energy Resources, Inc., as Borrowers, the Lenders party thereto, and Union Bank of California,
N.A., as Administrative Agent for such Lenders and as Issuing Lender for such Lenders
(incorporated by reference to Exhibit 4.1 to Mariners Form 8-K filed on April 24, 2007).4.8*
    
    Amendment No. 4, dated as of August 24, 2007, among Mariner Energy, Inc. and Mariner Energy
Resources, Inc., as Borrowers, the Lenders party thereto, and Union Bank of California, N.A., as
Administrative Agent for such Lenders and as Issuing Lender for such Lenders (incorporated by
reference to Exhibit 4.1 to Mariners Form 8-K filed on August 27, 2007).10.1*
    
    Underwriting Agreement, dated April 25, 2007, among J.P. Morgan Securities Inc., as Representative
of the several Underwriters listed in Schedule 1 thereto, Mariner Energy, Inc., Mariner Energy
Resources, Inc., Mariner LP LLC, and Mariner Energy Texas LP (incorporated by reference to Exhibit
1.1 to Mariners Form 8-K filed on April 26, 2007).10.2*
    
    Purchase Agreement, dated as of April 19, 2006, among Mariner Energy, Inc., Mariner LP LLC,
Mariner Energy Resources, Inc., Mariner Energy Texas LP and the initial purchasers party thereto
(incorporated by reference to Exhibit 10.1 to Mariners Form 8-K filed on April 25, 2006).31.1
    
    Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 *
    
    Incorporated by reference as indicated.