##### 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 March 31, 2010
 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
  Large accelerated filer þ
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




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##### 



TABLE OF CONTENTS
  
 PART IItem 1. Unaudited Condensed Consolidated Financial Statements:Condensed Consolidated Balance Sheets at March 31, 2010 and December 31, 2009
    
    
    3Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2010
and 2009
    
    
    4Condensed Consolidated Statements of Changes in Stockholders Equity for the Three Months
EndedMarch 31, 2010 and 2009
    
    
    5Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2010
and 2009
    
    
    6Notes to the Condensed Consolidated Financial Statements
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    29Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    39Item 4. Controls and Procedures
    
    
    41PART IIItem 1A. Risk Factors
    
    
    42Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    44Item 6. Exhibits
    
    
    45Items 1, 3, 4 and 5 are not applicable and have been omitted.EX-31.1EX-31.2EX-32.1EX-32.2
  2




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##### Table of Contents



PART I
 
 Item 1. Unaudited Condensed Consolidated Financial Statements
 MARINER ENERGY, INC.
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 March 31,
    
    
    December 31,2010
    
    
    2009ASSETSCurrent Assets:Cash and cash equivalents
    
    $
    10,821
    
    
    $
    8,919Receivables, net of allowances of $1,781 and $3,408 as of
March 31, 2010 and December 31, 2009, respectively
    
    
    150,830
    
    
    
    148,725Insurance receivables
    
    
    9,781
    
    
    
    8,452Derivative financial instruments
    
    
    40,011
    
    
    
    2,239Intangible assets
    
    
    19,571
    
    
    
    22,615Prepaid expenses and other
    
    
    35,810
    
    
    
    11,667Deferred income tax
    
    
    
    
    
    
    9,704Total current assets
    
    
    266,824
    
    
    
    212,321Property and Equipment:Proved oil and gas properties, full cost method
    
    
    5,218,933
    
    
    
    5,117,273Unproved properties, not subject to amortization
    
    
    337,693
    
    
    
    292,237Total oil and gas properties
    
    
    5,556,626
    
    
    
    5,409,510Other property and equipment
    
    
    55,976
    
    
    
    55,695Accumulated depreciation, depletion and amortization:Proved oil and gas properties
    
    
    (2,975,205
    )
    
    
    (2,884,411
    )Other property and equipment
    
    
    (8,948
    )
    
    
    (8,235
    )Total accumulated depreciation, depletion and amortization
    
    
    (2,984,153
    )
    
    
    (2,892,646
    )Total property and equipment, net
    
    
    2,628,449
    
    
    
    2,572,559Derivative Financial Instruments
    
    
    13,080
    
    
    
    902Deferred Income Tax
    
    
    
    
    
    
    12,491Other Assets, net of amortization
    
    
    93,884
    
    
    
    68,932TOTAL ASSETS
    
    $
    3,002,237
    
    
    $
    2,867,205LIABILITIES AND STOCKHOLDERS EQUITYCurrent Liabilities:Accounts payable
    
    $
    7,355
    
    
    $
    3,579Accrued liabilities
    
    
    158,882
    
    
    
    137,206Accrued capital costs
    
    
    143,845
    
    
    
    140,941Deferred income tax
    
    
    5,254
    
    
    
    Abandonment liability
    
    
    81,743
    
    
    
    54,915Accrued interest
    
    
    28,992
    
    
    
    8,262Derivative financial instruments
    
    
    25,351
    
    
    
    27,708Total current liabilities
    
    
    451,422
    
    
    
    372,611Long-Term Liabilities:Abandonment liability
    
    
    340,687
    
    
    
    362,972Deferred income tax
    
    
    4,998
    
    
    
    Derivative financial instruments
    
    
    5,401
    
    
    
    15,017Long-term debt
    
    
    1,222,204
    
    
    
    1,194,850Other long-term liabilities
    
    
    36,280
    
    
    
    38,800Total long-term liabilities
    
    
    1,609,570
    
    
    
    1,611,639Commitments and Contingencies (see Note 8)Stockholders Equity:Preferred stock, $.0001 par value; 20,000,000 shares
authorized, no shares issued and outstanding at March
31, 2010 and December 31, 2009
    
    
    
    
    
    
    Common stock, $.0001 par value; 180,000,000 shares
authorized, 103,122,652 shares issued and outstanding at
March 31, 2010; 180,000,000 shares authorized,
101,806,825 shares issued and outstanding at December
31, 2009
    
    
    10
    
    
    
    10Additional paid-in capital
    
    
    1,262,245
    
    
    
    1,257,526Accumulated other comprehensive income (loss)
    
    
    12,353
    
    
    
    (25,955
    )Accumulated deficit
    
    
    (333,363
    )
    
    
    (348,626
    )Total stockholders equity
    
    
    941,245
    
    
    
    882,955TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    3,002,237
    
    
    $
    2,867,205
 The accompanying notes are an integral part of these condensed consolidated financial statements
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##### Table of Contents



MARINER ENERGY, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 Three Months EndedMarch 31,2010
    
    
    2009Revenues:Natural gas
    
    $
    117,512
    
    
    $
    153,338Oil
    
    
    95,639
    
    
    
    60,925Natural gas liquids
    
    
    27,660
    
    
    
    6,469Other revenues
    
    
    2,302
    
    
    
    22,604Total revenues
    
    
    243,113
    
    
    
    243,336Costs and Expenses:Lease operating expense
    
    
    52,943
    
    
    
    53,399Severance and ad valorem taxes
    
    
    6,919
    
    
    
    3,532Transportation expense
    
    
    5,689
    
    
    
    4,584General and administrative expense
    
    
    27,580
    
    
    
    17,411Depreciation, depletion and amortization
    
    
    100,503
    
    
    
    94,805Full cost ceiling test impairment
    
    
    
    
    
    
    704,731Other miscellaneous expense
    
    
    2,689
    
    
    
    8,009Total costs and expenses
    
    
    196,323
    
    
    
    886,471OPERATING INCOME (LOSS)
    
    
    46,790
    
    
    
    (643,135
    )Other Income (Expense):Interest income
    
    
    135
    
    
    
    85Interest expense, net of amounts capitalized
    
    
    (20,463
    )
    
    
    (14,402
    )Income (Loss) Before Taxes
    
    
    26,462
    
    
    
    (657,452
    )(Provision) Benefit for Income Taxes
    
    
    (11,199
    )
    
    
    233,334NET INCOME (LOSS)
    
    $
    15,263
    
    
    $
    (424,118
    )Net Income (Loss) per share:Basic
    
    $
    0.15
    
    
    $
    (4.77
    )Diluted
    
    $
    0.15
    
    
    $
    (4.77
    )Weighted average shares outstanding:Basic
    
    
    100,991,254
    
    
    
    88,864,648Diluted
    
    
    101,885,493
    
    
    
    88,864,648
 The accompanying notes are an integral part of these condensed consolidated financial statements
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##### Table of Contents



MARINER ENERGY, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY
 AccumulatedOtherAdditional
    
    
    Comprehensive
    
    
    
    
    
    
    TotalCommon
    
    
    Stock
    
    
    Paid-In-
    
    
    Income/
    
    
    Accumulated
    
    
    StockholdersStock
    
    
    Amount
    
    
    Capital
    
    
    (Loss)
    
    
    Deficit
    
    
    EquityBalance at December 31, 2009
    
    
    101,807
    
    
    $
    10
    
    
    $
    1,257,526
    
    
    $
    (25,955
    )
    
    $
    (348,626
    )
    
    $
    882,955Common shares issued 
restricted stock
    
    
    1,458
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Treasury stock bought and
cancelled on same day
    
    
    (144
    )
    
    
    
    
    
    
    (2,190
    )
    
    
    
    
    
    
    
    
    
    
    (2,190
    )Forfeiture of restricted stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Share-based compensation
    
    
    
    
    
    
    
    
    
    
    6,891
    
    
    
    
    
    
    
    
    
    
    
    6,891Stock options exercised
    
    
    2
    
    
    
    
    
    
    
    18
    
    
    
    
    
    
    
    
    
    
    
    18Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,263
    
    
    
    15,263Change in fair value of
derivative hedging
instruments  net of income
taxes of $21,083
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    37,809
    
    
    
    
    
    
    
    37,809Hedge settlements
reclassified to income  net
of income taxes of $206
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    367
    
    
    
    
    
    
    
    367Foreign currency translation
adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    132
    
    
    
    
    
    
    
    132Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    38,308
    
    
    
    15,263
    
    
    
    53,571Balance at March 31, 2010
    
    
    103,123
    
    
    $
    10
    
    
    $
    1,262,245
    
    
    $
    12,353
    
    
    $
    (333,363
    )
    
    $
    941,245
 AccumulatedOtherAdditional
    
    
    Comprehensive
    
    
    
    
    
    
    TotalCommon
    
    
    Stock
    
    
    Paid-In-
    
    
    Income/
    
    
    Accumulated
    
    
    StockholdersStock
    
    
    Amount
    
    
    Capital
    
    
    (Loss)
    
    
    Deficit
    
    
    EquityBalance at December 31, 2008
    
    
    88,846
    
    
    $
    9
    
    
    $
    1,071,347
    
    
    $
    78,181
    
    
    $
    (29,217
    )
    
    $
    1,120,320Common shares issued 
restricted stock
    
    
    1,213
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Treasury stock bought and
cancelled on same day
    
    
    (52
    )
    
    
    
    
    
    
    (448
    )
    
    
    
    
    
    
    
    
    
    
    (448
    )Forfeiture of restricted stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Share-based compensation
    
    
    
    
    
    
    
    
    
    
    6,778
    
    
    
    
    
    
    
    
    
    
    
    6,778Stock options exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Comprehensive income (loss):Net (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (424,118
    )
    
    
    (424,118
    )Change in fair value of
derivative hedging instruments 
net of income taxes of $(10,398)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (19,496
    )
    
    
    
    
    
    
    (19,496
    )Hedge settlements reclassified
to income  net of income taxes
of $22,885
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    40,916
    
    
    
    
    
    
    
    40,916Total comprehensive income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21,420
    
    
    
    (424,118
    )
    
    
    (402,698
    )Balance at March 31, 2009
    
    
    90,007
    
    
    $
    9
    
    
    $
    1,077,677
    
    
    $
    99,601
    
    
    $
    (453,335
    )
    
    $
    723,952
 The accompanying notes are an integral part of these condensed consolidated financial statements
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MARINER ENERGY, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 Three MonthsEnded March 31,2010
    
    
    2009Operating Activities:Net income (loss)
    
    $
    15,263
    
    
    $
    (424,118
    )Adjustments to reconcile net income to net cash provided by operating activities:Deferred income tax
    
    
    11,199
    
    
    
    (233,334
    )Depreciation, depletion and amortization
    
    
    100,503
    
    
    
    94,805Ineffectiveness of derivative instruments
    
    
    (2,458
    )
    
    
    179Full cost ceiling test impairment
    
    
    
    
    
    
    704,731Share-based compensation
    
    
    5,891
    
    
    
    6,778Derivative financial instruments
    
    
    
    
    
    
    (3,591
    )Other
    
    
    1,486
    
    
    
    (2,450
    )Changes in operating assets and liabilities:Receivables
    
    
    (4,622
    )
    
    
    12,784Insurance receivables
    
    
    (1,329
    )
    
    
    (4,674
    )Cash from liquidation of hedges
    
    
    
    
    
    
    10,024Prepaid expenses and other
    
    
    (50,655
    )
    
    
    (14,005
    )Intangible assets
    
    
    (1,456
    )
    
    
    548Accounts payable and accrued liabilities
    
    
    39,300
    
    
    
    (21,720
    )Net cash provided by operating activities
    
    
    113,122
    
    
    
    125,957Investing Activities:Acquisitions and additions to oil and gas properties
    
    
    (135,767
    )
    
    
    (190,880
    )Additions to other property and equipment
    
    
    (281
    )
    
    
    (524
    )Net cash used in investing activities
    
    
    (136,048
    )
    
    
    (191,404
    )Financing Activities:Credit facility borrowings
    
    
    180,000
    
    
    
    140,000Credit facility repayments
    
    
    (153,000
    )
    
    
    (70,000
    )Repurchase of stock
    
    
    (2,190
    )
    
    
    (448
    )Debt redetermination costs
    
    
    
    
    
    
    (17
    )Proceeds from exercise of stock options
    
    
    18
    
    
    
    Net cash provided by financing activities
    
    
    24,828
    
    
    
    69,535Increase in Cash and Cash Equivalents
    
    
    1,902
    
    
    
    4,088Cash and Cash Equivalents at Beginning of Period
    
    
    8,919
    
    
    
    3,251Cash and Cash Equivalents at End of Period
    
    $
    10,821
    
    
    $
    7,339Supplemental Disclosure of Cash Flow Information:Cash paid during the year for:Interest
    
    $
    2,821
    
    
    $
    6,836
 The accompanying notes are an integral part of these condensed consolidated financial statements
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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
 Income Taxes
  Recent Accounting Pronouncements
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2. Acquisitions and Dispositions
 Onshore Acquisition
 Pro Forma Financial Information:
 For the Three MonthsEnded March 31, 2009(In thousands, exceptper share amounts)Pro Forma:Revenue
    
    $
    267,821Net loss available to common stockholders
    
    $
    (499,538
    )Basic loss per share
    
    $
    (5.62
    )Diluted loss per share
    
    $
    (5.62
    )
 3. Long-Term Debt
  March 31,
    
    
    December 31,2010
    
    
    2009(In thousands)Bank credit facility
    
    $
    332,000
    
    
    $
    305,0007 1/2% Senior Notes, due April 15, 2013, net of discount
    
    
    298,268
    
    
    
    298,1258% Senior Notes, due May 15, 2017
    
    
    300,000
    
    
    
    300,00011 3/4% Senior Notes, due June 30, 2016, net of discount
    
    
    291,936
    
    
    
    291,725Total long-term debt
    
    $
    1,222,204
    
    
    $
    1,194,850
 Bank Credit Facility 
 
    Increase the borrowing base by $150.0 million to $950.0 million until the next
redetermination under the credit agreement,
 
    Reschedule the regular periodic borrowing base redeterminations to begin in February
and August of each year,
 
    Give the lenders an option to redetermine the borrowing base upon termination of hedge
contracts with more than six months remaining in their original nominal term,
 8




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##### Table of Contents




    Increase the maximum permitted ratio of total debt to EBITDA (as defined in the credit
agreement) to 3.5 to 1.0 from 2.5 to 1.0, and
 
    Give Mariner optionality to issue before January 1, 2011 up to $400.0 million in
additional unsecured debt with a non-default interest rate of up to 13% per annum (plus a maximum
default rate of 3%) and a scheduled maturity date no earlier than March 2, 2015. Upon closing such
a debt issuance, the borrowing base automatically would reduce by 25% of the aggregate principal
amount of the debt issued until otherwise redetermined under the credit agreement.
    
    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 3 4 3 4 1 2 1 2 3 4 3 4 1 2
 Capitalized Interest 
 9




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4. Oil and Gas Properties
    5. Accrual for Future Abandonment Liabilities
   10




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(In thousands)Abandonment liability as of January 1, 2010 (1)
    
    $
    417,887Liabilities incurred
    
    
    Liabilities settled
    
    
    (4,454
    )Accretion expense
    
    
    8,997Revisions to previous estimates
    
    
    Abandonment liability as of March 31, 2010 (2)
    
    $
    422,430
 
 (1)
    
    Includes $54.9 million classified as a current liability at January 1, 2010.(2)
    
    Includes $81.7 million classified as a current liability at March 31, 2010. 6. Share-Based Compensation
 Applicable Plans 
 Plan Activity 
  Three Months Ended March 31,2010
    
    
    2009(In thousands)Share-based compensation included in:General and administrative expense
    
    $
    5,891
    
    
    $
    5,924Oil and natural gas properties under full cost method
    
    
    1,000
    
    
    
    854Total share-based compensation
    
    $
    6,891
    
    
    $
    6,778
  Three Months Ended March 31,2010
    
    
    2009(In thousands)Charged to earnings
    
    $
    5,891
    
    
    $
    5,924Tax benefit
    
    
    (2,117
    )
    
    
    (2,103
    )$
    3,774
    
    
    $
    3,821
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WeightedAverage
    
    
    Aggregate IntrinsicExercise
    
    
    Value (1)Shares
    
    
    Price
    
    
    (In thousands)Outstanding at January 1, 2010
    
    
    644,160
    
    
    $
    13.88
    
    
    $
    702Granted
    
    
    
    
    
    
    
    
    
    
    Exercised
    
    
    (1,782
    )
    
    
    11.59
    
    
    
    (6
    )Forfeited
    
    
    (1,600
    )
    
    
    14.00
    
    
    
    (2
    )Outstanding and exercisable at March 31, 2010
    
    
    640,778
    
    
    
    13.89
    
    
    $
    694
 
 (1)
    
    Based upon the difference between the closing price per share of Mariners common stock on
March 31, 2010 of $14.97 and the option exercise price of in-the-money options.  Restricted Shares underStock Incentive PlanMarch 31,2010
    
    2009Total unvested shares at beginning of period: January 1
    
    
    3,660,265
    
    
    
    2,697,926Shares granted (1)
    
    
    1,458,044
    
    
    
    1,212,654Shares vested
    
    
    (431,847
    )
    
    
    (170,724
    )Shares forfeited
    
    
    
    
    
    
    Total unvested shares at end of period: March 31
    
    
    4,686,462
    
    
    
    3,739,856Available for future grant as options or restricted stock
    
    
    5,758,379
    
    
    
    1,369,868
 
 (1)
    
    Includes 4,741 shares granted during the three months ended March 31, 2009 under the Stock
Incentive Plans 2008 Long-Term Performance-Based Restricted Stock Program discussed below.  WeightedAggregate
    
    
    AverageEquity
    
    
    Weighted
    
    
    Intrinsic
    
    
    RemainingInstruments
    
    
    Average
    
    
    Value
    
    
    Contractual(thousands)
    
    
    Fair Value
    
    
    ($ thousands)
    
    
    Life (Years)Unvested at January 1, 2010
    
    
    3,660,265
    
    
    $
    21.51
    
    
    $
    78,734Granted
    
    
    1,458,044
    
    
    
    14.78
    
    
    
    21,549Vested
    
    
    (431,847
    )
    
    
    16.00
    
    
    
    (6,907
    )Forfeited
    
    
    
    
    
    
    
    
    
    
    Unvested at March 31, 2010
    
    
    4,686,462
    
    
    
    19.92
    
    
    $
    93,376
    
    
    
    5.54
 Long-Term Performance-Based Restricted Stock Program 
 12




---



##### Table of Contents



Quarter EndedMarch 31,2010Weighted average fair value of grants
    
    $
    33.73Expected volatility
    
    
    42.29
    %Risk-free interest rate
    
    
    4.57
    %Dividend yield
    
    
    0.00
    %Expected life
    
    10 years
  7. Derivative Financial Instruments and Hedging Activities
    13




---



##### Table of Contents



Three Months Ended March 31,2010
    
    
    2009(In thousands)Cash (Loss) Gain on Settlements (1)
    
    $
    (1,885
    )
    
    $
    57,457Reclassification of Liquidated Swaps (2)
    
    
    
    
    
    
    6,523Gain (Loss) on Hedge Ineffectiveness (3)
    
    
    2,458
    
    
    
    (179
    )Total
    
    $
    573
    
    
    $
    63,801
 
 (1)
    
    Designated as cash flow hedges pursuant to accounting for derivatives and hedging under GAAP.(2)
    
    Net gain realized in 2009 on liquidated crude oil fixed price swaps that do not qualify for
hedge accounting.(3)
    
    Unrealized gain (loss) recognized in natural gas revenue related to the ineffective portion
of open contracts that are not eligible for deferral under GAAP due primarily to the basis
differentials between the contract price and the indexed price at the point of sale.  Weighted Average
    
    
    Fair ValueFixed Price Swaps
    
    Quantity
    
    
    Fixed Price
    
    
    Asset/(Liability)(In thousands)Natural Gas (MMbtus)April 1  December 31, 2010
    
    
    32,209,145
    
    
    $
    5.56
    
    
    $
    42,026January 1  December 31, 2011
    
    
    29,389,843
    
    
    $
    5.79
    
    
    
    13,340January 1  December 31, 2012
    
    
    22,338,802
    
    
    $
    6.11
    
    
    
    6,705January 1  December 31, 2013
    
    
    5,840,000
    
    
    $
    6.76
    
    
    
    3,744Crude Oil (Bbls)April 1  December 31, 2010
    
    
    2,454,866
    
    
    $
    73.92
    
    
    
    (26,461
    )January 1  December 31, 2011
    
    
    1,978,364
    
    
    $
    79.33
    
    
    
    (12,842
    )January 1  December 31, 2012
    
    
    494,100
    
    
    $
    80.76
    
    
    
    (2,665
    )January 1  December 31, 2013
    
    
    408,800
    
    
    $
    82.81
    
    
    
    (1,508
    )Total
    
    
    
    
    
    
    
    
    
    $
    22,339
    14




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##### Table of Contents



Additional Disclosures about Derivative Instruments and Hedging Activities
  Fair Value of Derivative ContractsAsset DerivativesMarch 31, 2010
    
    
    December 31, 2009Balance sheet
    
    
    
    
    
    Balance sheetLocation
    
    Fair value
    
    
    Location
    
    Fair valueDerivatives designated as cash flow hedging contractsFixed Price Swaps
    
    Current
Assets: Derivative financial instruments
    
    $
    40,011
    
    
    Current
Assets: Derivative financial instruments
    
    $
    2,239Long-Term Assets:
Derivative Financial Instruments
    
    
    13,080
    
    
    Long-Term Assets:
Derivative Financial Instruments
    
    
    902Total:
    
    $
    53,091
    
    
    Total:
    
    $
    3,141
 Fair Value of Derivative ContractsLiability DerivativesMarch 31, 2010
    
    
    December 31, 2009Balance sheet
    
    
    
    
    
    Balance sheetLocation
    
    Fair value
    
    
    Location
    
    Fair valueDerivatives designated as cash flow hedging contractsFixed Price Swaps
    
    Current Liabilities:
Derivative financial instruments
    
    $
    25,351
    
    
    Current Liabilities:
Derivative financial instruments
    
    $
    27,708Long-Term Liabilities:
Derivative financial instruments
    
    
    5,401
    
    
    Long-Term Liabilities:
Derivative financial instruments
    
    
    15,017Total:
    
    
    $
    30,752
    
    
    
    Total:
    
    
    $
    42,725
  Amount of
    
    
    Location of
    
    
    Amount of gain/(loss)gain/(loss)
    
    
    gain/(loss)
    
    
    reclassified from
    
    
    
    
    
    
    Amount of (loss)Derivatives
    
    recognized in OCI
    
    
    reclassified from
    
    
    Accumulated OCI into
    
    
    
    
    
    
    recognized in incomedesignated as cash
    
    on derivative
    
    
    Accumulated OCI
    
    
    income (effective
    
    
    Location of (loss)
    
    
    on derivativeflow hedging
    
    (effective portion)
    
    
    into income
    
    
    portion)
    
    
    recognized in income
    
    
    (ineffective portion)contracts under
    
    First Quarter
    
    
    (effective
    
    
    First Quarter
    
    
    on derivative
    
    
    First QuarterGAAP
    
    2010
    
    
    2009
    
    
    portion)
    
    
    2010
    
    
    2009
    
    
    (ineffective portion)
    
    
    2010
    
    
    2009Fixed Price Swaps
    
    $
    22,339
    
    
    $
    138,212
    
    
    Revenues-Natural Gas
    
    $
    3,509
    
    
    $
    43,145
    
    
    Revenues-Natural Gas
    
    $
    2,458
    
    
    $
    (179
    )Revenues-Crude Oil
    
    
    (5,394
    )
    
    
    14,312Total
    
    $
    (1,885
    )
    
    $
    57,457
 Amount of gain/(loss) recognizedLocation of gain/(loss)
    
    in income on derivativeDerivatives not designated as cash flow hedging contracts
    
    recognized in income on
    
    First Quarter
    
    First Quarterunder  GAAP
    
    derivative
    
    2010
    
    2009Fixed Price Swaps
    
    Revenues-Crude Oil
    
    $
    
    
    
    $
    6,523
 15




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##### Table of Contents



8. Commitments and Contingencies
 Minimum Future Lease Payments
 (In thousands)2011
    
    $
    2,2612012
    
    
    2,5022013
    
    
    2,1732014
    
    
    2,0282015 and thereafter
    
    
    7,931
 Other Commitments
 Insurance Matters
 Current Insurance Against Hurricanes
    16




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##### Table of Contents



Hurricane Ike (2008)
  Litigation
 Letters of Credit
 17




---



##### Table of Contents



9. Earnings per Share
  Three Months EndedMarch 31,2010
    
    
    2009(In thousands, except per share data)Numerator:Net Income (Loss)
    
    $
    15,263
    
    
    $
    (424,118
    )Denominator:Weighted average shares outstanding
    
    
    100,991
    
    
    
    88,865Add dilutive securitiesOptions
    
    
    123
    
    
    
    Restricted stock
    
    
    771
    
    
    
    Total weighted average shares outstanding and dilutive securities
    
    
    101,885
    
    
    
    88,865Net Income (Loss) per share:Basic:
    
    $
    0.15
    
    
    $
    (4.77
    )Diluted:
    
    $
    0.15
    
    
    $
    (4.77
    )
  10. Comprehensive Income (Loss)
  Three Months EndedMarch 31,2010
    
    
    2009(in thousands)Net Income (Loss)
    
    $
    15,263
    
    
    $
    (424,118
    )Other comprehensive income (loss), net of tax:Change in unrealized mark-to-market gains (losses) arising during period, net of taxes
    
    
    37,809
    
    
    
    (19,496
    )Derivative contracts settled and reclassified, net of taxes
    
    
    367
    
    
    
    40,916Foreign currency translation adjustment
    
    
    132
    
    
    
    Change in accumulated other comprehensive income
    
    
    38,308
    
    
    
    21,420Comprehensive income (loss)
    
    $
    53,571
    
    
    $
    (402,698
    )
 11. Fair Value Measurement
  18




---



##### Table of Contents



Fair Value Measurements Using:SignificantQuoted Prices
    
    
    other
    
    
    Significantin Active
    
    
    Observable
    
    
    UnobservableTotal Fair
    
    
    Markets
    
    
    Inputs
    
    
    InputsDerivative Financial Instruments
    
    Value
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)(In thousands)Natural gas and crude oil fixed price swaps  Short Term
    
    $
    14,660
    
    
    $
    
    
    
    $
    14,660
    
    
    $
    Natural gas and crude oil fixed price swaps  Long Term
    
    
    7,679
    
    
    
    
    
    
    
    7,679
    
    
    
    Total
    
    $
    22,339
    
    
    $
    
    
    
    $
    22,339
    
    
    $
    
  Level 2 Fair Value Measurements
  Level 3 Fair Value Measurements
   19




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##### Table of Contents



March 31, 2010CarryingLong-term Debt
    
    Amount
    
    
    Fair Value(In thousands)Bank credit facility
    
    $
    332,000
    
    
    $
    332,0007 1/2% Notes, net of discount
    
    
    298,268
    
    
    
    304,5008% Notes
    
    
    300,000
    
    
    
    298,50011 3/4% Notes, net of discount
    
    
    291,936
    
    
    
    336,750Total long-term debt
    
    $
    1,222,204
    
    
    $
    1,271,750
  12. Segment Information
   13. Supplemental Guarantor Information
 3 4 1 2
   20




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##### Table of Contents



MARINER ENERGY, INC.
CONDENSED CONSOLIDATING BALANCE SHEET (Unaudited)
March 31, 2010
(In thousands except share data)
 Subsidiary
    
    
    
    
    
    
    ConsolidatedParent
    
    
    Subsidiary
    
    
    Non-
    
    
    
    
    
    
    MarinerCompany
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    Energy, Inc.Current Assets:Cash and cash equivalents
    
    $
    5,707
    
    
    $
    3,930
    
    
    $
    1,184
    
    
    $
    
    
    
    $
    10,821Receivables, net of allowances
    
    
    76,093
    
    
    
    74,737
    
    
    
    
    
    
    
    
    
    
    
    150,830Insurance receivables
    
    
    74
    
    
    
    9,707
    
    
    
    
    
    
    
    
    
    
    
    9,781Derivative financial instruments
    
    
    40,011
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    40,011Intangible assets
    
    
    19,571
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19,571Prepaid expenses and other
    
    
    33,591
    
    
    
    2,219
    
    
    
    
    
    
    
    
    
    
    
    35,810Total current assets
    
    
    175,047
    
    
    
    90,593
    
    
    
    1,184
    
    
    
    
    
    
    
    266,824Property and Equipment:Proved oil and gas properties, full cost method
    
    
    2,549,507
    
    
    
    2,669,227
    
    
    
    199
    
    
    
    
    
    
    
    5,218,933Unproved properties, not subject to amortization
    
    
    287,995
    
    
    
    49,240
    
    
    
    458
    
    
    
    
    
    
    
    337,693Total oil and gas properties
    
    
    2,837,502
    
    
    
    2,718,467
    
    
    
    657
    
    
    
    
    
    
    
    5,556,626Other property and equipment
    
    
    20,184
    
    
    
    35,358
    
    
    
    434
    
    
    
    
    
    
    
    55,976Accumulated depreciation, depletion and amortization:Proved oil and gas properties
    
    
    (1,551,871
    )
    
    
    (1,423,300
    )
    
    
    (34
    )
    
    
    
    
    
    
    (2,975,205
    )Other property and equipment
    
    
    (6,599
    )
    
    
    (2,349
    )
    
    
    
    
    
    
    
    
    
    
    (8,948
    )Accumulated depreciation, depletion and amortization
    
    
    (1,558,470
    )
    
    
    (1,425,649
    )
    
    
    (34
    )
    
    
    
    
    
    
    (2,984,153
    )Total property and equipment, net
    
    
    1,299,216
    
    
    
    1,328,176
    
    
    
    1,057
    
    
    
    
    
    
    
    2,628,449Investment in Subsidiaries
    
    
    721,480
    
    
    
    
    
    
    
    
    
    
    
    (721,480
    )
    
    
    Intercompany Receivables
    
    
    220,092
    
    
    
    
    
    
    
    
    
    
    
    (220,092
    )
    
    
    Intercompany Note Receivable
    
    
    7,175
    
    
    
    
    
    
    
    
    
    
    
    (7,175
    )
    
    
    Derivative Financial Instruments
    
    
    13,080
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,080Other Assets, net of amortization
    
    
    93,044
    
    
    
    840
    
    
    
    
    
    
    
    
    
    
    
    93,884TOTAL ASSETS
    
    $
    2,529,134
    
    
    $
    1,419,609
    
    
    $
    2,241
    
    
    $
    (948,747
    )
    
    $
    3,002,237Current Liabilities:Accounts payable
    
    $
    5,940
    
    
    $
    1,415
    
    
    $
    
    
    
    $
    
    
    
    $
    7,355Accrued liabilities
    
    
    117,154
    
    
    
    41,728
    
    
    
    
    
    
    
    
    
    
    
    158,882Accrued capital costs
    
    
    81,534
    
    
    
    62,253
    
    
    
    58
    
    
    
    
    
    
    
    143,845Deferred income tax
    
    
    5,254
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,254Abandonment liability
    
    
    15,077
    
    
    
    66,666
    
    
    
    
    
    
    
    
    
    
    
    81,743Accrued interest
    
    
    28,992
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    28,992Derivative financial instruments
    
    
    25,351
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25,351Total current liabilities
    
    
    279,302
    
    
    
    172,062
    
    
    
    58
    
    
    
    
    
    
    
    451,422Long-Term Liabilities:Abandonment liability
    
    
    69,265
    
    
    
    271,422
    
    
    
    
    
    
    
    
    
    
    
    340,687Deferred income tax
    
    
    (24,085
    )
    
    
    29,083
    
    
    
    
    
    
    
    
    
    
    
    4,998Intercompany payables
    
    
    
    
    
    
    220,092
    
    
    
    
    
    
    
    (220,092
    )
    
    
    Derivative financial instruments
    
    
    5,401
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,401Long-term debt
    
    
    1,222,204
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,222,204Other long-term liabilities
    
    
    35,927
    
    
    
    353
    
    
    
    
    
    
    
    
    
    
    
    36,280Intercompany note payable
    
    
    
    
    
    
    7,175
    
    
    
    
    
    
    
    (7,175
    )
    
    
    Total long-term liabilities
    
    
    1,308,712
    
    
    
    528,125
    
    
    
    
    
    
    
    (227,267
    )
    
    
    1,609,570Commitments and ContingenciesStockholders Equity:Preferred stock, $.0001 par value; 20,000,000 shares
authorized, no shares issued and outstanding at
March 31, 2010
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Common stock, $.0001 par value; 180,000,000 shares
authorized, 103,122,652 shares issued and
outstanding at March 31, 2010
    
    
    10
    
    
    
    5
    
    
    
    
    
    
    
    (5
    )
    
    
    10Additional paid-in-capital
    
    
    1,262,245
    
    
    
    1,084,054
    
    
    
    2,732
    
    
    
    (1,086,786
    )
    
    
    1,262,245Partner capital
    
    
    
    
    
    
    35,219
    
    
    
    
    
    
    
    (35,219
    )
    
    
    Accumulated other comprehensive income
    
    
    12,228
    
    
    
    
    
    
    
    125
    
    
    
    
    
    
    
    12,353Accumulated retained deficit
    
    
    (333,363
    )
    
    
    (399,856
    )
    
    
    (674
    )
    
    
    400,530
    
    
    
    (333,363
    )Total stockholders equity
    
    
    941,120
    
    
    
    719,422
    
    
    
    2,183
    
    
    
    (721,480
    )
    
    
    941,245TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    2,529,134
    
    
    $
    1,419,609
    
    
    $
    2,241
    
    
    $
    (948,747
    )
    
    $
    3,002,237
 21




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##### Table of Contents



MARINER ENERGY, INC.
CONDENSED CONSOLIDATING BALANCE SHEET (Unaudited)
December 31, 2009
(In thousands except share data)
 Subsidiary
    
    
    
    
    
    
    ConsolidatedParent
    
    
    Subsidiary
    
    
    Non-
    
    
    
    
    
    
    MarinerCompany
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    Energy, Inc.Current Assets:Cash and cash equivalents
    
    $
    8,365
    
    
    $
    3
    
    
    $
    551
    
    
    $
    
    
    
    $
    8,919Receivables, net of allowances
    
    
    94,958
    
    
    
    53,767
    
    
    
    
    
    
    
    
    
    
    
    148,725Insurance receivables
    
    
    74
    
    
    
    8,378
    
    
    
    
    
    
    
    
    
    
    
    8,452Derivative financial instruments
    
    
    2,239
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,239Intangible assets
    
    
    22,615
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    22,615Prepaid expenses and other
    
    
    10,450
    
    
    
    1,217
    
    
    
    
    
    
    
    
    
    
    
    11,667Deferred income tax
    
    
    9,704
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,704Total current assets
    
    
    148,405
    
    
    
    63,365
    
    
    
    551
    
    
    
    
    
    
    
    212,321Property and Equipment:Proved oil and gas properties, full cost method
    
    
    2,472,963
    
    
    
    2,644,310
    
    
    
    
    
    
    
    
    
    
    
    5,117,273Unproved properties, not subject to amortization
    
    
    246,037
    
    
    
    46,134
    
    
    
    66
    
    
    
    
    
    
    
    292,237Total oil and gas properties
    
    
    2,719,000
    
    
    
    2,690,444
    
    
    
    66
    
    
    
    
    
    
    
    5,409,510Other property and equipment
    
    
    19,926
    
    
    
    35,358
    
    
    
    411
    
    
    
    
    
    
    
    55,695Accumulated depreciation, depletion and amortization:Proved oil and gas properties
    
    
    (1,499,787
    )
    
    
    (1,384,624
    )
    
    
    
    
    
    
    
    
    
    
    (2,884,411
    )Other property and equipment
    
    
    (6,145
    )
    
    
    (2,090
    )
    
    
    
    
    
    
    
    
    
    
    (8,235
    )Accumulated depreciation, depletion and amortization
    
    
    (1,505,932
    )
    
    
    (1,386,714
    )
    
    
    
    
    
    
    
    
    
    
    (2,892,646
    )Total property and equipment, net
    
    
    1,232,994
    
    
    
    1,339,088
    
    
    
    477
    
    
    
    
    
    
    
    2,572,559Investment in Subsidiaries
    
    
    715,772
    
    
    
    
    
    
    
    
    
    
    
    (715,772
    )
    
    
    Intercompany Receivables
    
    
    222,273
    
    
    
    
    
    
    
    
    
    
    
    (222,273
    )
    
    
    Intercompany Note Receivable
    
    
    7,175
    
    
    
    
    
    
    
    
    
    
    
    (7,175
    )
    
    
    Derivative Financial Instruments
    
    
    902
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    902Deferred Income Tax
    
    
    35,583
    
    
    
    (23,092
    )
    
    
    
    
    
    
    
    
    
    
    12,491Other Assets, net of amortization
    
    
    68,631
    
    
    
    301
    
    
    
    
    
    
    
    
    
    
    
    68,932TOTAL ASSETS
    
    $
    2,431,735
    
    
    $
    1,379,662
    
    
    $
    1,028
    
    
    $
    (945,220
    )
    
    $
    2,867,205Current Liabilities:Accounts payable
    
    $
    3,569
    
    
    $
    
    
    
    $
    10
    
    
    $
    
    
    
    $
    3,579Accrued liabilities
    
    
    107,537
    
    
    
    29,669
    
    
    
    
    
    
    
    
    
    
    
    137,206Accrued capital costs
    
    
    71,420
    
    
    
    69,521
    
    
    
    
    
    
    
    
    
    
    
    140,941Abandonment liability
    
    
    10,632
    
    
    
    44,283
    
    
    
    
    
    
    
    
    
    
    
    54,915Accrued interest
    
    
    8,262
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,262Derivative financial instruments
    
    
    27,708
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27,708Total current liabilities
    
    
    229,128
    
    
    
    143,473
    
    
    
    10
    
    
    
    
    
    
    
    372,611Long-Term Liabilities:Abandonment liability
    
    
    71,320
    
    
    
    291,652
    
    
    
    
    
    
    
    
    
    
    
    362,972Intercompany payables
    
    
    
    
    
    
    222,273
    
    
    
    
    
    
    
    (222,273
    )
    
    
    Derivative
financial instruments
    
    
    15,017
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,017Long-term debt
    
    
    1,194,850
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,194,850Other long-term liabilities
    
    
    38,458
    
    
    
    342
    
    
    
    
    
    
    
    
    
    
    
    38,800Intercompany note payable
    
    
    
    
    
    
    7,175
    
    
    
    
    
    
    
    (7,175
    )
    
    
    Total long-term liabilities
    
    
    1,319,645
    
    
    
    521,442
    
    
    
    
    
    
    
    (229,448
    )
    
    
    1,611,639Commitments and ContingenciesStockholders Equity:Preferred stock, $.0001 par value; 20,000,000 shares
authorized, no shares issued and outstanding at
December 31, 2009
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Common stock, $.0001 par value; 180,000,000 shares
authorized, 101,806,825 shares issued and
outstanding at December 31, 2009
    
    
    10
    
    
    
    5
    
    
    
    
    
    
    
    (5
    )
    
    
    10Additional paid-in-capital
    
    
    1,257,526
    
    
    
    1,098,156
    
    
    
    1,538
    
    
    
    (1,099,694
    )
    
    
    1,257,526Partner capital
    
    
    
    
    
    
    33,019
    
    
    
    
    
    
    
    (33,019
    )
    
    
    Accumulated other comprehensive loss
    
    
    (25,948
    )
    
    
    
    
    
    
    (7
    )
    
    
    
    
    
    
    (25,955
    )Accumulated retained deficit
    
    
    (348,626
    )
    
    
    (416,433
    )
    
    
    (513
    )
    
    
    416,946
    
    
    
    (348,626
    )Total stockholders equity
    
    
    882,962
    
    
    
    714,747
    
    
    
    1,018
    
    
    
    (715,772
    )
    
    
    882,955TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    2,431,735
    
    
    $
    1,379,662
    
    
    $
    1,028
    
    
    $
    (945,220
    )
    
    $
    2,867,205
 22




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##### Table of Contents



MARINER ENERGY, INC.
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS (Unaudited)
Three Months Ended March 31, 2010
(In thousands)
 Subsidiary
    
    
    
    
    
    
    ConsolidatedParent
    
    
    Subsidiary
    
    
    Non-
    
    
    
    
    
    
    MarinerCompany
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    Energy, Inc.Revenues:Natural gas
    
    $
    71,454
    
    
    $
    46,058
    
    
    $
    
    
    
    $
    
    
    
    $
    117,512Oil
    
    
    51,403
    
    
    
    44,236
    
    
    
    
    
    
    
    
    
    
    
    95,639Natural gas liquids
    
    
    17,014
    
    
    
    10,646
    
    
    
    
    
    
    
    
    
    
    
    27,660Other revenues
    
    
    2,211
    
    
    
    91
    
    
    
    
    
    
    
    
    
    
    
    2,302Total revenues
    
    
    142,082
    
    
    
    101,031
    
    
    
    
    
    
    
    
    
    
    
    243,113Costs and Expenses:Operating expenses
    
    
    35,434
    
    
    
    30,117
    
    
    
    
    
    
    
    
    
    
    
    65,551General and administrative expense
    
    
    25,593
    
    
    
    1,858
    
    
    
    129
    
    
    
    
    
    
    
    27,580Depreciation, depletion and amortization
    
    
    54,319
    
    
    
    46,150
    
    
    
    34
    
    
    
    
    
    
    
    100,503Other miscellaneous expense
    
    
    2,426
    
    
    
    263
    
    
    
    
    
    
    
    
    
    
    
    2,689Total costs and expenses
    
    
    117,772
    
    
    
    78,388
    
    
    
    163
    
    
    
    
    
    
    
    196,323OPERATING INCOME (LOSS)
    
    
    24,310
    
    
    
    22,643
    
    
    
    (163
    )
    
    
    
    
    
    
    46,790Earnings of Affiliates
    
    
    16,416
    
    
    
    
    
    
    
    
    
    
    
    (16,416
    )
    
    
    Other Income/(Expense):Interest income
    
    
    208
    
    
    
    
    
    
    
    2
    
    
    
    (75
    )
    
    
    135Interest expense, net of amounts capitalized
    
    
    (20,463
    )
    
    
    (75
    )
    
    
    
    
    
    
    75
    
    
    
    (20,463
    )Income (Loss) Before Taxes
    
    
    20,471
    
    
    
    22,568
    
    
    
    (161
    )
    
    
    (16,416
    )
    
    
    26,462Provision for Income Taxes
    
    
    (5,208
    )
    
    
    (5,991
    )
    
    
    
    
    
    
    
    
    
    
    (11,199
    )NET INCOME (LOSS)
    
    $
    15,263
    
    
    $
    16,577
    
    
    $
    (161
    )
    
    $
    (16,416
    )
    
    $
    15,263
 23




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##### Table of Contents



MARINER ENERGY, INC.
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS (Unaudited)
Three Months Ended March 31, 2009
(In thousands)
 ConsolidatedParent
    
    
    Subsidiary
    
    
    
    
    
    
    MarinerCompany
    
    
    Guarantors
    
    
    Eliminations
    
    
    Energy, Inc.Revenues:Natural gas
    
    $
    103,451
    
    
    $
    49,887
    
    
    $
    
    
    
    $
    153,338Oil
    
    
    48,783
    
    
    
    12,142
    
    
    
    
    
    
    
    60,925Natural gas liquids
    
    
    4,046
    
    
    
    2,423
    
    
    
    
    
    
    
    6,469Other revenues
    
    
    4,960
    
    
    
    17,644
    
    
    
    
    
    
    
    22,604Total revenues
    
    
    161,240
    
    
    
    82,096
    
    
    
    
    
    
    
    243,336Costs and Expenses:Operating expenses
    
    
    34,540
    
    
    
    26,975
    
    
    
    
    
    
    
    61,515General and administrative expense
    
    
    17,052
    
    
    
    359
    
    
    
    
    
    
    
    17,411Depreciation, depletion and amortization
    
    
    51,743
    
    
    
    43,062
    
    
    
    
    
    
    
    94,805Full cost ceiling test impairment
    
    
    342,595
    
    
    
    362,136
    
    
    
    
    
    
    
    704,731Other miscellaneous expense
    
    
    7,438
    
    
    
    571
    
    
    
    
    
    
    
    8,009Total costs and expenses
    
    
    453,368
    
    
    
    433,103
    
    
    
    
    
    
    
    886,471OPERATING LOSS
    
    
    (292,128
    )
    
    
    (351,007
    )
    
    
    
    
    
    
    (643,135
    )Loss of Affiliates
    
    
    (244,904
    )
    
    
    
    
    
    
    244,904
    
    
    
    Other Income (Expense):Interest income
    
    
    1,532
    
    
    
    
    
    
    
    (1,447
    )
    
    
    85Interest expense, net of amounts capitalized
    
    
    (14,275
    )
    
    
    (1,574
    )
    
    
    1,447
    
    
    
    (14,402
    )(Loss) Before Taxes
    
    
    (549,775
    )
    
    
    (352,581
    )
    
    
    244,904
    
    
    
    (657,452
    )Benefit for Income Taxes
    
    
    125,657
    
    
    
    107,677
    
    
    
    
    
    
    
    233,334NET LOSS
    
    $
    (424,118
    )
    
    $
    (244,904
    )
    
    $
    244,904
    
    
    $
    (424,118
    )
 24




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##### Table of Contents



MARINER ENERGY, INC.
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS (Unaudited)
Three Months Ended March 31, 2010
(In thousands)
 Subsidiary
    
    
    ConsolidatedParent
    
    
    Subsidiary
    
    
    Non-
    
    
    MarinerCompany
    
    
    Guarantors
    
    
    Guarantors
    
    
    Energy, Inc.Net cash provided by (used in) operating activities
    
    $
    59,958
    
    
    $
    53,302
    
    
    $
    (138
    )
    
    $
    113,122Cash flow from investing activities:Acquisitions and additions to oil and gas properties
    
    
    (87,034
    )
    
    
    (48,200
    )
    
    
    (533
    )
    
    
    (135,767
    )Additions to other property and equipment
    
    
    (258
    )
    
    
    
    
    
    
    (23
    )
    
    
    (281
    )Net cash used in investing activities
    
    
    (87,292
    )
    
    
    (48,200
    )
    
    
    (556
    )
    
    
    (136,048
    )Cash flow from financing activities:Credit facility borrowings
    
    
    180,000
    
    
    
    
    
    
    
    
    
    
    
    180,000Credit facility repayments
    
    
    (153,000
    )
    
    
    
    
    
    
    
    
    
    
    (153,000
    )Other financing activities
    
    
    (2,324
    )
    
    
    (1,175
    )
    
    
    1,327
    
    
    
    (2,172
    )Net cash provided by (used in) financing activities
    
    
    24,676
    
    
    
    (1,175
    )
    
    
    1,327
    
    
    
    24,828(Decrease) Increase in Cash and Cash Equivalents
    
    
    (2,658
    )
    
    
    3,927
    
    
    
    633
    
    
    
    1,902Cash and Cash Equivalents at Beginning of Period
    
    
    8,365
    
    
    
    3
    
    
    
    551
    
    
    
    8,919Cash and Cash Equivalents at End of Period
    
    $
    5,707
    
    
    $
    3,930
    
    
    $
    1,184
    
    
    $
    10,821
 25




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##### Table of Contents



MARINER ENERGY, INC.
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS (Unaudited)
Three Months Ended March 31, 2009
(In thousands)
 ConsolidatedParent
    
    
    Subsidiary
    
    
    MarinerCompany
    
    
    Guarantors
    
    
    Energy, Inc.Net cash (used in) provided by operating activities
    
    $
    (14,273
    )
    
    $
    140,230
    
    
    $
    125,957Cash flow from investing activities:Acquisitions and additions to oil and gas properties
    
    
    (124,965
    )
    
    
    (65,915
    )
    
    
    (190,880
    )Additions to other property and equipment
    
    
    (524
    )
    
    
    
    
    
    
    (524
    )Net cash used in investing activities
    
    
    (125,489
    )
    
    
    (65,915
    )
    
    
    (191,404
    )Cash flow from financing activities:Credit facility borrowings
    
    
    140,000
    
    
    
    
    
    
    
    140,000Credit facility repayments
    
    
    (70,000
    )
    
    
    
    
    
    
    (70,000
    )Other financing activities
    
    
    74,250
    
    
    
    (74,715
    )
    
    
    (465
    )Net cash provided by (used in) financing activities
    
    
    144,250
    
    
    
    (74,715
    )
    
    
    69,535Increase (Decrease) in Cash and Cash Equivalents
    
    
    4,488
    
    
    
    (400
    )
    
    
    4,088Cash and Cash Equivalents at Beginning of Period
    
    
    2,851
    
    
    
    400
    
    
    
    3,251Cash and Cash Equivalents at End of Period
    
    $
    7,339
    
    
    $
    
    
    
    $
    7,339
 26




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##### Table of Contents



14. Subsequent Events
 Apache Merger.
        27




---



##### Table of Contents



City of
Livonia Employees Retirement System v. Mariner Energy, Inc., et al Southeastern Pennsylvania Transportation Authority v. Scott D. Josey, et
al
 Credit Facility.
 
    
    Increase the borrowing base by $150.0 million to $950.0 million until the next
redetermination under the credit agreement,
    
    Reschedule the regular periodic borrowing base redeterminations to begin in February and
August of each year,
    
    Give the lenders an option to redetermine the borrowing base upon termination of hedge
contracts with more than six months remaining in their original nominal term,
    
    Increase the maximum permitted ratio of total debt to EBITDA (as defined in the credit
agreement) to 3.5 to 1.0 from 2.5 to 1.0, and
    
    Give Mariner optionality to issue before January 1, 2011 up to $400.0 million in
additional unsecured debt with a non-default interest rate of up to 13% per annum (plus a
maximum default rate of 3%) and a scheduled maturity date no earlier than March 2, 2015.
Upon closing such a debt issuance, the borrowing base automatically would reduce by 25% of
the aggregate principal amount of the debt issued until otherwise redetermined under the
credit agreement.
  28




---



##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
  Forward-Looking Statements
  Overview
    Recent Developments
 Apache Merger.
  29




---



##### Table of Contents



City of
Livonia Employees Retirement System v. Mariner Energy, Inc., et al
 30




---



##### Table of Contents



Southeastern Pennsylvania Transportation Authority v. Scott D. Josey,
et al
 Bank Credit Facility 
 
    
    Increase the borrowing base by $150.0 million to $950.0 million until the next
redetermination under the credit agreement,
    
    Reschedule the regular periodic borrowing base redeterminations to begin in February and
August of each year,
    
    Give the lenders an option to redetermine the borrowing base upon termination of hedge
contracts with more than six months remaining in their original nominal term,
    
    Increase the maximum permitted ratio of total debt to EBITDA (as defined in the credit
agreement) to 3.5 to 1.0 from 2.5 to 1.0, and
    
    Give us optionality to issue before January 1, 2011 up to $400.0 million in additional
unsecured debt with a non-default interest rate of up to 13% per annum (plus a maximum
default rate of 3%) and a scheduled maturity date no earlier than March 2, 2015. Upon
closing such a debt issuance, the borrowing base automatically would reduce by 25% of the
aggregate principal amount of the debt issued until otherwise redetermined under the credit
agreement.
 Acquisitions.
 First Quarter 2010 Highlights
  
    
    Average daily production during first quarter 2010 increased to 59 Mboe per day,
compared to 55 Mboe per day during first quarter 2009.
    
    Net cash provided by operations for the three-month period ended March 31, 2010
decreased 10% to $113.1 million, from $126.0 million for the same period in 2009.
    
    Total revenues during first quarter 2010 were
$243.1 million compared to $243.3 million during
first quarter 2009.
 31




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##### Table of Contents



Operational Update
 Offshore
 ApproximateWell Name
    
    Operator
    
    Working Interest
    
    Water Depth (Ft)
    
    LocationKeathley Canyon 875 #1 ST#1
    
    Anadarko
    
    
    17
    %
    
    
    7,125
    
    
    DeepwaterMississippi Canyon 199 #1
    
    LLOG
    
    
    35
    %
    
    
    2,460
    
    
    DeepwaterMississippi Canyon 199 #2
    
    LLOG
    
    
    35
    %
    
    
    2,465
    
    
    DeepwaterSouth Pass 75 A6 ST#1
    
    Apache
    
    
    29
    %
    
    
    356
    
    
    Conventional ShelfSouth Pass 75 A11 ST#2
    
    Apache
    
    
    29
    %
    
    
    356
    
    
    Conventional Shelf
     Deepwater Horizon
 Onshore
 32




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##### Table of Contents



Results of Operations
 Three Months Ended March 31, 2010 Compared to Three Months Ended March 31, 2009
  Three Months EndedMarch 31,
    
    
    Increase
    
    
    %2010
    
    
    2009
    
    
    (Decrease)
    
    
    Change(In thousands, except net production, average sales prices and % change)Summary Operating Information:Net Production:Natural gas (MMcf)
    
    
    20,725
    
    
    
    22,048
    
    
    
    (1,323
    )
    
    
    (6
    )%Oil (MBbls)
    
    
    1,323
    
    
    
    970
    
    
    
    353
    
    
    
    36
    %Natural gas liquids (MBbls)
    
    
    575
    
    
    
    273
    
    
    
    302
    
    
    
    111
    %Total barrel of oil equivalent (Mboe)
    
    
    5,352
    
    
    
    4,917
    
    
    
    435
    
    
    
    9
    %Average daily production (Mboe/d)
    
    
    59
    
    
    
    55
    
    
    
    4
    
    
    
    7
    %Hedging Activities:Natural gas revenue gain
    
    $
    5,967
    
    
    $
    42,966
    
    
    $
    (36,999
    )
    
    
    (86
    )%Oil revenue (loss) gain
    
    
    (5,394
    )
    
    
    20,835
    
    
    
    (26,229
    )
    
    
    (126
    )%Total hedging revenue gain (loss)
    
    $
    573
    
    
    $
    63,801
    
    
    $
    (63,228
    )
    
    
    (99
    )%Average Sales Prices:Natural gas (per Mcf) realized(1)
    
    $
    5.67
    
    
    $
    6.95
    
    
    $
    (1.28
    )
    
    
    (18
    )%Natural gas (per Mcf) unhedged
    
    
    5.38
    
    
    
    5.01
    
    
    
    0.37
    
    
    
    7
    %Oil (per Bbl) realized(1)
    
    
    72.31
    
    
    
    62.81
    
    
    
    9.50
    
    
    
    15
    %Oil (per Bbl) unhedged
    
    
    76.39
    
    
    
    41.33
    
    
    
    35.06
    
    
    
    85
    %Natural gas liquids (per Bbl) realized(1)
    
    
    48.08
    
    
    
    23.70
    
    
    
    24.38
    
    
    
    103
    %Natural gas liquids (per Bbl) unhedged
    
    
    48.08
    
    
    
    23.70
    
    
    
    24.38
    
    
    
    103
    %Total barrel of oil equivalent ($/Mboe) realized(1)
    
    
    45.00
    
    
    
    44.89
    
    
    
    0.11
    
    
    
    <1
    %Total barrel of oil equivalent ($/Mboe) unhedged
    
    
    44.89
    
    
    
    31.92
    
    
    
    12.97
    
    
    
    41
    %Summary of Financial Information:Natural gas revenue
    
    $
    117,512
    
    
    $
    153,338
    
    
    $
    (35,826
    )
    
    
    (23
    )%Oil revenue
    
    
    95,639
    
    
    
    60,925
    
    
    
    34,714
    
    
    
    57
    %Natural gas liquids revenue
    
    
    27,660
    
    
    
    6,469
    
    
    
    21,191
    
    
    
    328
    %Other revenues
    
    
    2,302
    
    
    
    22,604
    
    
    
    (20,302
    )
    
    
    (90
    )%Lease operating expense
    
    
    52,943
    
    
    
    53,399
    
    
    
    (456
    )
    
    
    (1
    )%Severance and ad valorem taxes
    
    
    6,919
    
    
    
    3,532
    
    
    
    3,387
    
    
    
    96
    %Transportation expense
    
    
    5,689
    
    
    
    4,584
    
    
    
    1,105
    
    
    
    24
    %General and administrative expense
    
    
    27,580
    
    
    
    17,411
    
    
    
    10,169
    
    
    
    58
    %Depreciation, depletion and amortization
    
    
    100,503
    
    
    
    94,805
    
    
    
    5,698
    
    
    
    6
    %Full cost ceiling test impairment
    
    
    
    
    
    
    704,731
    
    
    
    (704,731
    )
    
    
    (100
    )%Other miscellaneous expense
    
    
    2,689
    
    
    
    8,009
    
    
    
    (5,320
    )
    
    
    (66
    )%Net interest expense
    
    
    20,328
    
    
    
    14,317
    
    
    
    6,011
    
    
    
    42
    %Income (Loss) before taxes
    
    
    26,462
    
    
    
    (657,452
    )
    
    
    683,914
    
    
    
    104
    %Provision (Benefit) for income taxes
    
    
    11,199
    
    
    
    (233,334
    )
    
    
    244,533
    
    
    
    105
    %Net Income (Loss)
    
    $
    15,263
    
    
    $
    (424,118
    )
    
    $
    439,381
    
    
    
    104
    %Average Unit Costs per Mboe:Lease operating expense
    
    $
    9.89
    
    
    $
    10.86
    
    
    $
    (0.97
    )
    
    
    (9
    )%Severance and ad valorem taxes
    
    
    1.29
    
    
    
    0.72
    
    
    
    0.57
    
    
    
    79
    %Transportation expense
    
    
    1.06
    
    
    
    0.93
    
    
    
    0.13
    
    
    
    14
    %General and administrative expense
    
    
    5.15
    
    
    
    3.54
    
    
    
    1.61
    
    
    
    45
    %Depreciation, depletion and amortization
    
    
    18.78
    
    
    
    19.28
    
    
    
    (0.50
    )
    
    
    (3
    )%
 
 (1)
    
    Average sales prices include the effects of hedging Net Income (Loss)
 Net Production
  33




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##### Table of Contents




    
    Increased production of 91.8 Mboe, or 13%, from our Permian Basin properties, primarily
as a result of our drilling and development of existing acreage.
    
    Increased production of 363.9 Mboe from our Gulf Coast and other onshore properties due
to the Edge acquisition.
    
    Increased production of 158.2 Mboe, or 8%, from our Gulf of Mexico deepwater properties,
due primarily to Geauxpher located in Garden Banks 462 (which contributed 696.4 Mboe),
partially offset by decreased production at certain of our properties including East Breaks
558 (211.2 Mboe), Garden Banks 195 (127.9 Mboe), Green Canyon 472 (111.4 Mboe) and Viosca
Knoll 917 (78.8 Mboe).
    
    Decreased production of 178.9 Mboe, or 8%, from our Gulf of Mexico shelf properties as a
result of normal depletion declines and production interruptions due to workovers and
recompletions primarily from South Marsh Island 76 (223.2 Mboe), High Island 116 (129.2
Mboe) and High Island 163 (68.6 Mboe), partially offset by increased production at certain
of our properties including Vermilion 380 (136.2 Mboe) and South Timbalier 49 (100.1 Mboe).
 Natural gas, oil and NGL revenues
   HedgingRealized
    
    Unhedged
    
    Gain (Loss)
    
    % ChangeThree Months Ended March 31, 2010:Natural gas (per Mcf)
    
    $
    5.67
    
    
    $
    5.38
    
    
    $
    0.29
    
    
    
    5
    %Oil (per Bbl)
    
    
    72.31
    
    
    
    76.39
    
    
    
    (4.08
    )
    
    
    (5
    )%Three Months Ended March 31, 2009:Natural gas (per Mcf)
    
    $
    6.95
    
    
    $
    5.01
    
    
    $
    1.94
    
    
    
    39
    %Oil (per Bbl)
    
    
    62.81
    
    
    
    41.33
    
    
    
    21.48
    
    
    
    52
    %
 Other revenues
 Lease operating expense LOE
 34




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##### Table of Contents



Severance and ad valorem tax
 Transportation expense
 General and administrative expense
 Depreciation, depletion, and amortization expense
 Full cost ceiling test impairment
 Other miscellaneous expense
 Net interest expense 3 4
 Provision for income taxes
 Liquidity and Capital Resources
   35




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##### Table of Contents



Capital Expenditures 
 In thousands
    
    
    PercentageCapital Expenditures:Natural gas and oil exploration
    
    $
    50,507
    
    
    
    34
    %Offshore natural gas and oil development
    
    
    50,264
    
    
    
    33
    %Onshore natural gas and oil development
    
    
    30,859
    
    
    
    20
    %Other items (primarily capitalized overhead)
    
    
    11,928
    
    
    
    8
    %Acquisitions (property and leasehold)
    
    
    8,038
    
    
    
    5
    %Total capital expenditures
    
    $
    151,596
    
    
    
    100
    %
  Bank Credit Facility 
 
    
    Increase the borrowing base by $150.0 million to $950.0 million until the next
redetermination under the credit agreement,
    
    Reschedule the regular periodic borrowing base redeterminations to begin in February and
August of each year,
    
    Give the lenders an option to redetermine the borrowing base upon termination of hedge
contracts with more than six months remaining in their original nominal term,
    
    Increase the maximum permitted ratio of total debt to EBITDA (as defined in the credit
agreement) to 3.5 to 1.0 from 2.5 to 1.0, and
    
    Give us optionality to issue before January 1, 2011 up to $400.0 million in additional
unsecured debt with a non-default interest rate of up to 13% per annum (plus a maximum
default rate of 3%) and a scheduled maturity date no earlier than March 2, 2015. Upon
closing such a debt issuance, the borrowing base automatically would reduce by 25% of the
aggregate principal amount of the debt issued until otherwise redetermined under the credit
agreement.
   36




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##### Table of Contents




    
    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 3 4 3 4 1 2 1 2 3 4 3 4 1 2
 Future Uses of Capital.
 
    
    funding future capital expenditures;
    
    funding hurricane repairs and hurricane-related abandonment operations;
    
    financing any future acquisitions that we may identify;
    
    paying routine operating and administrative expenses; and
    
    paying other commitments comprised largely of cash settlement of hedging obligations and
debt service.
 2010 Capital Expenditures.
 37




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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
 Fair Value Measurement
  38




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##### Table of Contents



Recent Accounting Pronouncements
  
 Item 3. Quantitative and Qualitative Disclosures about Market Risk
 Commodity Prices and Related Hedging Activities
    39




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##### Table of Contents



Three Months Ended March 31,2010
    
    
    2009(In thousands)Cash (Loss) Gain on Settlements (1)
    
    $
    (1,885
    )
    
    $
    57,457Reclassification of Liquidated Swaps (2)
    
    
    
    
    
    
    6,523Gain (Loss) on Hedge Ineffectiveness (1) (3)
    
    
    2,458
    
    
    
    (179
    )Total
    
    $
    573
    
    
    $
    63,801
 
 (1)
    
    Designated as cash flow hedges pursuant to accounting for derivatives and hedging under GAAP.(2)
    
    Net gain realized in 2009 on liquidated crude oil fixed price swaps that do not qualify for
hedge accounting.(3)
    
    Unrealized gain (loss) recognized in natural gas revenue related to the ineffective portion
of open contracts that are not eligible for deferral under GAAP due primarily to the basis
differentials between the contract price and the indexed price at the point of sale.  Weighted Average
    
    
    Fair ValueFixed Price Swaps
    
    Quantity
    
    
    Fixed Price
    
    
    Asset/(Liability)(In thousands)Natural Gas (MMbtus)April 1  December 31, 2010
    
    
    32,209,145
    
    
    $
    5.56
    
    
    $
    42,026January 1  December 31, 2011
    
    
    29,389,843
    
    
    $
    5.79
    
    
    
    13,340January 1  December 31, 2012
    
    
    22,338,802
    
    
    $
    6.11
    
    
    
    6,705January 1  December 31, 2013
    
    
    5,840,000
    
    
    $
    6.76
    
    
    
    3,744Crude Oil (Bbls)April 1December 31, 2010
    
    
    2,454,866
    
    
    $
    73.92
    
    
    
    (26,461
    )January 1  December 31, 2011
    
    
    1,978,364
    
    
    $
    79.33
    
    
    
    (12,842
    )January 1  December 31, 2012
    
    
    494,100
    
    
    $
    80.76
    
    
    
    (2,665
    )January 1  December 31, 2013
    
    
    408,800
    
    
    $
    82.81
    
    
    
    (1,508
    )Total
    
    
    
    
    
    
    
    
    
    $
    22,339
   Interest Rate Market Risk 
 40




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##### Table of Contents



Item 4. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Controls Over Financial Reporting
  41




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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;
 42




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##### Table of Contents




    
    developments in oil-producing and natural gas-producing countries;
    
    uninsured or underinsured losses in our oil and natural gas operations;
    
    risks related to our level of indebtedness; and
    
    risks related to significant acquisitions or other strategic transactions, such as
failure to realize expected benefits or objectives for future operations.
 On April 14, 2010, we entered into a definitive merger agreement pursuant to which we would be
acquired by Apache Corporation.
 Failure to complete the merger or delays in completing the merger could negatively affect our
stock price and future businesses and operations.
  
    
    we will not realize the benefits expected from the merger, including a
potentially enhanced financial and competitive position;
    
    the current market price of our common stock may reflect a market assumption
that the merger will occur and a failure to complete the merger could result in a
negative perception of us by the stock market and cause a decline in the market price
of our common stock;
    
    certain costs relating to the merger, including certain investment banking,
financing, legal and accounting fees and expenses, must be paid even if the merger is
not completed, and we may be required to pay substantial fees to Apache if the merger
agreement is terminated under specified circumstances; and
    
    we would continue to face the risks that we currently face as an independent
company.
  There may be substantial disruption to our business and distraction of our management and
employees as a result of the merger.
  Business uncertainties and contractual restrictions while the merger is pending may have an
adverse effect on us.
  43




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##### Table of Contents



The merger agreement restricts our ability to pursue alternatives to the merger.
  Gulf of Mexico Oil Spill
 Deepwater Horizon Deepwater Horizon
 
 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
    
    ProgramsJanuary 1, 2010 to January 31, 2010 (1)
    
    
    40,516
    
    
    $
    15.41
    
    
    
    
    
    
    
    February 1, 2010 to February 28, 2010 (1)
    
    
    60,962
    
    
    $
    15.23
    
    
    
    
    
    
    
    March 1, 2010 to March 31, 2010 (1)
    
    
    42,521
    
    
    $
    14.99
    
    
    
    
    
    
    
    Total
    
    
    143,999
    
    
    $
    15.21
    
    
    
    
    
    
    
    
 
 (1)
    
    These shares were withheld upon the vesting of employee restricted stock grants in connection
with payment of required withholding taxes. 44




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##### Table of Contents



Item 6. Exhibits
 Number
    
    Description2.1*
    
    Agreement and Plan of Merger dated as of April 14, 2010 by and
among Apache Corporation, ZMZ Acquisitions LLC and Mariner
Energy, Inc. (incorporated by reference to Exhibit 2.1 to
Mariners Form 8-K filed on April 16, 2010).2.2*
    
    Purchase and Sale Agreement, dated as of December 9, 2009, by
and between Edge Petroleum Corporation, Edge Petroleum
Exploration Company, Miller Exploration Company, Edge
Petroleum Operating Company, Inc., Edge Petroleum Production
Company, Miller Oil Corporation, and Mariner Energy, Inc.
(incorporated by reference to Exhibit 2.1 to Mariners
Form 8-K filed on January 5, 2010).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*
    
    Certificate of Designations of Series A Junior Participating
Preferred Stock of Mariner Energy, Inc. (incorporated by
reference to Exhibit 3.1 to Mariners Form 8-K filed on
October 14, 2008).3.3*
    
    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 June 10, 2009, 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 June 16, 2009).4.2*
    
    First Supplemental Indenture, dated as of June 10, 2009, among
Mariner Energy, Inc., the guarantors party thereto and Wells
Fargo Bank, N.A., as trustee (incorporated by reference to
Exhibit 4.2 to Mariners Form 8-K filed on June 16, 2009).4.3*
    
    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).4.4*
    
    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).4.5*
    
    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).4.6*
    
    Rights Agreement, dated as of October 12, 2008, between
Mariner Energy, Inc. and Continental Stock Transfer & Trust
Company, as Rights Agent (incorporated by reference to Exhibit
4.1 to Mariners Form 8-K filed on October 14, 2008).4.7*
    
    Amendment to Rights Agreement dated as of April 14, 2010,
between Mariner Energy, Inc. and Continental Stock Transfer &
Trust Company (incorporated by reference to Exhibit 4.1 to
Mariners Form 8-K filed on April 16, 2010).4.8*
    
    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).4.9*
    
    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).
 45




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##### Table of Contents



Number
    
    Description4.10*
    
    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).4.11*
    
    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).4.12*
    
    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).4.13*
    
    Amendment No. 5 and Agreement, dated as of January 31, 2008,
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 February 5,
2008).4.14*
    
    Master Assignment, Agreement and Amendment No. 6, dated as of
June 2, 2008, 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 June 3, 2008).4.15*
    
    Amendment No. 7, dated as of December 12, 2008, 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 December 15, 2008).4.16*
    
    Amendment No. 8 and Consent, dated as of March 24, 2009, 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 March 27, 2009).4.17*
    
    Amendment No. 9, dated as of June 2, 2009, 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 June 2, 2009).4.18*
    
    Amendment No. 10, dated as of August 25, 2009, 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, 2009).4.19*
    
    Amendment No. 11, dated as of April 8, 2010, among Mariner
Energy, Inc. and Mariner Energy Resources, Inc., as Borrowers,
the Lenders party thereto, and Union Bank, N.A. (f/k/a 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 8, 2010).10.1*
    
    Underwriting Agreement, dated June 4, 2009, among Credit
Suisse Securities (USA) LLC, J.P. Morgan Securities Inc., and
Merrill Lynch, Pierce, Fenner & Smith Incorporated, as
Representatives of the several Underwriters named in Schedule
A thereto, and Mariner Energy, Inc. (incorporated by reference
to Exhibit 1.1 to Mariners Form 8-K filed on June 9, 2009).10.2*
    
    Underwriting Agreement, dated June 4, 2009, among Credit
Suisse Securities (USA) LLC, Banc of America Securities LLC,
J.P. Morgan Securities Inc., Wachovia Capital Markets, LLC and
Citigroup Global Markets Inc., as Representatives of the
several Underwriters named in Schedule A thereto, and Mariner
Energy, Inc., Mariner Energy Resources, Inc., Mariner Gulf of
Mexico LLC, MC Beltway 8 LLC and Mariner LP LLC (incorporated
by reference to Exhibit 1.2 to Mariners Form 8-K filed on
June 9, 2009).
 46




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##### Table of Contents



Number
    
    Description10.3*
    
    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).10.4*
    
    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).10.5*
    
    Mariner Energy, Inc. Third Amended and Restated Stock
Incentive Plan, effective as of May 11, 2009 (incorporated by
reference to Exhibit 10.1 to Mariners Form 8-K filed on May
12, 2009).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.  47




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##### Table of Contents



SIGNATURES
  Mariner Energy, Inc.By:
    /s/ Scott D. JoseyScott D. Josey,Chairman of the Board, Chief Executive Officer
and PresidentBy:
    /s/ Jesus G. MelendrezJesus G. Melendrez,Senior Vice President, Chief Commercial Officer,
Acting Chief Financial Officer and Treasurer 48




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##### Table of Contents



Exhibit Index
 Number
    
    Description2.1*
    
    Agreement and Plan of Merger dated as of April 14, 2010 by and
among Apache Corporation, ZMZ Acquisitions LLC and Mariner
Energy, Inc. (incorporated by reference to Exhibit 2.1 to
Mariners Form 8-K filed on April 16, 2010).2.2*
    
    Purchase and Sale Agreement, dated as of December 9, 2009, by
and between Edge Petroleum Corporation, Edge Petroleum
Exploration Company, Miller Exploration Company, Edge
Petroleum Operating Company, Inc., Edge Petroleum Production
Company, Miller Oil Corporation, and Mariner Energy, Inc.
(incorporated by reference to Exhibit 2.1 to Mariners Form
8-K filed on January 5, 2010).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*
    
    Certificate of Designations of Series A Junior Participating
Preferred Stock of Mariner Energy, Inc. (incorporated by
reference to Exhibit 3.1 to Mariners Form 8-K filed on
October 14, 2008).3.3*
    
    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 June 10, 2009, 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 June 16, 2009).4.2*
    
    First Supplemental Indenture, dated as of June 10, 2009, among
Mariner Energy, Inc., the guarantors party thereto and Wells
Fargo Bank, N.A., as trustee (incorporated by reference to
Exhibit 4.2 to Mariners Form 8-K filed on June 16, 2009).4.3*
    
    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).4.4*
    
    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).4.5*
    
    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).4.6*
    
    Rights Agreement, dated as of October 12, 2008, between
Mariner Energy, Inc. and Continental Stock Transfer & Trust
Company, as Rights Agent (incorporated by reference to Exhibit
4.1 to Mariners Form 8-K filed on October 14, 2008).4.7*
    
    Amendment to Rights Agreement dated as of April 14, 2010,
between Mariner Energy, Inc. and Continental Stock Transfer &
Trust Company (incorporated by reference to Exhibit 4.1 to
Mariners Form 8-K filed on April 16, 2010).4.8*
    
    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).4.9*
    
    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).




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##### Table of Contents



Number
    
    Description4.10*
    
    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).4.11*
    
    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).4.12*
    
    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).4.13*
    
    Amendment No. 5 and Agreement, dated as of January 31, 2008,
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 February 5,
2008).4.14*
    
    Master Assignment, Agreement and Amendment No. 6, dated as of
June 2, 2008, 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 June 3, 2008).4.15*
    
    Amendment No. 7, dated as of December 12, 2008, 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 December 15, 2008).4.16*
    
    Amendment No. 8 and Consent, dated as of March 24, 2009, 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 March 27, 2009).4.17*
    
    Amendment No. 9, dated as of June 2, 2009, 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 June 2, 2009).4.18*
    
    Amendment No. 10, dated as of August 25, 2009, 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, 2009).4.19*
    
    Amendment No. 11, dated as of April 8, 2010, among Mariner
Energy, Inc. and Mariner Energy Resources, Inc., as Borrowers,
the Lenders party thereto, and Union Bank, N.A. (f/k/a 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 8, 2010).10.1*
    
    Underwriting Agreement, dated June 4, 2009, among Credit
Suisse Securities (USA) LLC, J.P. Morgan Securities Inc., and
Merrill Lynch, Pierce, Fenner & Smith Incorporated, as
Representatives of the several Underwriters named in Schedule
A thereto, and Mariner Energy, Inc. (incorporated by reference
to Exhibit 1.1 to Mariners Form 8-K filed on June 9, 2009).10.2*
    
    Underwriting Agreement, dated June 4, 2009, among Credit
Suisse Securities (USA) LLC, Banc of America Securities LLC,
J.P. Morgan Securities Inc., Wachovia Capital Markets, LLC and
Citigroup Global Markets Inc., as Representatives of the
several Underwriters named in Schedule A thereto, and Mariner
Energy, Inc., Mariner Energy Resources, Inc., Mariner Gulf of
Mexico LLC, MC Beltway 8 LLC and Mariner LP LLC (incorporated
by reference to Exhibit 1.2 to Mariners Form 8-K filed on
June 9, 2009).




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##### Table of Contents



Number
    
    Description10.3*
    
    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).10.4*
    
    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).10.5*
    
    Mariner Energy, Inc. Third Amended and Restated Stock
Incentive Plan, effective as of May 11, 2009 (incorporated by
reference to Exhibit 10.1 to Mariners Form 8-K filed on May
12, 2009).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.