##### 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 June 30, 2009
 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
(Do not check if a smaller reporting company)
    
    Smaller reporting company
o
 o þ




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##### 



TABLE OF CONTENTS
 PART IItem 1. Unaudited Condensed Consolidated Financial Statements:Condensed Consolidated Balance Sheets at June 30, 2009 and December 31, 2008
    
    
    3Condensed Consolidated Statements of Operations for the Three Months and Six Months Ended June
30, 2009 and 2008
    
    
    4Condensed Consolidated Statements of Changes in Stockholders Equity for the Six Months Ended
June 30, 2009 and 2008
    
    
    5Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2009 and 2008
    
    
    6Notes to the Condensed Consolidated Financial Statements
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    32Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    47Item 4. Controls and Procedures
    
    
    49PART IIItem 1A. Risk Factors
    
    
    50Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    51Item 4. Submission of Matters to a Vote of Security Holders
    
    
    51Item 6. Exhibits
    
    
    52Items 1, 3 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
  June 30,
    
    
    December 31,2009
    
    
    2008ASSETSCurrent Assets:Cash and cash equivalents
    
    $
    33,648
    
    
    $
    3,209Receivables, net of allowances of $7,254 and $3,868 as of
June 30, 2009 and December 31, 2008, respectively
    
    
    157,009
    
    
    
    219,920Insurance receivables
    
    
    25,826
    
    
    
    13,123Derivative financial instruments
    
    
    70,849
    
    
    
    121,929Intangible assets
    
    
    1,333
    
    
    
    2,334Prepaid expenses and other
    
    
    25,535
    
    
    
    14,438Total current assets
    
    
    314,200
    
    
    
    374,953Property and Equipment:Proved oil and gas properties, full-cost method
    
    
    4,719,635
    
    
    
    4,448,146Unproved properties, not subject to amortization
    
    
    237,058
    
    
    
    201,121Total oil and gas properties
    
    
    4,956,693
    
    
    
    4,649,267Other property and equipment
    
    
    53,704
    
    
    
    53,115Accumulated depreciation, depletion and amortization:Proved oil and gas properties
    
    
    (2,648,343
    )
    
    
    (1,767,028
    )Other property and equipment
    
    
    (6,860
    )
    
    
    (5,477
    )Total accumulated depreciation, depletion and amortization
    
    
    (2,655,203
    )
    
    
    (1,772,505
    )Total property and equipment, net
    
    
    2,355,194
    
    
    
    2,929,877Insurance Receivables
    
    
    5,082
    
    
    
    22,132Other Assets, net of amortization
    
    
    65,409
    
    
    
    65,831TOTAL ASSETS
    
    $
    2,739,885
    
    
    $
    3,392,793LIABILITIES AND STOCKHOLDERS EQUITYCurrent Liabilities:Accounts payable
    
    $
    3,925
    
    
    $
    3,837Accrued liabilities
    
    
    112,722
    
    
    
    107,815Accrued capital costs
    
    
    131,174
    
    
    
    195,833Deferred income tax
    
    
    28,625
    
    
    
    23,148Abandonment liability
    
    
    40,386
    
    
    
    82,364Accrued interest
    
    
    12,873
    
    
    
    12,567Derivative financial instruments
    
    
    3,599
    
    
    
    Total current liabilities
    
    
    333,304
    
    
    
    425,564Long-Term Liabilities:Abandonment liability
    
    
    406,733
    
    
    
    325,880Deferred income tax
    
    
    77,801
    
    
    
    319,766Derivative financial instruments
    
    
    16,174
    
    
    
    Long-term debt
    
    
    1,029,189
    
    
    
    1,170,000Other long-term liabilities
    
    
    30,525
    
    
    
    31,263Total long-term liabilities
    
    
    1,560,422
    
    
    
    1,846,909Commitments and Contingencies (see Note 9)Stockholders Equity:Preferred stock, $.0001 par value; 20,000,000 shares
authorized, no shares issued and outstanding at June 30,
2009 and December 31, 2008
    
    
    
    
    
    
    Common stock, $.0001 par value; 180,000,000 shares
authorized, 101,848,191 shares issued and outstanding at
June 30, 2009; 180,000,000 shares authorized, 88,846,073
shares issued and outstanding at December 31, 2008
    
    
    10
    
    
    
    9Additional paid-in capital
    
    
    1,243,277
    
    
    
    1,071,347Accumulated other comprehensive income
    
    
    38,994
    
    
    
    78,181Accumulated deficit
    
    
    (436,122
    )
    
    
    (29,217
    )Total stockholders equity
    
    
    846,159
    
    
    
    1,120,320TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    2,739,885
    
    
    $
    3,392,793
 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 Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Revenues:Natural gas
    
    $
    142,363
    
    
    $
    250,278
    
    
    $
    295,701
    
    
    $
    429,901Oil
    
    
    78,954
    
    
    
    144,556
    
    
    
    139,879
    
    
    
    258,170Natural gas liquids
    
    
    8,193
    
    
    
    33,057
    
    
    
    14,662
    
    
    
    54,038Other revenues
    
    
    2,460
    
    
    
    1,561
    
    
    
    25,064
    
    
    
    3,240Total revenues
    
    
    231,970
    
    
    
    429,452
    
    
    
    475,306
    
    
    
    745,349Costs and Expenses:Lease operating expense
    
    
    47,092
    
    
    
    56,427
    
    
    
    100,491
    
    
    
    102,074Severance and ad valorem taxes
    
    
    3,730
    
    
    
    5,263
    
    
    
    7,262
    
    
    
    9,873Transportation expense
    
    
    4,575
    
    
    
    4,204
    
    
    
    9,159
    
    
    
    7,223General and administrative expense
    
    
    21,122
    
    
    
    13,615
    
    
    
    38,533
    
    
    
    24,726Depreciation, depletion and amortization
    
    
    100,282
    
    
    
    141,454
    
    
    
    195,087
    
    
    
    260,772Full cost ceiling test impairment
    
    
    
    
    
    
    
    
    
    
    704,731
    
    
    
    Other miscellaneous expense
    
    
    2,758
    
    
    
    303
    
    
    
    10,767
    
    
    
    840Total costs and expenses
    
    
    179,559
    
    
    
    221,266
    
    
    
    1,066,030
    
    
    
    405,508OPERATING INCOME (LOSS)
    
    
    52,411
    
    
    
    208,186
    
    
    
    (590,724
    )
    
    
    339,841Other Income (Expense):Interest income
    
    
    302
    
    
    
    281
    
    
    
    387
    
    
    
    607Interest expense, net of amounts capitalized
    
    
    (16,972
    )
    
    
    (17,563
    )
    
    
    (31,374
    )
    
    
    (36,134
    )Income (Loss) Before Taxes
    
    
    35,741
    
    
    
    190,904
    
    
    
    (621,711
    )
    
    
    304,314(Provision) Benefit for Income Taxes
    
    
    (18,528
    )
    
    
    (67,416
    )
    
    
    214,806
    
    
    
    (108,610
    )Net Income (Loss)
    
    
    17,213
    
    
    
    123,488
    
    
    
    (406,905
    )
    
    
    195,704Less: Net income attributable to
noncontrolling interest
    
    
    
    
    
    
    (98
    )
    
    
    
    
    
    
    (188
    )NET INCOME (LOSS) ATTRIBUTABLE TO MARINER
ENERGY, INC.
    
    $
    17,213
    
    
    $
    123,390
    
    
    $
    (406,905
    )
    
    $
    195,516Net Income (Loss) per share attributable to
Mariner Energy, Inc.:Basic
    
    $
    0.19
    
    
    $
    1.40
    
    
    $
    (4.50
    )
    
    $
    2.23Diluted
    
    $
    0.19
    
    
    $
    1.39
    
    
    $
    (4.50
    )
    
    $
    2.21Weighted average shares outstanding:Basic
    
    
    91,798,761
    
    
    
    87,983,902
    
    
    
    90,339,810
    
    
    
    87,638,816Diluted
    
    
    92,152,933
    
    
    
    88,828,904
    
    
    
    90,339,810
    
    
    
    88,430,344
 The accompanying notes are an integral part of these condensed consolidated financial statements
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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, 2008
    
    
    88,846
    
    
    $
    9
    
    
    $
    1,071,347
    
    
    $
    78,181
    
    
    $
    (29,217
    )
    
    $
    1,120,320Common shares issued  equity offering
    
    
    11,500
    
    
    
    1
    
    
    
    159,673
    
    
    
    
    
    
    
    
    
    
    
    159,674Common shares issued  restricted stock
    
    
    1,689
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Treasury stock bought and cancelled on
same day
    
    
    (167
    )
    
    
    
    
    
    
    (1,891
    )
    
    
    
    
    
    
    
    
    
    
    (1,891
    )Forfeiture of restricted stock
    
    
    (20
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Share-based compensation
    
    
    
    
    
    
    
    
    
    
    14,143
    
    
    
    
    
    
    
    
    
    
    
    14,143Stock options exercised
    
    
    
    
    
    
    
    
    
    
    5
    
    
    
    
    
    
    
    
    
    
    
    5Comprehensive income (loss):Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (406,905
    )
    
    
    (406,905
    )Change in fair value of derivative
hedging instruments  net of income
taxes of $(26,327)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (125,250
    )
    
    
    
    
    
    
    (125,250
    )Hedge settlements reclassified to
income  net of income taxes of
$48,138
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    86,063
    
    
    
    
    
    
    
    86,063Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (39,187
    )
    
    
    (406,905
    )
    
    
    (446,092
    )Balance at June 30, 2009
    
    
    101,848
    
    
    $
    10
    
    
    $
    1,243,277
    
    
    $
    38,994
    
    
    $
    (436,122
    )
    
    $
    846,159
 Accumulated
    
    
    
    
    
    
    TotalOther
    
    
    
    
    
    
    MarinerAdditional
    
    
    Comprehensive
    
    
    Accumulated
    
    
    Energy, Inc.
    
    
    
    
    
    
    TotalCommon
    
    
    Stock
    
    
    Paid-In-
    
    
    Income/
    
    
    Retained
    
    
    Stockholders
    
    
    Noncontrolling
    
    
    StockholdersStock
    
    
    Amount
    
    
    Capital
    
    
    (Loss)
    
    
    Earnings
    
    
    Equity
    
    
    Interests
    
    
    EquityBalance at December 31, 2007
    
    
    87,229
    
    
    $
    9
    
    
    $
    1,054,089
    
    
    $
    (22,576
    )
    
    $
    359,496
    
    
    $
    1,391,018
    
    
    $
    1
    
    
    $
    1,391,019Common shares issued  restricted
stock
    
    
    1,683
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Treasury stock bought and cancelled
on same day
    
    
    (130
    )
    
    
    
    
    
    
    (4,014
    )
    
    
    
    
    
    
    
    
    
    
    (4,014
    )
    
    
    
    
    
    
    (4,014
    )Forfeiture of restricted stock
    
    
    (17
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Share-based compensation
    
    
    
    
    
    
    
    
    
    
    6,984
    
    
    
    
    
    
    
    
    
    
    
    6,984
    
    
    
    
    
    
    
    6,984Stock options exercised
    
    
    55
    
    
    
    
    
    
    
    728
    
    
    
    
    
    
    
    
    
    
    
    728
    
    
    
    
    
    
    
    728Comprehensive income (loss):Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    195,516
    
    
    
    195,516
    
    
    
    188
    
    
    
    195,704Change in fair value of derivative
hedging instruments  net of income
taxes of $(124,800)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (203,157
    )
    
    
    
    
    
    
    (203,157
    )
    
    
    
    
    
    
    (203,157
    )Hedge settlements reclassified to
income  net of income taxes of
$(28,977)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (52,411
    )
    
    
    
    
    
    
    (52,411
    )
    
    
    
    
    
    
    (52,411
    )Total comprehensive (loss) income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (255,568
    )
    
    
    195,516
    
    
    
    (60,052
    )
    
    
    188
    
    
    
    (59,864
    )Balance at June 30, 2008
    
    
    88,820
    
    
    $
    9
    
    
    $
    1,057,787
    
    
    $
    (278,144
    )
    
    $
    555,012
    
    
    $
    1,334,664
    
    
    $
    189
    
    
    $
    1,334,853
 The accompanying notes are an integral part of these condensed consolidated financial statements
 5




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MARINER ENERGY, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
  Six MonthsEnded June,2009
    
    
    2008Operating Activities:Net (loss) income attributable to Mariner Energy, Inc.
    
    $
    (406,905
    )
    
    $
    195,516Adjustments to reconcile net income to net cash provided by operating activities:Deferred income (benefit) tax
    
    
    (214,806
    )
    
    
    105,075Depreciation, depletion and amortization
    
    
    195,087
    
    
    
    260,772Ineffectiveness of derivative instruments
    
    
    3
    
    
    
    6,474Full cost ceiling test impairment
    
    
    704,731
    
    
    
    Share-based compensation
    
    
    12,208
    
    
    
    7,172Derivative financial instruments
    
    
    (10,269
    )
    
    
    Other
    
    
    483
    
    
    
    1,842Changes in operating assets and liabilities:Receivables
    
    
    66,302
    
    
    
    (131,078
    )Insurance receivables
    
    
    4,347
    
    
    
    57,083Cash from liquidation of hedges
    
    
    20,519
    
    
    
    Prepaid expenses and other
    
    
    (8,052
    )
    
    
    (62
    )Accounts payable and accrued liabilities
    
    
    (25,917
    )
    
    
    48,686Net cash provided by operating activities
    
    
    337,731
    
    
    
    551,480Investing Activities:Acquisitions and additions to oil and gas properties
    
    
    (318,625
    )
    
    
    (652,910
    )Additions to other property and equipment
    
    
    (616
    )
    
    
    (48,605
    )Restricted cash designated for investment
    
    
    
    
    
    
    5,000Net cash used in investing activities
    
    
    (319,241
    )
    
    
    (696,515
    )Financing Activities:Credit facility borrowings
    
    
    261,221
    
    
    
    630,000Credit facility repayments
    
    
    (691,221
    )
    
    
    (459,000
    )Repurchase of stock
    
    
    (1,891
    )
    
    
    (4,014
    )Debt redetermination costs
    
    
    (2,300
    )
    
    
    Debt offering costs
    
    
    (5,282
    )
    
    
    Proceeds from equity offering
    
    
    160,138
    
    
    
    Proceeds from debt issuance
    
    
    291,279
    
    
    
    Proceeds from exercise of stock options
    
    
    5
    
    
    
    729Net cash provided by financing activities
    
    
    11,949
    
    
    
    167,715Increase in Cash and Cash Equivalents
    
    
    30,439
    
    
    
    22,680Cash and Cash Equivalents at Beginning of Period
    
    
    3,209
    
    
    
    18,589Cash and Cash Equivalents at End of Period
    
    $
    33,648
    
    
    $
    41,269Supplemental Disclosure of Cash Flow Information:Cash paid during the period for:Interest (net of amount capitalized)
    
    $
    28,765
    
    
    $
    31,101Income taxes, net of refunds
    
    $
    174
    
    
    $
    1,100
 The accompanying notes are an integral part of these condensed consolidated financial statements
 6




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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
 1. Summary of Significant Accounting Policies
 Operations
 Interim Financial Statements
 Use of Estimates
 Principles of Consolidation
 Reclassifications
 Income Taxes
  7




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Recent Accounting Pronouncements The FASB Accounting Standards Codification and the Hierarchy of
Generally Accepted Accounting Principles The
Hierarchy of Generally Accepted Accounting Principles
 Subsequent Events
 Determining Fair Value When the Volume and Level of Activity for the
Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly, Interim Disclosures about Fair Value of
Financial Instruments, Recognition and Presentation of
Other-Than-Temporary Impairments,
 Modernization of Oil and Gas Reporting
 
    
    Oil and gas reserves must be reported using average prices over the prior 12 month
period, rather than year-end prices;
 
    
    Companies will be allowed to report, on an optional basis, probable and possible
reserves;
 
    
    Non-traditional reserves, such as oil and gas extracted from coal and shales, will
be included in the definition of oil and gas producing activities;
 
    
    Companies will be permitted to use new technologies to determine proved reserves, as
long as those technologies have been demonstrated empirically to lead to reliable
conclusions with respect to reserve volumes;
 8




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##### Table of Contents




    
    Companies will be required to disclose, in narrative form, additional details on
their proved undeveloped reserves (PUDs), including the total quantity of PUDs at year
end, any material changes to PUDs that occurred during the year, investments and
progress made to convert PUDs to developed oil and gas reserves and an explanation of
the reasons why material concentrations of PUDs in individual fields or countries have
remained undeveloped for five years or more after disclosure as PUDs;
and
 
    
    Companies will be required to report the qualifications and measures taken to assure
the independence and objectivity of any business entity or employee primarily
responsible for preparing or auditing the reserves estimates.
   Fair Value Measurements Effective Date of FASB Statement No. 157
 Disclosures about Derivative Instruments and
Hedging Activities  an amendment of FASB Statement No. 133
 2. Acquisitions
 Gulf of Mexico Shelf Acquisition.
 Pro Forma Financial Information
 9




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##### Table of Contents



For the Three Months
    
    For the Six MonthsEnded June 30, 2008(In thousands, except per share amounts)Pro Forma:Revenue
    
    $
    429,168
    
    
    $
    760,042Net income attributable to Mariner Energy, Inc.
    
    $
    123,443
    
    
    $
    199,071Basic earnings per share
    
    $
    1.40
    
    
    $
    2.27Diluted earnings per share
    
    $
    1.39
    
    
    $
    2.25
 Permian Basin Acquisitions.
 Bass Lite
 3. Long-Term Debt
  June 30,
    
    
    December 31,2009
    
    
    2008(In thousands)Bank credit facility
    
    $
    140,000
    
    
    $
    570,0007 1/2% Senior Notes, due April 15, 2013, net of discount
    
    
    297,841
    
    
    
    300,0008% Senior Notes, due May 15, 2017
    
    
    300,000
    
    
    
    300,00011 3/4% Senior Notes, due June 30, 2016, net of discount
    
    
    291,348
    
    
    
    Total long-term debt
    
    $
    1,029,189
    
    
    $
    1,170,000
 Bank Credit Facility 3 4
 3 4
  10




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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
 113/4% Notes 3 4
 3 4
 3 4 1 2
 11




---



##### Table of Contents



3 4
 3 4 3 4
 
 3 4 3 4
 3 4 3 4
 3 4 1 2
 
    
    make investments;
 
    
    incur additional indebtedness or issue preferred stock;
 
    
    create certain liens;
 
    
    sell assets;
 
    
    enter into agreements that restrict dividends or other payments from its
subsidiaries to itself;
 
    
    consolidate, merge or transfer all or substantially all of its assets;
 
    
    engage in transactions with affiliates;
 
    
    pay dividends or make other distributions on capital stock or subordinated
indebtedness; and
 
    
    create unrestricted subsidiaries.
 Capitalized Interest
 4. Stockholders Equity
 Common Stock Offering
 12




---



##### Table of Contents



5. Oil and Gas Properties
    6. Accrual for Future Abandonment Liabilities
   13




---



##### Table of Contents



(In thousands)Abandonment liability as of January 1, 2009 (1)
    
    $
    408,244Liabilities incurred
    
    
    12,177Liabilities settled
    
    
    (29,742
    )Accretion expense
    
    
    17,119Revisions to previous estimates
    
    
    39,321Abandonment Liability as of June 30, 2009 (2)
    
    $
    447,119
 
 (1)
    
    Includes $82.4 million classified as a current liability at December 31, 2008.(2)
    
    Includes $40.4 million classified as a current liability at June 30, 2009. 7. Share-Based Compensation
 Applicable Plans
   
    
    without the approval of the Companys stockholders, no change can be made that would
 (i)
    
    increase the total number of shares that may be issued under
the Stock Incentive Plan, except as provided in the Stock Incentive Plan with
respect to stock dividends or splits, or with respect to mergers,
recapitalizations, reorganizations, spin-offs or other unusual transactions or
events,
 (ii)
    
    permit the exercise price of any outstanding option that is
underwater to be reduced or for an underwater option to be cancelled and
replaced with a new award,
 (iii)
    
    include participants other than employees, non-employee
directors and consultants, or
 (iv)
    
    materially increase benefits accrued to participants under the
Stock Incentive Plan; and
 
    
    no change can materially adversely affect the rights of a participant under an award
without the participants written consent.
 14




---



##### Table of Contents



Plan Activity
  WeightedAverage
    
    
    Aggregate IntrinsicExercise
    
    
    Value (1)Shares
    
    
    Price
    
    
    (In thousands)Outstanding at January 1, 2009
    
    
    645,348
    
    
    $
    13.88
    
    
    $
    (1,376
    )Granted
    
    
    
    
    
    
    
    
    
    
    Exercised
    
    
    (462
    )
    
    
    11.59
    
    
    
    Forfeited
    
    
    
    
    
    
    
    
    
    
    Outstanding and exercisable at June 30, 2009
    
    
    644,886
    
    
    $
    13.88
    
    
    $
    (1,376
    )
 
 (1)
    
    Based upon the difference between the closing price per share of the common stock on the last
trading date of the quarter of $11.75 and the option exercise price of in-the-money options.  Restricted Shares underStock Incentive PlanJune 30,2009
    
    2008Total unvested shares at beginning of period: January 1
    
    
    2,697,926
    
    
    
    1,484,552Shares granted (1)
    
    
    1,689,342
    
    
    
    1,683,316Shares vested
    
    
    (562,798
    )
    
    
    (432,606
    )Shares forfeited (1)
    
    
    (20,426
    )
    
    
    (17,214
    )Total unvested shares at end of period: June 30
    
    
    3,804,044
    
    
    
    2,718,048Available for future grant as options or restricted stock
    
    
    7,028,732
    
    
    
    2,554,720
 
 (1)
    
    Current year activity includes 4,741 shares granted and forfeited under the Stock
Incentive Plans 2008 Long-Term Performance-Based Restricted Stock Program discussed below
during the six months ended June 30, 2009. Share-Based Payment
 WeightedAggregate
    
    
    AverageWeighted
    
    
    Intrinsic
    
    
    RemainingEquity
    
    
    Average
    
    
    Value
    
    
    ContractualInstruments
    
    
    Fair Value
    
    
    ($ thousands)
    
    
    Life (Years)Unvested at January 1, 2009
    
    
    2,697,926
    
    
    $
    28.22
    
    
    $
    76,123Granted
    
    
    1,689,342
    
    
    
    11.18
    
    
    
    18,891Vested
    
    
    (562,798
    )
    
    
    22.48
    
    
    
    (12,652
    )Forfeited
    
    
    (20,426
    )
    
    
    13.68
    
    
    
    (279
    )Unvested at June 30, 2009
    
    
    3,804,044
    
    
    
    21.58
    
    
    $
    82,083
    
    
    
    6.54
 15




---



##### Table of Contents



Long-Term Performance-Based Restricted Stock Program
  Weighted average fair value of grants
    
    $
    33.73Expected volatility
    
    
    42.29
    %Risk-free interest rate
    
    
    4.57
    %Dividend yield
    
    
    0.00
    %Expected life
    
    10 years
  8. Derivative Financial Instruments and Hedging Activities
    16




---



##### Table of Contents



Three Months Ended June 30,
    
    
    Six Months Ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(In thousands)Cash Gain (Loss) on Settlements (1)
    
    $
    63,547
    
    
    $
    (64,607
    )
    
    $
    121,004
    
    
    $
    (74,914
    )Gain on liquidated swaps (2)
    
    
    6,677
    
    
    
    
    
    
    
    13,200
    
    
    
    Gain (Loss) on Hedge Ineffectiveness (3)
    
    
    176
    
    
    
    (2,550
    )
    
    
    (3
    )
    
    
    (6,474
    )Total
    
    $
    70,400
    
    
    $
    (67,157
    )
    
    $
    134,201
    
    
    $
    (81,388
    )
 
 (1)
    
    Designated as cash flow hedges pursuant to SFAS 133.(2)
    
    Crude oil fixed price swaps liquidated on January 29, 2009 that do not qualify for hedge
accounting. Includes a $0.3 million net gain related to the liquidation of hedges on January
29, 2009.(3)
    
    Unrealized loss recognized in natural gas revenue related to the ineffective portion of open
contracts that are not eligible for deferral under SFAS 133 due primarily to the basis
differentials between the contract price and the indexed price at the point of sale.  Weighted Average
    
    
    Fair ValueFixed Price Swaps
    
    Quantity
    
    
    Fixed Price
    
    
    Asset(In thousands)Natural Gas (MMbtus)July 1December 31, 2009
    
    
    22,220,024
    
    
    $
    7.62
    
    
    $
    72,156January 1December 31, 2010
    
    
    12,775,000
    
    
    $
    5.84
    
    
    
    (2,470
    )January 1June 30, 2011
    
    
    4,525,000
    
    
    $
    6.65
    
    
    
    (732
    )Crude Oil (Bbls)July 1December 31, 2009
    
    
    484,564
    
    
    $
    76.45
    
    
    
    2,212January 1December 31, 2010
    
    
    1,277,500
    
    
    $
    62.28
    
    
    
    (15,336
    )January 1June 30, 2011
    
    
    452,500
    
    
    $
    65.65
    
    
    
    (4,754
    )Total
    
    
    
    
    
    
    
    
    
    $
    51,076
     17




---



##### Table of Contents



Additional Disclosures about Derivative Instruments and Hedging Activities
  Fair Value of Derivative ContractsAsset DerivativesJune 30, 2009
    
    
    December 31, 2008Balance sheet
    
    
    
    
    
    Balance sheetLocation
    
    Fair value
    
    
    Location
    
    Fair valueDerivatives designated as cash flow hedging contracts under SFAS 133Fixed Price Swaps
    
    Current Assets: Derivative financial instruments
    
    $
    70,849
    
    
    Current Assets: Derivative
financial
instruments
    
    $
    121,929Derivatives not designated as cash flow hedging contracts under SFAS 133Fixed Price Swaps
    
    Stockholders Equity:
Accumulated other comprehensive income
    
    
    10,250
    
    
    Current Assets: Derivative
financial
instruments
    
    
    Total derivatives
    
    
    
    $
    81,099
    
    
    
    
    $
    121,929Fair Value of Derivative ContractsLiability DerivativesJune 30, 2009
    
    
    December 31, 2008Balance sheet
    
    
    
    
    
    Balance sheetLocation
    
    Fair value
    
    
    Location
    
    Fair valueDerivatives designated as cash flow hedging contracts under SFAS 133Fixed Price Swaps
    
    Current
Liabilities: Derivative
financial
instruments
    
    
    3,599
    
    
    
    
    
    Long-Term
Liabilities: Derivative
financial
instruments
    
    
    16,174
    
    
    
    
    
    Total derivatives
    
    
    
    $
    19,773
    
    
    
    
    $
    
  Location of
    
    Amount of gain/(loss)Amount of gain/(loss)
    
    
    gain/(loss) reclassified
    
    reclassified from
    
    
    Location of (loss)
    
    Amount of (loss)Derivatives
    
    recognized in OCI on
    
    
    from Accumulated
    
    Accumulated OCI
    
    
    recognized in income
    
    recognized in incomedesignated as cash
    
    derivative (effective
    
    
    OCI into income
    
    into income (effective
    
    
    on derivative
    
    on derivativeflow hedging
    
    portion)
    
    

(effective portion)
    
    portion)
    
    
    (ineffective portion)
    
    (ineffective portion)contracts under
    
    Second Quarter
    
    
    
    
    Second Quarter
    
    
    
    
    Second QuarterSFAS 133
    
    2009
    
    
    2008
    
    
    
    
    2009
    
    
    2008
    
    
    
    
    2009
    
    
    2008Fixed Price Swaps
    
    $
    51,076
    
    
    $
    (403,989
    )
    
    Revenues-Natural Gas
    
    $
    58,844
    
    
    $
    (28,839
    )
    
    Revenues-Natural Gas
    
    $
    (176
    )
    
    $
    (2,550
    )Fixed Price Collars
    
    
    
    
    
    
    (31,886
    )
    
    Revenues-Crude Oil
    
    
    11,556
    
    
    
    (38,318
    )Total
    
    $
    51,076
    
    
    $
    (435,875
    )
    
    Total
    
    $
    70,400
    
    
    $
    (67,157
    )
 Amount of gain/(loss) recognizedLocation of gain/(loss)
    
    in income on derivativeDerivatives not designated as cash flow hedging contracts
    
    recognized in income on
    
    Second Quarterunder SFAS 133
    
    derivative
    
    2009
    
    2008Fixed Price Swaps
    
    Revenues-Crude Oil
    
    $
    6,677
    
    
    
 18




---



##### Table of Contents



9. Commitments and Contingencies
 Minimum Future Lease Payments
 (In thousands)2010
    
    $
    2,5322011
    
    
    2,4992012
    
    
    2,4142013
    
    
    2,0842014 and thereafter
    
    
    9,877
 Other Commitments
 Insurance Matters
 Current Insurance Against Hurricanes
    Hurricane Ike (2008)
  19




---



##### Table of Contents



Hurricanes Katrina and Rita (2005)
    Litigation
 Letters of Credit
 10. Earnings per Share
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(In thousands, except per share data)Numerator:Net Income (Loss) attributable to Mariner Energy, Inc.
    
    $
    17,213
    
    
    $
    123,390
    
    
    $
    (406,905
    )
    
    $
    195,516Denominator:Weighted average shares outstanding
    
    
    91,799
    
    
    
    87,984
    
    
    
    90,340
    
    
    
    87,639Add dilutive securitiesOptions
    
    
    11
    
    
    
    281
    
    
    
    
    
    
    
    271Restricted stock
    
    
    343
    
    
    
    564
    
    
    
    
    
    
    
    520Total weighted average shares outstanding and dilutive securities
    
    
    92,153
    
    
    
    88,829
    
    
    
    90,340
    
    
    
    88,430Net Income (Loss) per share attributable to Mariner Energy, Inc.:Basic:
    
    $
    0.19
    
    
    $
    1.40
    
    
    $
    (4.50
    )
    
    $
    2.23Diluted:
    
    $
    0.19
    
    
    $
    1.39
    
    
    $
    (4.50
    )
    
    $
    2.21
 20




---



##### Table of Contents



11. Comprehensive Income
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(in thousands)Net Income (Loss)
    
    $
    17,213
    
    
    $
    123,488
    
    
    $
    (406,905
    )
    
    $
    195,704Other comprehensive income (loss):Change in fair value of derivative hedging instruments, net
of income taxes of $(59,152), $(67,487), $(26,327), and
$(124,800)
    
    
    (105,754
    )
    
    
    (122,068
    )
    
    
    (125,250
    )
    
    
    (203,157
    )Derivative contracts settled and reclassified, net of
income taxes of $25,253, $(23,910), $48,138 and $(28,977)
    
    
    45,147
    
    
    
    (43,247
    )
    
    
    86,063
    
    
    
    (52,411
    )Change in accumulated other comprehensive income (loss)
    
    
    (60,607
    )
    
    
    (165,315
    )
    
    
    (39,187
    )
    
    
    (255,568
    )Comprehensive loss
    
    
    (43,394
    )
    
    
    (41,827
    )
    
    
    (446,092
    )
    
    
    (59,864
    )Comprehensive income attributable to noncontrolling interest
    
    
    
    
    
    
    98
    
    
    
    
    
    
    
    188Comprehensive loss attributable to Mariner Energy, Inc.
    
    $
    (43,394
    )
    
    $
    (41,925
    )
    
    $
    (446,092
    )
    
    $
    (60,052
    )
 12. Fair Value Measurement
   21




---



##### Table of Contents



Fair Value Measurements Using:SignificantQuoted Prices
    
    
    other
    
    
    Significantin Active
    
    
    Observable
    
    
    UnobservableTotal Fair
    
    
    Markets
    
    
    Inputs
    
    
    InputsValue
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Derivative Financial Instruments
    
    (In thousands)Natural gas and crude oil fixed price swaps  Short Term
    
    $
    67,250
    
    
    $
    
    
    
    $
    67,250
    
    
    $
    Natural gas and crude oil fixed price swaps  Long Term
    
    
    (16,174
    )
    
    
    
    
    
    
    (16,174
    )
    
    
    Total
    
    $
    51,076
    
    
    $
    
    
    
    $
    51,076
    
    
    $
    
  Level 2 Fair Value Measurements
  Level 3 Fair Value Measurements
  Disclosures About Fair Value of Financial
Instruments
  June 30, 2009
    
    
    December 31, 2008Carrying
    
    
    
    
    
    
    CarryingLong-term Debt
    
    Amount
    
    
    Fair Value
    
    
    Amount
    
    
    Fair Value(In thousands)Bank credit facility
    
    $
    140,000
    
    
    $
    140,000
    
    
    $
    570,000
    
    
    $
    570,0007 1/2% Notes, net of discount
    
    
    297,841
    
    
    
    134,675
    
    
    
    300,000
    
    
    
    70,0418% Notes
    
    
    300,000
    
    
    
    193,917
    
    
    
    300,000
    
    
    
    134,14011 3/4% Notes, net of discount
    
    
    291,348
    
    
    
    134,381
    
    
    
    
    
    
    
    Total long-term debt
    
    $
    1,029,189
    
    
    $
    602,973
    
    
    $
    1,170,000
    
    
    $
    774,181
  22




---



##### Table of Contents



13. Segment Information
   14. Supplemental Guarantor Information
 3 4 1 2
   23




---



##### Table of Contents



CONSOLIDATING BALANCE SHEET (Unaudited)
June 30, 2009
(In thousands except share data)
 ConsolidatedParent
    
    
    Subsidiary
    
    
    
    
    
    
    MarinerCompany
    
    
    Guarantors
    
    
    Eliminations
    
    
    Energy, Inc.Current Assets:Cash and cash equivalents
    
    $
    33,648
    
    
    $
    
    
    
    $
    
    
    
    $
    33,648Receivables, net of allowances
    
    
    103,583
    
    
    
    53,426
    
    
    
    
    
    
    
    157,009Insurance receivables
    
    
    234
    
    
    
    25,592
    
    
    
    
    
    
    
    25,826Derivative financial instruments
    
    
    70,849
    
    
    
    
    
    
    
    
    
    
    
    70,849Intangible assets
    
    
    1,333
    
    
    
    
    
    
    
    
    
    
    
    1,333Prepaid expenses and other
    
    
    23,793
    
    
    
    1,742
    
    
    
    
    
    
    
    25,535Total current assets
    
    
    233,440
    
    
    
    80,760
    
    
    
    
    
    
    
    314,200Property and Equipment:Proved oil and gas properties, full-cost method
    
    
    2,323,685
    
    
    
    2,395,950
    
    
    
    
    
    
    
    4,719,635Unproved properties, not subject to amortization
    
    
    223,402
    
    
    
    13,656
    
    
    
    
    
    
    
    237,058Total oil and gas properties
    
    
    2,547,087
    
    
    
    2,409,606
    
    
    
    
    
    
    
    4,956,693Other property and equipment
    
    
    33,938
    
    
    
    19,766
    
    
    
    
    
    
    
    53,704Accumulated depreciation, depletion and amortization:Proved oil and gas properties
    
    
    (1,358,429
    )
    
    
    (1,289,914
    )
    
    
    
    
    
    
    (2,648,343
    )Other property and equipment
    
    
    (5,288
    )
    
    
    (1,572
    )
    
    
    
    
    
    
    (6,860
    )Total accumulated depreciation, depletion and
amortization
    
    
    (1,363,717
    )
    
    
    (1,291,486
    )
    
    
    
    
    
    
    (2,655,203
    )Total property and equipment, net
    
    
    1,217,308
    
    
    
    1,137,886
    
    
    
    
    
    
    
    2,355,194Investment in Subsidiaries
    
    
    452,386
    
    
    
    
    
    
    
    (452,386
    )
    
    
    Intercompany Receivables
    
    
    194,802
    
    
    
    
    
    
    
    (194,802
    )
    
    
    Intercompany Note Receivable
    
    
    7,175
    
    
    
    
    
    
    
    (7,175
    )
    
    
    Insurance Receivables
    
    
    156
    
    
    
    4,926
    
    
    
    
    
    
    
    5,082Other Assets, net of amortization
    
    
    64,881
    
    
    
    528
    
    
    
    
    
    
    
    65,409TOTAL ASSETS
    
    $
    2,170,148
    
    
    $
    1,224,100
    
    
    $
    (654,363
    )
    
    $
    2,739,885Current Liabilities:Accounts payable
    
    $
    3,925
    
    
    $
    
    
    
    $
    
    
    
    $
    3,925Accrued liabilities
    
    
    85,401
    
    
    
    27,321
    
    
    
    
    
    
    
    112,722Accrued capital costs
    
    
    89,893
    
    
    
    41,281
    
    
    
    
    
    
    
    131,174Deferred
income tax
    
    
    28,625
    
    
    
    
    
    
    
    
    
    
    
    28,625Abandonment liability
    
    
    9,012
    
    
    
    31,374
    
    
    
    
    
    
    
    40,386Accrued interest
    
    
    12,873
    
    
    
    
    
    
    
    
    
    
    
    12,873Derivative financial instruments
    
    
    3,599
    
    
    
    
    
    
    
    
    
    
    
    3,599Total current liabilities
    
    
    233,328
    
    
    
    99,976
    
    
    
    
    
    
    
    333,304Long-Term Liabilities:Abandonment liability
    
    
    85,715
    
    
    
    321,018
    
    
    
    
    
    
    
    406,733Deferred income tax
    
    
    (69,247
    )
    
    
    147,048
    
    
    
    
    
    
    
    77,801Intercompany payable
    
    
    
    
    
    
    194,802
    
    
    
    (194,802
    )
    
    
    Derivative financial instruments
    
    
    16,174
    
    
    
    
    
    
    
    
    
    
    
    16,174Long-term debt,
    
    
    1,029,189
    
    
    
    
    
    
    
    
    
    
    
    1,029,189Other long-term liabilities
    
    
    28,830
    
    
    
    1,695
    
    
    
    
    
    
    
    30,525Intercompany note payable
    
    
    
    
    
    
    7,175
    
    
    
    (7,175
    )
    
    
    Total long-term liabilities
    
    
    1,090,661
    
    
    
    671,738
    
    
    
    (201,977
    )
    
    
    1,560,422Commitments and Contingencies (see Note 9)Stockholders Equity:Preferred stock, $.0001 par value; 20,000,000 shares
authorized, no shares issued and outstanding at June
30, 2009
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Common stock, $.0001 par value; 180,000,000 shares
authorized, 101,848,191 shares issued and
outstanding at June 30, 2009
    
    
    10
    
    
    
    5
    
    
    
    (5
    )
    
    
    10Additional paid-in capital
    
    
    1,243,277
    
    
    
    886,142
    
    
    
    (886,142
    )
    
    
    1,243,277Partner capital
    
    
    
    
    
    
    31,927
    
    
    
    (31,927
    )
    
    
    Accumulated other comprehensive income
    
    
    38,994
    
    
    
    
    
    
    
    
    
    
    
    38,994Accumulated deficit
    
    
    (436,122
    )
    
    
    (465,688
    )
    
    
    465,688
    
    
    
    (436,122
    )Total stockholders equity
    
    
    846,159
    
    
    
    452,386
    
    
    
    (452,386
    )
    
    
    846,159TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    2,170,148
    
    
    $
    1,224,100
    
    
    $
    (654,363
    )
    
    $
    2,739,885
 24




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##### Table of Contents



CONSOLIDATING BALANCE SHEET (Unaudited)
 December 31, 2008
 (In thousands except share data)
 ConsolidatedParent
    
    
    Subsidiary
    
    
    
    
    
    
    MarinerCompany
    
    
    Guarantors
    
    
    Eliminations
    
    
    Energy, Inc.Current Assets:Cash and cash equivalents
    
    $
    2,809
    
    
    $
    400
    
    
    $
    
    
    
    $
    3,209Receivables, net of allowances
    
    
    157,362
    
    
    
    62,558
    
    
    
    
    
    
    
    219,920Insurance receivables
    
    
    5,886
    
    
    
    7,237
    
    
    
    
    
    
    
    13,123Derivative financial instruments
    
    
    121,929
    
    
    
    
    
    
    
    
    
    
    
    121,929Intangible assets
    
    
    2,334
    
    
    
    
    
    
    
    
    
    
    
    2,334Prepaid expenses and other
    
    
    12,965
    
    
    
    1,473
    
    
    
    
    
    
    
    14,438Total current assets
    
    
    303,285
    
    
    
    71,668
    
    
    
    
    
    
    
    374,953Property and Equipment:Proved oil and gas properties, full-cost method
    
    
    2,181,238
    
    
    
    2,266,908
    
    
    
    
    
    
    
    4,448,146Unproved properties, not subject to amortization
    
    
    185,012
    
    
    
    16,109
    
    
    
    
    
    
    
    201,121Total oil and gas properties
    
    
    2,366,250
    
    
    
    2,283,017
    
    
    
    
    
    
    
    4,649,267Other property and equipment
    
    
    33,351
    
    
    
    19,764
    
    
    
    
    
    
    
    53,115Accumulated depreciation, depletion and amortization:Proved oil and gas properties
    
    
    (911,462
    )
    
    
    (855,566
    )
    
    
    
    
    
    
    (1,767,028
    )Other property and equipment
    
    
    (4,425
    )
    
    
    (1,052
    )
    
    
    
    
    
    
    (5,477
    )Total accumulated depreciation, depletion and
amortization
    
    
    (915,887
    )
    
    
    (856,618
    )
    
    
    
    
    
    
    (1,772,505
    )Total property and equipment, net
    
    
    1,483,714
    
    
    
    1,446,163
    
    
    
    
    
    
    
    2,929,877Investment in Subsidiaries
    
    
    704,971
    
    
    
    
    
    
    
    (704,971
    )
    
    
    Intercompany Receivables
    
    
    123,142
    
    
    
    113,064
    
    
    
    (236,206
    )
    
    
    Intercompany Note Receivable
    
    
    176,200
    
    
    
    
    
    
    
    (176,200
    )
    
    
    Insurance Receivables
    
    
    3,924
    
    
    
    18,208
    
    
    
    
    
    
    
    22,132Other Assets, net of amortization
    
    
    64,726
    
    
    
    1,105
    
    
    
    
    
    
    
    65,831TOTAL ASSETS
    
    $
    2,859,962
    
    
    $
    1,650,208
    
    
    $
    (1,117,377
    )
    
    $
    3,392,793Current Liabilities:Accounts payable
    
    $
    3,837
    
    
    $
    
    
    
    $
    
    
    
    $
    3,837Accrued liabilities
    
    
    72,743
    
    
    
    35,072
    
    
    
    
    
    
    
    107,815Accrued capital costs
    
    
    144,710
    
    
    
    51,123
    
    
    
    
    
    
    
    195,833Deferred income tax
    
    
    23,148
    
    
    
    
    
    
    
    
    
    
    
    23,148Abandonment liability
    
    
    1,554
    
    
    
    80,810
    
    
    
    
    
    
    
    82,364Accrued interest
    
    
    12,567
    
    
    
    
    
    
    
    
    
    
    
    12,567Total current liabilities
    
    
    258,559
    
    
    
    167,005
    
    
    
    
    
    
    
    425,564Long-Term Liabilities:Abandonment liability
    
    
    56,920
    
    
    
    268,960
    
    
    
    
    
    
    
    325,880Deferred income tax
    
    
    110,431
    
    
    
    209,335
    
    
    
    
    
    
    
    319,766Intercompany payables
    
    
    113,064
    
    
    
    123,142
    
    
    
    (236,206
    )
    
    
    Long-term debt
    
    
    1,170,000
    
    
    
    
    
    
    
    
    
    
    
    1,170,000Other long-term liabilities
    
    
    30,668
    
    
    
    595
    
    
    
    
    
    
    
    31,263Intercompany note payable
    
    
    
    
    
    
    176,200
    
    
    
    (176,200
    )
    
    
    Total long-term liabilities
    
    
    1,481,083
    
    
    
    778,232
    
    
    
    (412,406
    )
    
    
    1,846,909Commitments and Contingencies (see Note 9)Stockholders Equity:Preferred stock, $.0001 par value; 20,000,000 shares
authorized, no shares issued and outstanding at
December 31, 2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Common stock, $.0001 par value; 180,000,000 shares
authorized, 88,846,073 shares issued and outstanding at
December 31, 2008
    
    
    9
    
    
    
    5
    
    
    
    (5
    )
    
    
    9Additional paid-in-capital
    
    
    1,071,347
    
    
    
    886,143
    
    
    
    (886,143
    )
    
    
    1,071,347Partner capital
    
    
    
    
    
    
    30,646
    
    
    
    (30,646
    )
    
    
    Accumulated other comprehensive income
    
    
    78,181
    
    
    
    
    
    
    
    
    
    
    
    78,181Accumulated deficit
    
    
    (29,217
    )
    
    
    (211,823
    )
    
    
    211,823
    
    
    
    (29,217
    )Total stockholders equity
    
    
    1,120,320
    
    
    
    704,971
    
    
    
    (704,971
    )
    
    
    1,120,320TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    2,859,962
    
    
    $
    1,650,208
    
    
    $
    (1,117,377
    )
    
    $
    3,392,793
 25




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##### Table of Contents



MARINER ENERGY, INC.
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS (Unaudited)
Three Months Ended June 30, 2009
(In thousands)
 ConsolidatedParent
    
    
    Subsidiary
    
    
    
    
    
    
    MarinerCompany
    
    
    Guarantors
    
    
    Eliminations
    
    
    Energy, Inc.Revenues:Natural gas
    
    $
    104,704
    
    
    $
    37,659
    
    
    $
    
    
    
    $
    142,363Oil
    
    
    57,162
    
    
    
    21,792
    
    
    
    
    
    
    
    78,954Natural gas liquids
    
    
    6,144
    
    
    
    2,049
    
    
    
    
    
    
    
    8,193Other revenues
    
    
    2,460
    
    
    
    
    
    
    
    
    
    
    
    2,460Total revenues
    
    
    170,470
    
    
    
    61,500
    
    
    
    
    
    
    
    231,970Costs and Expenses:Operating expenses
    
    
    29,040
    
    
    
    26,357
    
    
    
    
    
    
    
    55,397General and administrative expense
    
    
    21,421
    
    
    
    (299
    )
    
    
    
    
    
    
    21,122Depreciation, depletion and amortization
    
    
    55,050
    
    
    
    45,232
    
    
    
    
    
    
    
    100,282Other miscellaneous expense
    
    
    1,599
    
    
    
    1,159
    
    
    
    
    
    
    
    2,758Total costs and expenses
    
    
    107,110
    
    
    
    72,449
    
    
    
    
    
    
    
    179,559OPERATING INCOME (LOSS)
    
    
    63,360
    
    
    
    (10,949
    )
    
    
    
    
    
    
    52,411Loss of Affiliates
    
    
    (8,961
    )
    
    
    
    
    
    
    8,961
    
    
    
    Other Income (Expense):Interest income
    
    
    2,183
    
    
    
    
    
    
    
    (1,881
    )
    
    
    302Interest expense, net of amounts capitalized
    
    
    (16,973
    )
    
    
    (1,880
    )
    
    
    1,881
    
    
    
    (16,972
    )Income (Loss) Before Taxes
    
    
    39,609
    
    
    
    (12,829
    )
    
    
    8,961
    
    
    
    35,741(Provision) Benefit for Income Taxes
    
    
    (22,396
    )
    
    
    3,868
    
    
    
    
    
    
    
    (18,528
    )NET INCOME (LOSS)
    
    $
    17,213
    
    
    $
    (8,961
    )
    
    $
    8,961
    
    
    $
    17,213
 26




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##### Table of Contents



MARINER ENERGY, INC.
 CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS (Unaudited)
Three Months Ended June 30, 2008
(In thousands)
 ConsolidatedParent
    
    
    Subsidiary
    
    
    
    
    
    
    MarinerCompany
    
    
    Guarantors
    
    
    Eliminations
    
    
    Energy, Inc.Revenues:Natural gas
    
    $
    110,905
    
    
    $
    139,373
    
    
    $
    
    
    
    $
    250,278Oil
    
    
    76,215
    
    
    
    68,341
    
    
    
    
    
    
    
    144,556Natural gas liquids
    
    
    25,541
    
    
    
    7,516
    
    
    
    
    
    
    
    33,057Other revenues
    
    
    41
    
    
    
    1,520
    
    
    
    
    
    
    
    1,561Total revenues
    
    
    212,702
    
    
    
    216,750
    
    
    
    
    
    
    
    429,452Costs and Expenses:Operating expenses
    
    
    32,240
    
    
    
    33,654
    
    
    
    
    
    
    
    65,894General and administrative expense
    
    
    14,092
    
    
    
    (477
    )
    
    
    
    
    
    
    13,615Depreciation, depletion and amortization
    
    
    76,425
    
    
    
    65,029
    
    
    
    
    
    
    
    141,454Other miscellaneous expense
    
    
    266
    
    
    
    37
    
    
    
    
    
    
    
    303Total costs and expenses
    
    
    123,023
    
    
    
    98,243
    
    
    
    
    
    
    
    221,266OPERATING INCOME
    
    
    89,679
    
    
    
    118,507
    
    
    
    
    
    
    
    208,186Earnings of Affiliates
    
    
    88,686
    
    
    
    
    
    
    
    (88,686
    )
    
    
    Other Income (Expense):Interest income
    
    
    2,491
    
    
    
    15
    
    
    
    (2,225
    )
    
    
    281Interest expense, net of amounts capitalized
    
    
    (17,433
    )
    
    
    (2,355
    )
    
    
    2,225
    
    
    
    (17,563
    )Income Before Taxes
    
    
    163,423
    
    
    
    116,167
    
    
    
    (88,686
    )
    
    
    190,904Provision for Income Taxes
    
    
    (40,033
    )
    
    
    (27,383
    )
    
    
    
    
    
    
    (67,416
    )NET INCOME
    
    
    123,390
    
    
    
    88,784
    
    
    
    (88,686
    )
    
    
    123,488Less: Net income attributable to noncontrolling interest
    
    
    
    
    
    
    (98
    )
    
    
    
    
    
    
    (98
    )NET INCOME ATTRIBUTABLE TO MARINER ENERGY, INC.
    
    $
    123,390
    
    
    $
    88,686
    
    
    $
    (88,686
    )
    
    $
    123,390
 27




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##### Table of Contents



MARINER ENERGY, INC.
 CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS (Unaudited)
Six Months Ended June 30, 2009
(In thousands)
 ConsolidatedParent
    
    
    Subsidiary
    
    
    
    
    
    
    MarinerCompany
    
    
    Guarantors
    
    
    Eliminations
    
    
    Energy, Inc.Revenues:Natural gas
    
    $
    208,155
    
    
    $
    87,546
    
    
    $
    
    
    
    $
    295,701Oil
    
    
    105,945
    
    
    
    33,934
    
    
    
    
    
    
    
    139,879Natural gas liquids
    
    
    10,190
    
    
    
    4,472
    
    
    
    
    
    
    
    14,662Other revenues
    
    
    7,420
    
    
    
    17,644
    
    
    
    
    
    
    
    25,064Total revenues
    
    
    331,710
    
    
    
    143,596
    
    
    
    
    
    
    
    475,306Costs and Expenses:Operating expenses
    
    
    63,579
    
    
    
    53,333
    
    
    
    
    
    
    
    116,912General and administrative expense
    
    
    38,473
    
    
    
    60
    
    
    
    
    
    
    
    38,533Depreciation, depletion and amortization
    
    
    106,793
    
    
    
    88,294
    
    
    
    
    
    
    
    195,087Full cost ceiling test impairment
    
    
    342,595
    
    
    
    362,136
    
    
    
    
    
    
    
    704,731Other miscellaneous expense
    
    
    9,037
    
    
    
    1,730
    
    
    
    
    
    
    
    10,767Total costs and expenses
    
    
    560,477
    
    
    
    505,553
    
    
    
    
    
    
    
    1,066,030OPERATING LOSS
    
    
    (228,767
    )
    
    
    (361,957
    )
    
    
    
    
    
    
    (590,724
    )Loss of Affiliates
    
    
    (253,867
    )
    
    
    
    
    
    
    253,867
    
    
    
    Other Income (Expense):Interest income
    
    
    3,716
    
    
    
    
    
    
    
    (3,329
    )
    
    
    387Interest expense, net of amounts capitalized
    
    
    (31,248
    )
    
    
    (3,455
    )
    
    
    3,329
    
    
    
    (31,374
    )Loss Before Taxes
    
    
    (510,166
    )
    
    
    (365,412
    )
    
    
    253,867
    
    
    
    (621,711
    )Benefit for Income Taxes
    
    
    103,261
    
    
    
    111,545
    
    
    
    
    
    
    
    214,806NET LOSS
    
    $
    (406,905
    )
    
    $
    (253,867
    )
    
    $
    253,867
    
    
    $
    (406,905
    )
 28




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##### Table of Contents



MARINER ENERGY, INC.
 CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS (Unaudited)
Six Months Ended June 30, 2008
(In thousands)
 ConsolidatedParent
    
    
    Subsidiary
    
    
    
    
    
    
    MarinerCompany
    
    
    Guarantors
    
    
    Eliminations
    
    
    Energy, Inc.Revenues:Natural gas
    
    $
    196,438
    
    
    $
    233,463
    
    
    $
    
    
    
    $
    429,901Oil
    
    
    138,146
    
    
    
    120,024
    
    
    
    
    
    
    
    258,170Natural gas liquids
    
    
    37,284
    
    
    
    16,754
    
    
    
    
    
    
    
    54,038Other revenues
    
    
    375
    
    
    
    2,865
    
    
    
    
    
    
    
    3,240Total revenues
    
    
    372,243
    
    
    
    373,106
    
    
    
    
    
    
    
    745,349Costs and Expenses:Operating expenses
    
    
    53,759
    
    
    
    65,411
    
    
    
    
    
    
    
    119,170General and administrative expense
    
    
    24,906
    
    
    
    (180
    )
    
    
    
    
    
    
    24,726Depreciation, depletion and amortization
    
    
    136,580
    
    
    
    124,192
    
    
    
    
    
    
    
    260,772Other miscellaneous expense
    
    
    787
    
    
    
    53
    
    
    
    
    
    
    
    840Total costs and expenses
    
    
    216,032
    
    
    
    189,476
    
    
    
    
    
    
    
    405,508OPERATING INCOME
    
    
    156,211
    
    
    
    183,630
    
    
    
    
    
    
    
    339,841Earnings of Affiliates
    
    
    133,874
    
    
    
    
    
    
    
    (133,874
    )
    
    
    Other Income (Expense):Interest income
    
    
    5,534
    
    
    
    22
    
    
    
    (4,949
    )
    
    
    607Interest expense, net of amounts capitalized
    
    
    (35,807
    )
    
    
    (5,276
    )
    
    
    4,949
    
    
    
    (36,134
    )Income Before Taxes
    
    
    259,812
    
    
    
    178,376
    
    
    
    (133,874
    )
    
    
    304,314Provision for Income Taxes
    
    
    (64,296
    )
    
    
    (44,314
    )
    
    
    
    
    
    
    (108,610
    )NET INCOME
    
    
    195,516
    
    
    
    134,062
    
    
    
    (133,874
    )
    
    
    195,704Less: Net income attributable to noncontrolling interest
    
    
    
    
    
    
    (188
    )
    
    
    
    
    
    
    (188
    )NET INCOME ATTRIBUTABLE TO MARINER ENERGY, INC.
    
    $
    195,516
    
    
    $
    133,874
    
    
    $
    (133,874
    )
    
    $
    195,516
 29




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##### Table of Contents



MARINER ENERGY, INC.
 CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS (Unaudited)
Six Months Ended June 30, 2009
(In thousands)
 ConsolidatedParent
    
    
    Subsidiary
    
    
    
    
    
    
    MarinerCompany
    
    
    Guarantors
    
    
    Eliminations
    
    
    Energy, Inc.Net cash provided by operating activities
    
    $
    235,346
    
    
    $
    102,385
    
    
    $
    
    
    
    $
    337,731Cash flow from investing activities:Acquisitions and additions to oil and gas properties
    
    
    (198,862
    )
    
    
    (119,763
    )
    
    
    
    
    
    
    (318,625
    )Additions to other property and equipment
    
    
    (614
    )
    
    
    (2
    )
    
    
    
    
    
    
    (616
    )Repayments of notes from affiliates
    
    
    169,025
    
    
    
    
    
    
    
    (169,025
    )
    
    
    Net cash used in investing activities
    
    
    (30,451
    )
    
    
    (119,765
    )
    
    
    (169,025
    )
    
    
    (319,241
    )Cash flow from financing activities:Credit facility borrowings
    
    
    261,221
    
    
    
    
    
    
    
    
    
    
    
    261,221Credit facility repayments
    
    
    (691,221
    )
    
    
    
    
    
    
    
    
    
    
    (691,221
    )Repayments of notes to affiliates
    
    
    
    
    
    
    (169,025
    )
    
    
    169,025
    
    
    
    Other financing activities
    
    
    255,944
    
    
    
    186,005
    
    
    
    
    
    
    
    441,949Net cash (used in) provided by financing activities
    
    
    (174,056
    )
    
    
    16,980
    
    
    
    169,025
    
    
    
    11,949Increase (Decrease) in Cash and Cash Equivalents
    
    
    30,839
    
    
    
    (400
    )
    
    
    
    
    
    
    30,439Cash and Cash Equivalents at Beginning of Period
    
    
    2,809
    
    
    
    400
    
    
    
    
    
    
    
    3,209Cash and Cash Equivalents at End of Period
    
    $
    33,648
    
    
    $
    
    
    
    $
    
    
    
    $
    33,648
 30




---



##### Table of Contents



MARINER ENERGY, INC.
 CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS (Unaudited)
Six Months Ended June 30, 2008
(In thousands)
 ConsolidatedParent
    
    
    Subsidiary
    
    
    MarinerCompany
    
    
    Guarantors
    
    
    Energy, Inc.Net cash provided by operating activities
    
    $
    188,320
    
    
    $
    363,160
    
    
    $
    551,480Cash flow from investing activities:Acquisitions and additions to oil and gas properties
    
    
    (297,858
    )
    
    
    (355,052
    )
    
    
    (652,910
    )Additions to other property and equipment
    
    
    (15,447
    )
    
    
    (33,158
    )
    
    
    (48,605
    )Restricted cash designated for investment
    
    
    
    
    
    
    5,000
    
    
    
    5,000Net cash used in investing activities
    
    
    (313,305
    )
    
    
    (383,210
    )
    
    
    (696,515
    )Cash flow from financing activities:Credit facility borrowings
    
    
    630,000
    
    
    
    
    
    
    
    630,000Credit facility repayments
    
    
    (459,000
    )
    
    
    
    
    
    
    (459,000
    )Other financing activities
    
    
    (26,477
    )
    
    
    23,192
    
    
    
    (3,285
    )Net cash provided by financing activities
    
    
    144,523
    
    
    
    23,192
    
    
    
    167,715Increase in Cash and Cash Equivalents
    
    
    19,538
    
    
    
    3,142
    
    
    
    22,680Cash and Cash Equivalents at Beginning of Period
    
    
    18,589
    
    
    
    
    
    
    
    18,589Cash and Cash Equivalents at End of Period
    
    $
    38,127
    
    
    $
    3,142
    
    
    $
    41,269
 31




---



##### Table of Contents



Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of
Operations
  Forward-Looking Statements
  Overview
     32




---



##### Table of Contents



Securities Offerings. 3 4
 Acquisitions.
   Second Quarter 2009 Highlights
  
    
    Total revenues for second quarter 2009 decreased 46% to $232.0 million, down from
$429.5 million reported for second quarter 2008.
 
    
    Net cash provided by operations for the three-month period ended June 30, 2009
decreased 37% to $347.7 million, down from $551.5 million for the same period in 2008.
 
    
    Estimated average daily production for second quarter 2009 decreased to 361 MMcfe
per day, compared to 400 MMcfe per day for second quarter 2008.
 Operational Update
 Offshore
 ApproximateWell Name
    
    Operator
    
    Working Interest
    
    Water Depth (Ft)
    
    LocationVermillion 380 A16
    
    Mariner
    
    
    100
    %
    
    
    340
    
    
    Conventional Shelf
   Onshore
 33




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##### Table of Contents



Results of Operations
 Three Months Ended June 30, 2009 Compared to Three Months Ended June 30, 2008
  Three Months EndedJune 30,
    
    
    Increase
    
    
    %Summary Operating Information:
    
    2009
    
    
    2008
    
    
    (Decrease)
    
    
    Change(In thousands, except net production, average sales prices and %change)Net Production:Natural gas (MMcf)
    
    
    23,811
    
    
    
    24,359
    
    
    
    (548
    )
    
    
    (2
    )%Oil (MBbls)
    
    
    1,180
    
    
    
    1,502
    
    
    
    (322
    )
    
    
    (21
    )%Natural gas liquids (MBbls)
    
    
    332
    
    
    
    511
    
    
    
    (179
    )
    
    
    (35
    )%Total natural gas equivalent (MMcfe)
    
    
    32,881
    
    
    
    36,434
    
    
    
    (3,553
    )
    
    
    (10
    )%Average daily production (MMcfe/d)
    
    
    361
    
    
    
    400
    
    
    
    (39
    )
    
    
    (10
    )%Hedging Activities:Natural gas
revenue gain (loss)
    
    $
    58,844
    
    
    $
    (28,839
    )
    
    $
    87,683
    
    
    
    304
    %Oil revenue gain (loss)
    
    
    11,556
    
    
    
    (38,318
    )
    
    
    49,874
    
    
    
    130
    %Total hedging revenue gain (loss)
    
    $
    70,400
    
    
    $
    (67,157
    )
    
    $
    137,557
    
    
    
    205
    %Average Sales Prices:Natural gas (per Mcf) realized(1)
    
    $
    5.98
    
    
    $
    10.27
    
    
    $
    (4.29
    )
    
    
    (42
    )%Natural gas (per Mcf) unhedged
    
    
    3.51
    
    
    
    11.46
    
    
    
    (7.95
    )
    
    
    (69
    )%Oil (per Bbl) realized(1)
    
    
    66.91
    
    
    
    96.24
    
    
    
    (29.33
    )
    
    
    (30
    )%Oil (per Bbl) unhedged
    
    
    57.12
    
    
    
    121.75
    
    
    
    (64.63
    )
    
    
    (53
    )%Natural gas liquids (per Bbl) realized(1)
    
    
    24.68
    
    
    
    64.69
    
    
    
    (40.01
    )
    
    
    (62
    )%Natural gas liquids (per Bbl) unhedged
    
    
    24.68
    
    
    
    64.69
    
    
    
    (40.01
    )
    
    
    (62
    )%Total natural gas equivalent ($/Mcfe) realized(1)
    
    
    6.98
    
    
    
    11.74
    
    
    
    (4.76
    )
    
    
    (41
    )%Total natural gas equivalent ($/Mcfe) unhedged
    
    
    4.84
    
    
    
    13.59
    
    
    
    (8.75
    )
    
    
    (64
    )%Summary of Financial Information:Natural gas revenue
    
    $
    142,363
    
    
    $
    250,278
    
    
    $
    (107,915
    )
    
    
    (43
    )%Oil revenue
    
    
    78,954
    
    
    
    144,556
    
    
    
    (65,602
    )
    
    
    (45
    )%Natural gas liquids revenue
    
    
    8,193
    
    
    
    33,057
    
    
    
    (24,864
    )
    
    
    (75
    )%Other revenues
    
    
    2,460
    
    
    
    1,561
    
    
    
    899
    
    
    
    58
    %Lease operating expense
    
    
    47,092
    
    
    
    56,427
    
    
    
    (9,335
    )
    
    
    (17
    )%Severance and ad valorem taxes
    
    
    3,730
    
    
    
    5,263
    
    
    
    (1,533
    )
    
    
    (29
    )%Transportation expense
    
    
    4,575
    
    
    
    4,204
    
    
    
    371
    
    
    
    9
    %General and administrative expense
    
    
    21,122
    
    
    
    13,615
    
    
    
    7,507
    
    
    
    55
    %Depreciation, depletion and amortization
    
    
    100,282
    
    
    
    141,454
    
    
    
    (41,172
    )
    
    
    (29
    )%Other miscellaneous expense
    
    
    2,758
    
    
    
    303
    
    
    
    2,455
    
    
    
    810
    %Net interest expense
    
    
    16,670
    
    
    
    17,282
    
    
    
    (612
    )
    
    
    (4
    )%Income before taxes
    
    
    35,741
    
    
    
    190,904
    
    
    
    (155,163
    )
    
    
    (81
    )%Provision for income taxes
    
    
    18,528
    
    
    
    67,416
    
    
    
    (48,888
    )
    
    
    (73
    )%Net Income
    
    
    17,213
    
    
    
    123,488
    
    
    
    (106,275
    )
    
    
    (86
    )%Less: Net income attributable to noncontrolling
interest
    
    
    
    
    
    
    (98
    )
    
    
    98
    
    
    
    (100
    )%Net Income attributable to Mariner Energy, Inc.
    
    $
    17,213
    
    
    $
    123,390
    
    
    $
    (106,177
    )
    
    
    (86
    )%Average Unit Costs per Mcfe:Lease operating expense
    
    $
    1.43
    
    
    $
    1.55
    
    
    $
    (0.12
    )
    
    
    (8
    )%Severance and ad valorem taxes
    
    
    0.11
    
    
    
    0.14
    
    
    
    (0.03
    )
    
    
    (21
    )%Transportation expense
    
    
    0.14
    
    
    
    0.12
    
    
    
    0.02
    
    
    
    17
    %General and administrative expense
    
    
    0.64
    
    
    
    0.37
    
    
    
    0.27
    
    
    
    73
    %Depreciation, depletion and amortization
    
    
    3.05
    
    
    
    3.88
    
    
    
    (0.83
    )
    
    
    (21
    )%
 
 (1)
    
    Average sales prices include the effects of hedging Net Income attributable to Mariner Energy, Inc.
 34




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##### Table of Contents



Net Production
   
    
    Decreased production of 4.1 Bcfe, or 21%, from our Gulf of Mexico shelf properties
as a result of normal depletion declines and gas balancing adjustments of 7.9 Bcfe,
partially offset by increased production of 3.8 Bcfe at certain of our properties
including High Island 116 (1.1 Bcfe) and South Marsh Island 76 (0.9 Bcfe).
 
    
    Decreased production of 0.4 Bcfe, or 3%, from our Gulf of Mexico deepwater
properties primarily due to normal depletion declines at Northwest Nansen (2.8 Bcfe)
located in East Breaks 602 and a paraffin plug in the export pipeline at Pluto (1.8
Bcfe) located in Mississippi Canyon 674. Second quarter 2009 deepwater production was
favorably impacted by a full quarter of production from, and our recently acquired
incremental 11.6% working interest in, Bass Lite (2.7 Bcfe) located in Atwater 426, and
from our March 2009 start up of production from Geauxpher (2.6 Bcfe) located in Garden
Banks 462.
 
    
    Increased production of 1.0 Bcfe, or 26%, from our onshore properties primarily as a
result of our recently acquired additional working interests in certain of our existing
properties in the Spraberry field in the Permian Basin.
 Natural gas, oil and NGL revenues
 Accounting for Derivative Instruments and Hedging
Activities,
  HedgingRealized
    
    Unhedged
    
    Gain (Loss)
    
    % ChangeThree Months Ended June 30, 2009:Natural gas (per Mcf)
    
    $
    5.98
    
    
    $
    3.51
    
    
    $
    2.47
    
    
    
    70
    %Oil (per Bbl)
    
    
    66.91
    
    
    
    57.12
    
    
    
    9.79
    
    
    
    17
    %Three Months Ended June 30, 2008:Natural gas (per Mcf)
    
    $
    10.27
    
    
    $
    11.46
    
    
    $
    (1.19
    )
    
    
    (10
    )%Oil (per Bbl)
    
    
    96.24
    
    
    
    121.75
    
    
    
    (25.51
    )
    
    
    (21
    )%
 Other revenues
 35




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##### Table of Contents



Lease operating expense LOE
 Severance and ad valorem tax
 Transportation expense
 General and administrative expense (G&A)
 Depreciation, depletion, and amortization expense DD&A
 Other miscellaneous expense
 Net interest expense 3 4
 Income before taxes
 Provision for
income taxes Share-Based Payment
 36




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##### Table of Contents



Six Months Ended June 30, 2009 Compared to Six Months Ended June 30, 2008
  Six Months EndedJune 30,
    
    
    Increase
    
    
    %Summary Operating Information:
    
    2009
    
    
    2008
    
    
    (Decrease)
    
    
    Change(In thousands, except net production, average sales prices and %change)Net Production:Natural gas (MMcf)
    
    
    45,859
    
    
    
    45,315
    
    
    
    544
    
    
    
    1
    %Oil (MBbls)
    
    
    2,149
    
    
    
    2,851
    
    
    
    (702
    )
    
    
    (25
    )%Natural gas liquids (MBbls)
    
    
    605
    
    
    
    888
    
    
    
    (283
    )
    
    
    (32
    )%Total natural gas equivalent (MMcfe)
    
    
    62,382
    
    
    
    67,749
    
    
    
    (5,367
    )
    
    
    (8
    )%Average daily production (MMcfe/d)
    
    
    345
    
    
    
    372
    
    
    
    (27
    )
    
    
    (7
    )%Hedging Activities:Natural gas revenue gain (loss)
    
    $
    101,810
    
    
    $
    (26,902
    )
    
    $
    128,712
    
    
    
    478
    %Oil revenue gain (loss)
    
    
    32,391
    
    
    
    (54,486
    )
    
    
    86,877
    
    
    
    159
    %Total hedging revenue gain (loss)
    
    $
    134,201
    
    
    $
    (81,388
    )
    
    $
    215,589
    
    
    
    265
    %Average Sales Prices:Natural gas (per Mcf) realized(1)
    
    $
    6.45
    
    
    $
    9.49
    
    
    $
    (3.04
    )
    
    
    (32
    )%Natural gas (per Mcf) unhedged
    
    
    4.23
    
    
    
    10.08
    
    
    
    (5.85
    )
    
    
    (58
    )%Oil (per Bbl) realized(1)
    
    
    65.09
    
    
    
    90.55
    
    
    
    (25.46
    )
    
    
    (28
    )%Oil (per Bbl) unhedged
    
    
    50.02
    
    
    
    109.67
    
    
    
    (59.65
    )
    
    
    (54
    )%Natural gas liquids (per Bbl) realized(1)
    
    
    24.23
    
    
    
    60.85
    
    
    
    (36.62
    )
    
    
    (60
    )%Natural gas liquids (per Bbl) unhedged
    
    
    24.23
    
    
    
    60.85
    
    
    
    (36.62
    )
    
    
    (60
    )%Total natural gas equivalent ($/Mcfe) realized(1)
    
    
    7.22
    
    
    
    10.95
    
    
    
    (3.73
    )
    
    
    (34
    )%Total natural gas equivalent ($/Mcfe) unhedged
    
    
    5.07
    
    
    
    12.16
    
    
    
    (7.09
    )
    
    
    (58
    )%Summary of Financial Information:Natural gas revenue
    
    $
    295,701
    
    
    $
    429,901
    
    
    $
    (134,200
    )
    
    
    (31
    )%Oil revenue
    
    
    139,879
    
    
    
    258,170
    
    
    
    (118,291
    )
    
    
    (46
    )%Natural gas liquids revenue
    
    
    14,662
    
    
    
    54,038
    
    
    
    (39,376
    )
    
    
    (73
    )%Other revenues
    
    
    25,064
    
    
    
    3,240
    
    
    
    21,824
    
    
    
    674
    %Lease operating expense
    
    
    100,491
    
    
    
    102,074
    
    
    
    (1,583
    )
    
    
    (2
    )%Severance and ad valorem taxes
    
    
    7,262
    
    
    
    9,873
    
    
    
    (2,611
    )
    
    
    (26
    )%Transportation expense
    
    
    9,159
    
    
    
    7,223
    
    
    
    1,936
    
    
    
    27
    %General and administrative expense
    
    
    38,533
    
    
    
    24,726
    
    
    
    13,807
    
    
    
    56
    %Depreciation, depletion and amortization
    
    
    195,087
    
    
    
    260,772
    
    
    
    (65,685
    )
    
    
    (25
    )%Full cost ceiling test impairment
    
    
    704,731
    
    
    
    
    
    
    
    704,731
    
    
    
    N/AOther miscellaneous expense
    
    
    10,767
    
    
    
    840
    
    
    
    9,927
    
    
    
    1182
    %Net interest expense
    
    
    30,987
    
    
    
    35,527
    
    
    
    (4,540
    )
    
    
    (13
    )%(Loss) Income before taxes
    
    
    (621,711
    )
    
    
    304,314
    
    
    
    (926,025
    )
    
    
    (304
    )%(Benefit) Provision for income taxes
    
    
    (214,806
    )
    
    
    108,610
    
    
    
    (323,416
    )
    
    
    (298
    )%Net (Loss) Income
    
    
    (406,905
    )
    
    
    195,704
    
    
    
    (602,609
    )
    
    
    (308
    )%Less: Net income attributable to noncontrolling
interest
    
    
    
    
    
    
    (188
    )
    
    
    188
    
    
    
    (100
    )%Net Income attributable to Mariner Energy, Inc.
    
    $
    (406,905
    )
    
    $
    195,516
    
    
    $
    (602,421
    )
    
    
    (308
    )%Average Unit Costs per Mcfe:Lease operating expense
    
    $
    1.61
    
    
    $
    1.51
    
    
    $
    0.10
    
    
    
    7
    %Severance and ad valorem taxes
    
    
    0.12
    
    
    
    0.15
    
    
    
    (0.03
    )
    
    
    (20
    )%Transportation expense
    
    
    0.15
    
    
    
    0.11
    
    
    
    0.04
    
    
    
    36
    %General and administrative expense
    
    
    0.62
    
    
    
    0.36
    
    
    
    0.26
    
    
    
    72
    %Depreciation, depletion and amortization
    
    
    3.13
    
    
    
    3.85
    
    
    
    (0.72
    )
    
    
    (19
    )%
 
 (1)
    
    Average sales prices include the effects of hedging Net (Loss) Income attributable to Mariner Energy, Inc.
 37




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##### Table of Contents



Net Production
   
    
    Decreased production of 8.6 Bcfe, or 22%, from our Gulf of Mexico shelf properties
as a result of normal depletion declines and gas balancing adjustments of 15.1 Bcfe,
partially offset by increased production of 6.5 Bcfe at certain of our properties
including High Island 116 (1.8 Bcfe) and South Marsh Island 76 (2.3 Bcfe).
 
    
    Increased production of 1.7 Bcfe, or 8%, from our Gulf of Mexico deepwater
properties primarily due to Bass Lite located in Atwater Valley 426 (which contributed
6.7 Bcfe) partially offset by decreased production of 3.4 Bcfe from Pluto located in
Mississippi Canyon 674.
 
    
    Increased production of 1.5 Bcfe, or 20%, from our onshore properties primarily as a
result of our drilling and development of acreage in the Permian Basin.
 Natural gas, oil and NGL revenues
   HedgingRealized
    
    Unhedged
    
    Gain (Loss)
    
    % ChangeSix Months Ended June 30, 2009:Natural gas (per Mcf)
    
    $
    6.45
    
    
    $
    4.23
    
    
    $
    2.22
    
    
    
    52
    %Oil (per Bbl)
    
    
    65.09
    
    
    
    50.02
    
    
    
    15.07
    
    
    
    30
    %Six Months Ended June 30, 2008:Natural gas (per Mcf)
    
    $
    9.49
    
    
    $
    10.08
    
    
    $
    (0.59
    )
    
    
    (6
    )%Oil (per Bbl)
    
    
    90.55
    
    
    
    109.67
    
    
    
    (19.12
    )
    
    
    (17
    )%
 Other revenues
 Lease operating expense LOE
 38




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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
 Income before taxes
 Provision for income taxes
 Liquidity and Capital Resources
  39




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##### Table of Contents



Capital Expenditures 
 In thousands
    
    
    PercentageCapital Expenditures:Offshore natural gas and oil development
    
    $
    130,484
    
    
    
    45
    %Natural gas and oil exploration
    
    
    100,883
    
    
    
    35
    %Onshore natural gas and oil development
    
    
    29,668
    
    
    
    10
    %Other items (primarily capitalized overhead)
    
    
    16,131
    
    
    
    6
    %Acquisitions (property and leasehold)
    
    
    13,394
    
    
    
    4
    %Total capital expenditures
    
    $
    290,560
    
    
    
    100
    %
  Bank Credit Facility 3 4
 3 4
    40




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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
 113/4% Notes 3 4
 3 4
 3 4 1 2
 3 4
 41




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##### Table of Contents



3 4 3 4
 
 3 4 3 4
 3 4 3 4
 3 4 1 2
 
    
    make investments;
 
    
    incur additional indebtedness or issue preferred stock;
 
    
    create certain liens;
 
    
    sell assets;
 
    
    enter into agreements that restrict dividends or other payments from our
subsidiaries to us;
 
    
    consolidate, merge or transfer all or substantially all of our assets;
 
    
    engage in transactions with affiliates;
 
    
    pay dividends or make other distributions on capital stock or subordinated
indebtedness; and
 
    
    create unrestricted subsidiaries.
 Common Stock Offering
 42




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##### Table of Contents



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.
 2009
Capital Expenditures.
  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.
    43




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##### Table of Contents



Off-Balance Sheet Arrangements
 Letters of Credit
 Fair Value Measurement
  Fair Value
Measurements
   Legal Proceedings
 MMS Proceedings
 44




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##### Table of Contents



Kerr-McGee Oil & Gas Corp. v. Allred Kerr-McGee Kerr-McGee Oil & Gas Corp. v. Allred Kerr-McGee Oil & Gas Corp. v. U.S. Dept of Interior
 U.S. Department of the Interior Five-Year Leasing Program. et seq.
 Center for Biological Diversity v. Department of the Interior
   Recent Accounting Pronouncements
 The FASB
Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles The Hierarchy of Generally Accepted Accounting
Principles
 45




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##### Table of Contents



Subsequent Events
 Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have
Significantly Decreased and Identifying Transactions That Are Not Orderly, Interim Disclosures about Fair Value of Financial Instruments, Recognition and Presentation of Other-Than-Temporary Impairments,
  
    
    Oil and gas reserves must be reported using average prices over the prior 12 month
period, rather than year-end prices;
 
    
    Companies will be allowed to report, on an optional basis, probable and possible
reserves;
 
    
    Non-traditional reserves, such as oil and gas extracted from coal and shales, will
be included in the definition of oil and gas producing activities;
 
    
    Companies will be permitted to use new technologies to determine proved reserves, as
long as those technologies have been demonstrated empirically to lead to reliable
conclusions with respect to reserve volumes;
 
    
    Companies will be required to disclose, in narrative form, additional details on
their proved undeveloped reserves (PUDs), including the total quantity of PUDs at year
end, any material changes to PUDs that occurred during the year, investments and
progress made to convert PUDs to developed oil and gas reserves and an explanation of
the reasons why material concentrations of PUDs in individual fields or countries have
remained undeveloped for five years or more after disclosure as PUDs;
and
 46




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##### Table of Contents




    
    Companies will be required to report the qualifications and measures taken to assure
the independence and objectivity of any business entity or employee primarily
responsible for preparing or auditing the reserves estimates.
   Effective Date of FASB Statement No. 157
 Disclosures
about Derivative Instruments and Hedging Activities  an amendment of
FASB Statement No. 133
 
 Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
 Commodity Prices and Related Hedging Activities
   47




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##### Table of Contents



Three Months Ended June 30,
    
    
    Six Months Ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(In thousands)Cash Gain (Loss) on Settlements (1)
    
    $
    63,547
    
    
    $
    (64,607
    )
    
    $
    121,004
    
    
    $
    (74,914
    )Gain on liquidated swaps (2)
    
    
    6,677
    
    
    
    
    
    
    
    13,200
    
    
    
    Gain (Loss) on Hedge Ineffectiveness (3)
    
    
    176
    
    
    
    (2,550
    )
    
    
    (3
    )
    
    
    (6,474
    )Total
    
    $
    70,400
    
    
    $
    (67,157
    )
    
    $
    134,201
    
    
    $
    (81,388
    )
 
 (1)
    
    Designated as cash flow hedges pursuant to SFAS 133.(2)
    
    Crude oil fixed price swaps liquidated on January 29, 2009 that do not qualify for hedge
accounting. Includes a $0.3 million net gain related to the liquidation on January 29, 2009.(3)
    
    Unrealized loss recognized in natural gas revenue related to the ineffective portion of open
contracts that are not eligible for deferral under SFAS 133 due primarily to the basis
differentials between the contract price and the indexed price at the point of sale.  Weighted Average
    
    
    Fair ValueFixed Price Swaps
    
    Quantity
    
    
    Fixed Price
    
    
    Asset(In thousands)Natural Gas (MMbtus)July 1December 31, 2009
    
    
    22,220,024
    
    
    $
    7.62
    
    
    $
    72,156January 1December 31, 2010
    
    
    12,775,000
    
    
    $
    5.84
    
    
    
    (2,470
    )January 1June 30, 2011
    
    
    4,525,000
    
    
    $
    6.65
    
    
    
    (732
    )Crude Oil (Bbls)July 1December 31, 2009
    
    
    484,564
    
    
    $
    76.45
    
    
    
    2,212January 1December 31, 2010
    
    
    1,277,500
    
    
    $
    62.28
    
    
    
    (15,336
    )January 1June 30, 2011
    
    
    452,500
    
    
    $
    65.65
    
    
    
    (4,754
    )Total
    
    
    
    
    
    
    
    
    
    $
    51,076
    48




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##### Table of Contents



Interest Rate Market Risk 
 
 Item 4.
    
    Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Controls Over Financial Reporting
  49




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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;
 50




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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.
 
 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
    
    ProgramsApril 1, 2009 to April 30, 2009 (1)
    
    
    33,975
    
    
    $
    10.93
    
    
    
    
    
    
    
    May 1, 2009 to May 31, 2009 (1)
    
    
    79,338
    
    
    $
    13.40
    
    
    
    
    
    
    
    June 1, 2009 to June 30, 2009 (1)
    
    
    1,813
    
    
    $
    15.27
    
    
    
    
    
    
    
    Total
    
    
    115,126
    
    
    $
    12.70
    
    
    
    
    
    
    
    
 
 (1)
    
    These shares were withheld upon the vesting of employee restricted stock grants in connection
with payment of required withholding taxes. 
 Item 4.
    
    Submission of Matters to a Vote of Security Holders
  1.
    
    Election of directors:
 For
    
    WithholdBernard Aronson (term expires in 2012)
    
    
    38,027,287
    
    
    
    42,861,020H. Clayton Peterson (term expires in 2012)
    
    
    39,065,891
    
    
    
    41,822,416
 2.
    
    Ratification of the selection of Deloitte & Touche LLP as independent auditors for
the fiscal year ending December 31, 2009:
 For
    
    Against
    
    Abstain80,743,051
    
    127,502
    
    17,754
 3.
    
    Approval of the Mariner Energy, Inc. Third Amended and Restated Stock Incentive
Plan:
 For
    
    Against
    
    Abstain58,097,951
    
    18,812,058
    
    71,813
  51




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##### Table of Contents



Item 6.
    
    Exhibits
 Number
    
    Description2.1
    *
    
    Agreement and Plan of Merger dated as of September 9, 2005 among Forest Oil
Corporation, SML Wellhead Corporation, Mariner Energy, Inc. and MEI Sub,
Inc. (incorporated by reference to Exhibit 2.1 to Mariners Registration
Statement on Form S-4 (File No. 333-137441) filed on September 19, 2006).2.2
    *
    
    Letter Agreement dated as of February 3, 2006 among Forest Oil Corporation,
Forest Energy Resources, Inc., Mariner Energy, Inc. and MEI Sub, Inc.
amending the transaction agreements (incorporated by reference to Exhibit
2.2 to Mariners Registration Statement on Form S-4 (File No. 333-137441)
filed on September 19, 2006).2.3
    *
    
    Letter Agreement, dated as of February 28, 2006, among Forest Oil
Corporation, Forest Energy Resources, Inc., Mariner Energy, Inc. and MEI
Sub, Inc. amended the transaction agreements (incorporated by reference to
Exhibit 2.1 to Mariners Form 8-K filed on March 3, 2006).2.4
    *
    
    Letter Agreement, dated April 12, 2006, among Forest Oil Corporation,
Mariner Energy Resources, Inc. and Mariner Energy, Inc. amended the
transaction agreements (incorporated by reference to Exhibit 2.1 to
Mariners Form 8-K filed on April 13, 2006).2.5
    *
    
    Membership Interest Purchase Agreement by and between Hydro Gulf of Mexico,
Inc. and Mariner Energy, Inc., executed December 23, 2007 (incorporated by
reference to Exhibit 2.1 to Mariners Form 8-K filed on February 5, 2008).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).
 52




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##### Table of Contents



Number
    
    Description4.7
    *
    
    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).4.8
    *
    
    Amendment No. 1 and Consent, dated as of April 7, 2006, among Mariner
Energy, Inc. and Mariner Energy Resources, Inc., as Borrowers, the Lenders
party thereto, and Union Bank of California, N.A., as Administrative Agent
for such Lenders and as Issuing Lender for such Lenders (incorporated by
reference to Exhibit 4.1 to Mariners Form 8-K filed on April 13, 2006).4.9
    *
    
    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).4.10
    *
    
    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).4.11
    *
    
    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).4.12
    *
    
    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).4.13
    *
    
    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).4.14
    *
    
    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).4.15
    *
    
    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).4.16
    *
    
    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).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).
 53




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##### Table of Contents



Number
    
    Description10.2
    *
    
    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).10.3
    *
    
    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.  54




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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 President By:
    /s/ John H. KarnesJohn H. Karnes,Senior Vice President, Chief Financial Officer
and Treasurer 55




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##### Table of Contents



EXHIBIT INDEX
 Number
    
    Description2.1
    *
    
    Agreement and Plan of Merger dated as of September 9, 2005 among Forest Oil
Corporation, SML Wellhead Corporation, Mariner Energy, Inc. and MEI Sub,
Inc. (incorporated by reference to Exhibit 2.1 to Mariners Registration
Statement on Form S-4 (File No. 333-137441) filed on September 19, 2006).2.2
    *
    
    Letter Agreement dated as of February 3, 2006 among Forest Oil Corporation,
Forest Energy Resources, Inc., Mariner Energy, Inc. and MEI Sub, Inc.
amending the transaction agreements (incorporated by reference to Exhibit
2.2 to Mariners Registration Statement on Form S-4 (File No. 333-137441)
filed on September 19, 2006).2.3
    *
    
    Letter Agreement, dated as of February 28, 2006, among Forest Oil
Corporation, Forest Energy Resources, Inc., Mariner Energy, Inc. and MEI
Sub, Inc. amended the transaction agreements (incorporated by reference to
Exhibit 2.1 to Mariners Form 8-K filed on March 3, 2006).2.4
    *
    
    Letter Agreement, dated April 12, 2006, among Forest Oil Corporation,
Mariner Energy Resources, Inc. and Mariner Energy, Inc. amended the
transaction agreements (incorporated by reference to Exhibit 2.1 to
Mariners Form 8-K filed on April 13, 2006).2.5
    *
    
    Membership Interest Purchase Agreement by and between Hydro Gulf of Mexico,
Inc. and Mariner Energy, Inc., executed December 23, 2007 (incorporated by
reference to Exhibit 2.1 to Mariners Form 8-K filed on February 5, 2008).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).
 56




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##### Table of Contents



Number
    
    Description4.7
    *
    
    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).4.8
    *
    
    Amendment No. 1 and Consent, dated as of April 7, 2006, among Mariner
Energy, Inc. and Mariner Energy Resources, Inc., as Borrowers, the Lenders
party thereto, and Union Bank of California, N.A., as Administrative Agent
for such Lenders and as Issuing Lender for such Lenders (incorporated by
reference to Exhibit 4.1 to Mariners Form 8-K filed on April 13, 2006).4.9
    *
    
    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).4.10
    *
    
    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).4.11
    *
    
    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).4.12
    *
    
    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).4.13
    *
    
    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).4.14
    *
    
    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).4.15
    *
    
    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).4.16
    *
    
    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).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).
 57




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##### Table of Contents



Number
    
    Description10.2
    *
    
    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).10.3
    *
    
    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.  58