##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, DC 20549
 FORM 10-K/A
 Amendment No. 1
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2007
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number: 1-10671
 THE MERIDIAN RESOURCE CORPORATION
  TEXAS
(State of incorporation)
    
    76-0319553
(I.R.S. Employer Identification No.)1401 Enclave Parkway, Suite 300, Houston, Texas
(Address of principal executive offices)
    
    77077
(Zip Code)
 281-597-7000
 Securities registered pursuant to Section 12(b) of the Act:
 (Title of each class)
    
    (Name of each exchange on which registered)Common Stock, $0.01 par value
    
    New York Stock ExchangeRights to Purchase Preferred Shares
    
    New York Stock Exchange
 Securities registered pursuant to Section 12(g) of the Act: None
 
 o þ
 o þ
 þ o
 o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ
 Aggregate market value of shares of common stock held by non-affiliates
of the Registrant at June 30, 2007
    
    $
    266,718,455Number of shares of common stock outstanding at March 3, 2008:
    
    
    89,363,795




---



TABLE OF CONTENTS  PART IIIITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.ITEM 11. EXECUTIVE COMPENSATION.ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.PART IVITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.SIGNATURESEXHIBIT INDEXEmployment Agreement - Joseph A. Reeves, Jr.Employment Agreement - Michael J. MayellTermination Agreement - Joseph A. Reeves, Jr.Termination Agreement - Michael J. MayellAgreement (Regarding Net Profits Interests) - Joseph A. Reeves, Jr.Agreement (Regarding Net Profits Interests) - Michael J. MayellCertification of Chief Executive OfficerCertification of PresidentCertification of Chief Accounting OfficerCertification of Chief Executive OfficerCertification of PresidentCertification of Chief Accounting Officer    Table of Contents  EXPLANATORY NOTE
  1




---



##### Table of Contents



PART III
 
 ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
 DIRECTORS
   EXPIRATIONPRESENT POSITIONS
    
    DIRECTOR
    
    OF PRESENTNAME
    
    AGE
    
    WITH THE COMPANY
    
    SINCE
    
    TERMJoseph A. Reeves, Jr.
    
    61
    
    Class III Director and Chief Executive Officer (1)(6)
    
    1990
    
    2008Michael J. Mayell
    
    60
    
    Class III Director and President (1)
    
    1990
    
    2008Fenner R. Weller, Jr.
    
    56
    
    Class III Director (2)
    
    2004
    
    2008G.M. Byrd Larberg
    
    55
    
    Class III Director
    
    2008
    
    2008David W. Tauber
    
    58
    
    Class I Director (3)
    
    2004
    
    2009John B. Simmons
    
    55
    
    Class I Director (4)
    
    2004
    
    2009C. Mark Pearson
    
    52
    
    Class I Director (5)
    
    2006
    
    2010E. L. Henry
    
    72
    
    Class II Director (5)
    
    1998
    
    2010Joe E. Kares
    
    64
    
    Class II Director
    
    1990
    
    2010Gary A. Messersmith
    
    59
    
    Class II Director
    
    1997
    
    2010Paul Ching
    
    60
    
    Class II Director and Chairman of the Board (6)
    
    2008
    
    2008
  (1)
    
    Member of the Executive Committee and Directors Stock Option Plan Administration Committee.(2)
    
    Member of the Audit Committee and the Compensation Committee.(3)
    
    Member of the Audit Committee and the Board Affairs Committee.(4)
    
    Member of the Audit Committee.(5)
    
    Member of the Board Affairs Committee and the Compensation Committee.(6)
    
    On April 29, 2008, Mr. Reeves relinquished the title of Chairman of the Board and Mr. Ching
was elected by the Board to serve in that capacity.
   2




---



##### Table of Contents



3




---



##### Table of Contents



AUDIT COMMITTEE; AUDIT COMMITTEE FINANCIAL EXPERT
  EXECUTIVE AND CERTAIN OTHER OFFICERS
  YEAR FIRSTELECTEDNAME OF OFFICER
    
    POSITION WITH THE COMPANY
    
    AGE
    
    AS OFFICERJoseph A. Reeves, Jr.
    
    Chief Executive Officer
    
    
    61
    
    
    
    1990Michael J. Mayell
    
    Director and President
    
    
    60
    
    
    
    1990Lloyd V. DeLano
    
    Senior Vice President and Chief Accounting Officer
    
    
    57
    
    
    
    1993Alan S. Pennington
    
    Vice PresidentBusiness DevelopmentTMRX
    
    
    54
    
    
    
    1999Thomas J. Tourek*
    
    Senior Vice PresidentExplorationTMRX
    
    
    65
    
    
    
    1999A. Dale Breaux
    
    Vice PresidentOperationsTMRX
    
    
    58
    
    
    
    2002Steven G. Ives*
    
    Vice President TMRX
    
    
    46
    
    
    
    2005William Bishop*
    
    Vice PresidentLand and Business DevelopmentTMRX
    
    
    51
    
    
    
    2006
 
 *
    
    Non-executive officer.   4




---



##### Table of Contents



CODES OF ETHICS
  SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
  5




---



##### Table of Contents



6




---



##### Table of Contents



ITEM 11. EXECUTIVE COMPENSATION.
 COMPENSATION DISCUSSION AND ANALYSIS
 Compensation Committee
     Compensation philosophy and objectives
  7




---



##### Table of Contents




    
    the hiring and retention of excellent employees possessing the background and skills
to achieve Company goals;
    
    the alignment of these employees interests with those of the shareholders and the
Company in general; and
    
    the achievement of important Company goals in short-, medium- and long-term.
  
    
    pay should be linked to performance;
    
    employees should have a sense of ownership and a long-term perspective; and
    
    outstanding employee achievement should be recognized.
   
    
    replacement and increase of the Companys total oil and gas reserves;
    
    efficient management of costs of producing oil and gas reserves;
    
    attainment of the highest revenue possible for sales of oil and gas; and
    
    ultimately, increased value of the Company as reflected in the price of our common
stock.
 Compensation studies
  8




---



##### Table of Contents



Review of Compensation of Chief Executive Officer and Chief Operating Officer
       
    
    Their compensation arrangements failed to align their interests with the interests of
the Company and its shareholders;
    
    Their compensation was not meaningfully linked to their performance or the performance
of the Company; and
    
    Their compensation arrangements failed to result in sufficient achievement of the
Companys business goals.
 As a result of this review, the Company renegotiated the employment agreements for
 9




---



##### Table of Contents



these
executive officers and terminated certain other agreements that governed other elements of their
compensation packages. The new employment agreements were effective
April 29, 2008. A description
of the revised compensation arrangement is provided below; see 2008 Compensation for Chief
Executive Officer and Chief Operating Officer.
 Our Compensation Discussion and Analysis addresses both the package received by
these executive officers in 2007, as well as the revised compensation arrangements. Analysis
of the revised compensation arrangements is reflected in the section 2008 Compensation for Chief
Executive Officer and Chief Operating Officer. All other analysis, unless specifically noted,
relates to compensation awarded for 2007 in the context of certain past compensation practices.
 Total compensation; allocation among different elements of compensation
     Compensation components; relation of components to our objectives
 10




---



##### Table of Contents




    
    Salaries and annual cash bonuses;
    
    Profit-sharing incentives based on awards related to the net profits of our wells;
    
    A deferred compensation plan with opportunities to invest in our common stock;
    
    Long-term incentives based on equity awards;
    
    Employment contracts with termination benefits; and
    
    Benefits and limited perquisites.
 Salary.
 Annual Bonus for Chief Executive and Chief Operating Officers
 11




---



##### Table of Contents



Net profits interests
   In April 2008, at the recommendation of the Compensation Committee and with the agreement of
the CEO and COO, the Company terminated the NPI Agreements. See 2008 Compensation for Chief Executive
Officer and Chief Operating Officer below.
 Well bonus plans.
 12




---



##### Table of Contents



th
  Deferred Compensation
   13




---



##### Table of Contents



In April 2008, the Company terminated the DCP. See 2008 Compensation for Chief Executive
Officer and Chief Operating Officer below.
 Equity awards.
   Choice of equity vehicles
 Procedures for granting equity awards
 14




---



##### Table of Contents



Employment contracts and post-termination compensation.
  Benefits
  15




---



##### Table of Contents



Tax and Accounting Considerations
   2008 Compensation for Chief Executive Officer and Chief Operating Officer
  New
employment contracts; termination of other contracts
  16




---



##### Table of Contents




    
    Salary and guaranteed bonus, which together previously totaled $1,305,059, have been
reduced to $600,000 in salary. No annual bonus is payable under the new employment
agreements.
    
    The termination date of the new employment agreements is
December 29, 2008, at which time Mr. Reeves will cease to
serve as our CEO
and Mr. Mayell will cease to serve as our President and COO. The
previous agreements terminated August 17, 2010 and carried a provision under which the
term was automatically refreshed for an additional three years at each anniversary
date; thus, the old contracts carried a perpetual two to three year term;
    
    Termination benefits under the old agreements were significant, and have been
reduced and simplified under the new contracts; under the old employment agreements,
described in detail below (see Compensation Tables and Additional Information,
Potential Payments upon Termination or Change-of-Control), these officers would
receive various benefits upon termination:
 
    
    Upon termination by the Company for reasons other than death or good cause,
the contract would pay out salary to its termination (which, depending on the
date of termination in relation to the anniversary date of the contract, could
be a minimum of two years and a maximum of three years), plus one full annual
bonus based on the most recent one, plus a payment of two times the sum of
salary plus most recent annual bonus, plus continuation of benefits for the
remainder of the contract term; in addition, if the termination followed a
change of control, a tax gross up payment would be made;
    
    Under the new agreements, termination benefits are generally limited to
payout of salary and continuation of benefits to termination of contract
(which, depending on the date of termination of the contract, could be a
minimum of zero and a maximum of eight months).
  Agreements to terminate prior compensation arrangements
  
    
    $1,324,884, which is his current annual base salary under the prior employment
agreement for the remainder of the employment period under the prior employment
agreement;
 17




---



##### Table of Contents




    
    $782,711, which is an amount equal to the last annual bonus paid to him;
    
    $2,702,415, which is the product of two times the sum of the current annual base
salary plus the recent bonus referred to above; and
    
    $25,000, which is a lump sum retirement benefit equal to the difference between (i)
the actuarial equivalent to the benefit under any retirement plan (as defined in the
prior employment agreement) he would receive if he remained employed by the Company at
the current annual base salary plus the recent bonus for the remainder of the
employment period under the prior employment Agreement and (ii) actuarial equivalent of
his benefit, if any, under any retirement plan.
    
    
    $1,311,765, which is his current annual base salary under the prior employment
agreement for the remainder of the employment period under the prior employment
agreement;
    
    $782,711, which is an amount equal to the last annual bonus paid to him;
    
    $2,702,415, which is the product of two times the sum of the current annual base
salary plus the recent bonus referred to above; and
    
    $25,000, which is a lump sum retirement benefit equal to the difference between (i)
the actuarial equivalent to the benefit under any retirement plan (as defined in the
prior employment agreement) he would receive if he remained employed by the Company at
the current annual base salary plus the recent bonus for the remainder of the
employment period under the prior employment Agreement and (ii) actuarial equivalent of
his benefit, if any, under any retirement plan.
   18




---



##### Table of Contents




    
    The reduction in the estimated net present value of cash obligations, including
salary, guaranteed bonus, and termination benefits, under the old and new employment
contracts;
    
    The potential value of net profits interests to be awarded under the NPI Agreements,
which, had they not been terminated, would have continued to be awarded so long as
these executives remained employed by the Company;
    
    The loss of opportunity to defer taxation on a portion of salary and bonus, as well
as the opportunity to receive Company matching rights to future shares, prompted by the
termination of the DCP; and
    
    The work and dedication of these two executives over the past 20 years of their
service to the Company and its predecessor.
 Discussion and analysis of new compensation structure.
 Revisions
and discontinuations
  
    
    Cash bonus amounts were guaranteed and unrelated to performance, rather than
at-risk;
 19




---



##### Table of Contents




    
    The automatic renewal of employment contracts for three years at every anniversary
date excessively limited the flexibility to the Company to make a change to management
if it so desired;
    
    The Compensation Committee felt that overall, the contracts provided for potential
termination payments which were out of scale with the size of the Company and the
executives performance; and
    
    Termination provisions did not consider the substantial accumulation of net profits
interests, equity and cash awards provided to these executives over their long service
to the Company, which could be expected to substantially reduce any financial shock of
termination.
  
    
    The NPI interest conveyances had become ineffective at aligning management and
shareholder interests because they take into account neither capital costs nor
commodity hedging contracts, both of which can significantly impact income and
shareholder value;
    
    The NPI awards did not serve to link the executives compensation to his
performance;
    
    Because payouts under prior NPI awards continue irrespective of whether or not the
executive remains employed by the Company, the NPI awards were ineffective as a
retention device; and
    
    The conveyances create a permanent encumbrance on Company properties, which impacts
their value should we desire to market or exchange them.
   COMPENSATION COMMITTEE REPORT
  
 20




---



##### Table of Contents



COMPENSATION TABLES AND ADDITIONAL INFORMATION
  Summary Compensation Table
 Change inPensionValue andNonqualified
    
    AllNon-Equity
    
    Deferred
    
    OtherStock
    
    Option
    
    Incentive Plan
    
    Compensation
    
    Compen-Name and Principal
    
    
    
    
    
    Salary
    
    Bonus
    
    Awards
    
    Awards
    
    Compensation
    
    Earnings
    
    sation
    
    TotalPosition
    
    Year
    
    ($)
    
    ($)
    
    ($)
    
    ($)
    
    ($)
    
    ($)
    
    ($)
    
    ($)Joseph A. Reeves Jr. CEO & Chairman of the
Board of Directors
    
    
    2007
    
    
    
    545,059
    (1)
    
    
    782,711
    (2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    492,679
    (3)
    
    
    1,820,4492006
    
    
    
    521,587
    (1)
    
    
    781,733
    (2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    551,924
    (4)
    
    
    1,855,244Michael J. Mayell COO & President
    
    
    2007
    
    
    
    545,059
    (1)
    
    
    782,711
    (2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    492,679
    (3)
    
    
    1,820,4492006
    
    
    
    521,587
    (1)
    
    
    781,733
    (2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    551,924
    (4)
    
    
    1,855,244Lloyd V. DeLano CAO & Sr. Vice President
    
    
    2007
    
    
    
    244,422
    
    
    
    451,019
    (5)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,625
    (6)
    
    
    710,0662006
    
    
    
    211,021
    
    
    
    759,890
    (5)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,359
    (6)
    
    
    985,270Alan S. Pennington VP Business Development
    
    
    2007
    
    
    
    232,003
    
    
    
    450,394
    (7)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,625
    (6)
    
    
    697,0222006
    
    
    
    217,233
    
    
    
    759,567
    (7)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,300
    (6)
    
    
    991,100A. Dale Breaux, VP Operations
    
    
    2007
    
    
    
    219,000
    
    
    
    261,627
    (8)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,625
    (6)
    
    
    495,252Thomas J. Tourek Former VP
Exploration(9)
    
    
    2007
    
    
    
    382,500
    
    
    
    285,402
    (10)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    667,9022006
    
    
    
    322,598
    
    
    
    447,741
    (10)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    770,339
 
 1.
    
    Salary for Messrs. Reeves and Mayell includes $400,000 each, which they each elected to
contribute to the DCP in each of 2006 and 2007. See also Narrative to Summary
Compensation Table  Deferred Compensation Plan below and footnotes (3) and (4) to this
table below.2.
    
    Bonus amounts for Messrs. Reeves and Mayell include $760,000 each in bonus payments
required to be paid by the Company under their employment agreements, in each of 2006 21




---



##### Table of Contents



and 2007. For a description of these contracts, see Potential Payments Upon Termination or
Change-in-Control below. The totals also include $22,710 paid to each
of Messrs. Reeves and Mayell under our Christmas bonus program in 2007, and $21,733 paid to
each in 2006 under the same program.3.
    
    Includes $400,000 in Company matching contributions of notional stock to each of
Messrs. Reeves and Mayells deferred compensation accounts, $14,625 in Company matching
contributions of stock to each of their 401(k) savings account, and $78,054 which
represents the appraised value of net profits interest assignments made to each of them
during 2007. For further information, see Narrative to Summary Compensation Table  Net
Profits Interests. The appraisals are provided by a third party, and are based on the
value of the net profits interest at the date of the assignment.4.
    
    Includes $400,000 in Company matching contributions of notional stock to each of
Messrs. Reeves and Mayells deferred compensation accounts, $14,300 in Company matching
contributions of stock to each of their 401(k) savings accounts, and $137,624 which
represents the appraised value of net profits interest assignments made to each of them
during 2006.5.
    
    Includes $440,602 and $750,515 for bonus paid to Mr. DeLano under the Management Plan
in 2007 and 2006, respectively. Also includes $10,417 and $9,375 bonus paid under our
Christmas bonus plan in 2007 and 2006, respectively.6.
    
    Represents Company matching contributions of stock to the named executive officers
401(k) savings account.7.
    
    Includes $440,602 and $750,515 for bonus paid to Mr. Pennington under the Management
Plan in 2007 and 2006, respectively. Also includes $9,792 and $9,052 bonus paid under our
Christmas bonus plan in 2007 and 2006, respectively.8.
    
    Includes $252,253 for bonus paid to Mr. Breaux under the Management Plan and $9,375
bonus paid under our Christmas plan.9.
    
    Mr. Tourek is no longer serving as Vice President of Exploration, although he continues
his work with the Company in a non-executive capacity.10.
    
    Includes $275,402 and $437,741 for bonus paid to Mr. Tourek under the Management Plan
in 2007 and 2006, respectively. Also includes $10,000 bonus paid under our Christmas bonus
plan in each of 2007 and 2006. Grants of Plan-Based Awards
  Narrative to Summary Compensation Table
 Employment Agreements
  22




---



##### Table of Contents



Net Profits Interests
  In April 2008, the Company terminated the NPI Agreements. See 2008 Compensation for Chief
Executive Officer and Chief Operating Officer above.
    23




---



##### Table of Contents



Well Bonus Plans
  th
   Deferred Compensation Plan
  24




---



##### Table of Contents



Long-Term Incentive Plans
  25




---



##### Table of Contents



Outstanding Equity Awards at Year End


Option Awards
    
    Stock AwardsEquityIncentiveEquity
    
    PlanIncentive
    
    Awards:Plan
    
    Market orAwards:
    
    PayoutEquity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Number of
    
    Value ofIncentive
    
    
    
    
    
    
    
    
    
    
    
    
    
    Market
    
    Unearned
    
    UnearnedPlan
    
    
    
    
    
    
    
    
    
    Number of
    
    Value of
    
    Shares,
    
    Shares,Number
    
    Number of
    
    Awards:
    
    
    
    
    
    
    
    
    
    Shares or
    
    Shares or
    
    Units or
    
    Unitsof
    
    Securities
    
    Number of
    
    
    
    
    
    
    
    
    
    Units of
    
    Units of
    
    Other
    
    or OtherSecurities
    
    Underlying
    
    Securities
    
    
    
    
    
    
    
    
    
    Stock
    
    Stock
    
    Rights
    
    RightsUnderlying
    
    Unexercised
    
    Underlying
    
    
    
    
    
    
    
    
    
    That
    
    That
    
    That
    
    ThatUnexercised
    
    Options
    
    Unexercised
    
    Option
    
    
    
    
    
    Have
    
    Have
    
    Have
    
    HaveOptions
    
    (#)
    
    Unearned
    
    Exercise
    
    Option
    
    Not
    
    Not
    
    Not
    
    Not(#)
    
    Unexercisable
    
    Options
    
    Price
    
    Expiration
    
    Vested
    
    Vested
    
    Vested
    
    VestedName
    
    Exercisable
    
    (1)
    
    (#)
    
    ($)
    
    Date
    
    (#)
    
    ($)
    
    (#)
    
    ($)Joseph A. Reeves,
Jr.
    
    
    1,500,000
    
    
    
    
    
    
    
    
    
    
    
    3.375
    
    
    
    8/26/2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Michael J. Mayell
    
    
    1,500,000
    
    
    
    
    
    
    
    
    
    
    
    3.375
    
    
    
    8/26/2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Lloyd V. DeLano
    
    
    25,000
    
    
    
    
    
    
    
    
    
    
    
    3.375
    
    
    
    8/26/2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Alan S. Pennington
    
    
    5,000
    
    
    
    
    
    
    
    
    
    
    
    3.375
    
    
    
    8/26/2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    A. Dale Breaux
    
    
    15,000
    
    
    
    
    
    
    
    
    
    
    
    3.000
    
    
    
    7/24/2012
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    


1.
    
    Excludes (i) the warrants (the General Partner Warrants) granted to each of Messrs.
Reeves and Mayell in October 1990 in connection with the Companys formation and (ii)
warrants (Executive Officer Warrants) issued in prior years to Messrs. Reeves and Mayell
in connection with the surrender of certain Class B Warrants to the Company. The value
of these warrants at December 31, 2007, based on the difference between the market price of
the Common Stock at December 31, 2007 and the exercise price of the respective warrants,
was $1,542,393 for each of Messrs. Reeves and Mayell, and the total number of warrants
outstanding was 1,618,258 for each of Messrs. Reeves and Mayell. For further information
on the warrants, please see Note 10 to the financial statements included in our Form 10-K
for the year ended December 31, 2007.




Option Exercises and Stock Vested




Pension Benefits




26



---



##### Table of Contents



Nonqualified Deferred Compensation
  In April 2008, the Company terminated the DCP. See 2008 Compensation for Chief Executive
Officer and Chief Operating Officer above.
 AggregateExecutive
    
    Company
    
    Earnings/
    
    Aggregate
    
    AggregateContributions
    
    Contributions
    
    (Losses) in
    
    Withdrawals/
    
    Balancein 2007(1)
    
    in 2007(2)
    
    2007(3)
    
    Distributions
    
    at 12/31/07(4)Name
    
    ($)
    
    ($)
    
    ($)
    
    ($)
    
    ($)Joseph A. Reeves, Jr.
    
    
    400,000
    
    
    
    400,000
    
    
    
    (2,777,504
    )
    
    
    
    
    
    
    3,939,241Michael J. Mayell
    
    
    400,000
    
    
    
    400,000
    
    
    
    (2,535,046
    )
    
    
    
    
    
    
    3,596,390
 
 1.
    
    Amounts in this column reflect 2007 deferrals of salary, which are included in totals
reported in the Salary column of the Summary Compensation Table. Messrs. Reeves and
Mayell were each credited a total of 130,786 notional shares for these 2007 salary
deferrals.2.
    
    Company contributions reflect 2007 Company matching contributions to the salary
deferrals made in 2007. These amounts are included in the totals reported on the Summary
Compensation Table in the All Other Compensation column. The matching contributions
resulted in a total of 130,786 notional shares credited to the account of each Messrs.
Reeves and Mayell.3.
    
    Aggregate earnings (losses) reflect the change in the value of the participants
deferred compensation account which is not related to deferrals or matching contributions
in 2007, and is solely the result of movements in the price of our common stock.4.
    
    The aggregate balance at December 31, 2007 reflects the total notional shares credited
to the participants deferred compensation account since his participation began in 1996,
valued at the closing price of our common stock on December 31, 2007, the last trading day
of the year, which was $1.81. The total number of notional shares in Messrs. Reeves and
Mayells accounts at December 31, 2007 was 2,176,376 and 1,986,956, respectively. Of these
totals, 53,868 notional shares, valued at $97,501 are unvested for each Messrs. Reeves and
Mayell. These notional shares are the result of the 2007 Company matching contribution, which, under the terms of the DCP, vest evenly over the
twelve month period after the matching contribution is made. In years prior to 2006, 27




---



##### Table of Contents



contributed amounts, inclusive of both the participants deferred compensation and the
Company matching contribution, were reported on the Summary Compensation Table under the
heading Long-Term Compensation / Restricted Stock Award. For 2006 and 2007, the
participants deferred compensation is reported on the Summary Compensation Table in the
Salary column, and the Company matching contribution is reported in the All Other
Compensation column.
 Potential Payments Upon Termination or Change-in-Control
 Employment Agreement with Joseph A. Reeves, Jr., Deferred Compensation Plan, and NPI Agreement
   (a)
    
    we would pay his estate all base salary payments and accrued vacation pay then
due him under the new employment agreement through the date of termination, which is
December 29, 2008;
 (b)
    
    for the remainder of the term of the employment agreement and until October 31,
2010, we would continue Mr. Reeves and his familys benefits under our benefit plans
and other fringe benefits he may have been receiving at the time of termination.
  
    
    a change in the nature or scope of his duties or responsibilities;
 
    
    any failure by us to pay any form of compensation stated in his employment
agreement;
 
    
    requiring him to be based at any office or location 30 miles or more from our
current location in Houston, Texas, other than travel reasonably required in the
performance of his responsibilities;
 
    
    any purported termination by us of his employment other than due to death or for
good cause; or
 
    
    any failure by us to require our successor to assume the terms of his employment
agreement.
  (a)
    
    we would pay his estate all salary and accrued vacation payments then due him
under his new employment agreement through the date of termination and for the
 28




---



##### Table of Contents



remainder of the employment period;
 (b)
    
    for the remainder of the employment period and until October 31, 2010, his
family would continue to receive benefits provided by the Company at least equal to
those that would have been provided if his employment had not been terminated.
  
    
    his conviction for a felony that is no longer subject to direct appeal;
 
    
    he is adjudicated to be mentally incompetent so as to affect his ability to serve us
and such adjudication is no longer subject to direct appeal; or
 
    
    he has been found guilty of fraud or willful misconduct so as to materially damage
us and such finding is no longer subject to direct appeal.
 The following discussion relates to Mr. Reeves agreements that were in effect during 2007 and
reflects payments that would have been made under those agreements in the circumstances described.
Those agreements were terminated in April 2008. For more information on agreements entered into in
2008, see 2008 Compensation for Chief Executive Officer and Chief Operating Officer above.
    29




---



##### Table of Contents



Termination of Employment for Death
  (a)
    
    we would pay his estate all payments then due him under his employment
agreement through the date of termination;
 (b)
    
    we would pay his estate under his employment agreement a prorated annual bonus
based on the bonus paid in the prior year;
 (c)
    
    we would distribute to his estate, in shares of our common stock, any
compensation he previously deferred, and all matching amounts accrued under the DCP,
regardless of vesting status on the date of death;
 (d)
    
    his family would continue to receive benefits provided by the Company to
surviving families of key employees; and
 (e)
    
    we would continue to convey to his estate a 2% net profits interest in
properties existing at date of termination, depending on the activities of the Company
with regard to each of those properties on an individual basis.
  Termination of Employment for Good Cause
  (a)
    
    we would pay him all payments then due him under his employment agreement
through the date of termination;
 (b)
    
    we would pay him under his prior employment agreement a prorated annual bonus
based on the bonus paid in the prior year;
 (c)
    
    we would distribute to him, in shares of our common stock, any compensation he
previously deferred under the DCP, and he will forfeit all notional shares credited to
his deferred compensation account as Company matching grants, regardless of their
vesting status on the date of termination; and
 30




---



##### Table of Contents



(d)
    
    we would continue to convey to him a 2% net profits interest in properties
existing at date of termination, depending on the activities of the Company with regard
to each of those properties on an individual basis.
   
    
    his conviction for a felony that is no longer subject to direct appeal;
 
    
    he is adjudicated to be mentally incompetent so as to affect his ability to serve us
and such adjudication is no longer subject to direct appeal; or
 
    
    he has been found guilty of fraud or willful misconduct so as to materially damage
us and such finding is no longer subject to direct appeal.
  Termination of Employment by Mr. Reeves for Good Reason, or by us for other than death or Good
Cause
  (a)
    
    we would pay him his current base salary for the remainder of the employment
period under the employment agreement;
 (b)
    
    we would pay him under his employment agreement an amount equal to the last
annual bonus paid to him;
 (c)
    
    we would pay him under his employment agreement two times the sum of his annual
base salary and last annual bonus;
 (d)
    
    we would distribute to him, in shares of our common stock, all compensation
previously deferred under the DCP, including all vested Company matching shares, but
not unvested shares;
 (e)
    
    we would pay him under his employment agreement a lump-sum retirement benefit
equal to the actuarial equivalent of the benefits lost by virtue of the early
 31




---



##### Table of Contents



termination of his employment;
 (f)
    
    for the remainder of the term of the employment agreement, we would continue
Mr. Reeves and his familys benefits under our benefit plans and other fringe benefits
he may have been receiving at the time of termination; and
 (g)
    
    we would continue to convey to him a 2% net profits interest in properties
existing at date of termination, depending on the activities of the Company with regard
to each of those properties on an individual basis.
     
    
    a change in the nature or scope of his duties or responsibilities;
 
    
    any failure by us to pay any form of compensation stated in his employment
agreement;
 
    
    requiring him to be based at any office or location 30 miles or more from our
current location in Houston, Texas, other than travel reasonably required in the
performance of his responsibilities;
 
    
    any purported termination by us of his employment other than due to death or for
Good Cause; or
 
    
    any failure by us to require our successor to assume the terms of his employment
agreement.
 32




---



##### Table of Contents



Employment Agreement with Michael J. Mayell, Deferred Compensation Plan and NPI Agreement
   (a)
    
    we would pay his estate all base salary payments and accrued vacation pay then
due him under the new employment agreement through the date of termination, which is
December 29, 2008;(b)
    
    for the remainder of the term of the employment agreement and until October 31,
2010, we would continue Mr. Mayells and his familys benefits under our benefit plans
and other fringe benefits he may have been receiving at the time of termination.
  
    
    a change in the nature or scope of his duties or responsibilities;
    
    any failure by us to pay any form of compensation stated in his employment
agreement;
    
    requiring him to be based at any office or location 30 miles or more from our
current location in Houston, Texas, other than travel reasonably required in the
performance of his responsibilities;
    
    any purported termination by us of his employment other than due to death or for
good cause; or
    
    any failure by us to require our successor to assume the terms of his employment
agreement.
  (a)
    
    we would pay his estate all salary and accrued vacation payments then due him
under his new employment agreement through the date of termination and for the
remainder of the employment period;
 33




---



##### Table of Contents



(b)
    
    for the remainder of the employment period and until October 31, 2010, his
family would continue to receive benefits provided by the Company at least equal to
those that would have been provided if his employment had not been terminated.
  
    
    his conviction for a felony that is no longer subject to direct appeal;
    
    he is adjudicated to be mentally incompetent so as to affect his ability to serve us
and such adjudication is no longer subject to direct appeal; or
    
    he has been found guilty of fraud or willful misconduct so as to materially damage
us and such finding is no longer subject to direct appeal.
 The following discussion relates to Mr. Mayells agreements that were in effect during 2007
and reflects payments that would have been made under those agreements in the circumstances
described. Those agreements were terminated in April 2008. For more information on agreements
entered into in 2008, see 2008 Compensation for Chief Executive Officer and Chief Operating
Officer above.
    34




---



##### Table of Contents



Termination of Employment for Death
  (a)
    
    we would pay his estate all payments then due him under his employment
agreement through the date of termination;(b)
    
    we would pay his estate under his employment agreement a prorated annual bonus
based on the bonus paid in the prior year;(c)
    
    we would distribute to his estate, in shares of our common stock, any
compensation he previously deferred, and all matching amounts accrued under the DCP,
regardless of vesting status on the date of death;(d)
    
    his family would continue to receive benefits provided by the Company to
surviving families of key employees; and(e)
    
    we would continue to convey to his estate a 2% net profits interest in
properties existing at date of termination, depending on the activities of the Company
with regard to each of those properties on an individual basis.
  Termination of Employment for Good Cause
  (a)
    
    we would pay him all payments then due him under his prior employment agreement
through the date of termination;(b)
    
    we would pay him under his prior employment agreement a prorated annual bonus
based on the bonus paid in the prior year;(c)
    
    we would distribute to him, in shares of our common stock, any compensation he
previously deferred under the DCP, and he would forfeit all notional shares credited to
his deferred compensation account as Company matching grants, regardless of their
vesting status on the date of termination; and(d)
    
    we would continue to convey to him a 2% net profits interest in properties
existing at date of termination, depending on the activities of the Company with
 35




---



##### Table of Contents



regard to each of those properties on an individual basis.
   
    
    his conviction for a felony that is no longer subject to direct appeal;
    
    he is adjudicated to be mentally incompetent so as to affect his ability to serve us
and such adjudication is no longer subject to direct appeal; or
    
    he has been found guilty of fraud or willful misconduct so as to materially damage
us and such finding is no longer subject to direct appeal.
  Termination of Employment by Mr. Mayell for Good Reason, or by us for other than death or Good
Cause
  (a)
    
    we would pay him his current base salary for the remainder of the employment
period under the Employment Agreement;(b)
    
    we would pay him an amount equal to the last annual bonus paid to him;(c)
    
    we would pay him two times the sum of his annual base salary and last annual
bonus;(d)
    
    we would distribute to him, in shares of our common stock, all compensation
previously deferred, including all vested Company matching shares, but not unvested
shares;(e)
    
    we would pay him a lump-sum retirement benefit equal to the actuarial
equivalent of the benefits lost by virtue of the early termination of his employment;(f)
    
    for the remainder of the term of the employment agreement, we would continue
Mr. Mayells and his familys benefits under our benefit plans and other fringe
 36




---



##### Table of Contents



benefits he may have been receiving at the time of termination; and
 (g)
    
    we would continue to convey to him a 2% net profits interest in properties
existing at date of termination, depending on the activities of the Company with regard
to each of those properties on an individual basis.
     
    
    a change in the nature or scope of his duties or responsibilities;
    
    any failure by us to pay any form of compensation stated in his employment
agreement;
    
    requiring him to be based at any office or location 30 miles or more from our
current location in Houston, Texas, other than travel reasonably required in the
performance of his responsibilities;
    
    any purported termination by us of his employment other than due to death or for
Good Cause; or
    
    any failure by us to require our successor to assume the terms of his employment
agreement.
 Change of Control
  37




---



##### Table of Contents



Employment Agreement with Lloyd V. DeLano
  Termination of Employment Due to Death, Disability or for Cause
  Termination of Employment Without Cause
   Termination of Employment for Good Reason
   Voluntary Termination by Mr.DeLano
  38




---



##### Table of Contents



Termination of Employment after a Change of Control
   
    
    acquisition by any person of more than 50% of our common stock;
    
    certain changes in the composition of the individuals constituting a majority of the
members of the Board of Directors, except for changes approved by the existing Board;
    
    a merger or other transaction, unless at least 50% of the voting power of the
surviving entity is held by at least 50% of the holders of our voting securities
immediately prior to the transaction; or
    
    a sale of more than 50% of our assets.
  
    
    our failure to pay Mr. DeLano in accordance with his employment agreement;
    
    our failure to comply with any material provision of his employment agreement; or
    
    cancellation of the Management Well Bonus Plan or Mr. DeLanos participation in that
plan.
  
    
    his conviction of a felony;
    
    his failure or refusal to comply with our policies;
    
    his engaging in conduct amounting to fraud, dishonesty, gross negligence, willful
misconduct or conduct that is unprofessional, unethical or detrimental to our
reputation; or
    
    his failure to perform his duties under his employment agreement.
 Participation by Mr. DeLano in the Management Well Bonus Plan
  39




---



##### Table of Contents



Employment Agreement with Alan S. Pennington
  Termination of Employment Due to Death, Disability or for Cause
  Termination of Employment Without Cause
   Termination of Employment for Good Reason
   Voluntary Termination by Mr. Pennington
  40




---



##### Table of Contents



Termination of Employment after a Change of Control
   
    
    acquisition by any person of more than 50% of our common stock;
    
    certain changes in the composition of the individuals constituting a majority of the
members of the Board of Directors, except for changes approved by the existing Board;
    
    a merger or other transaction, unless at least 50% of the voting power of the
surviving entity is held by at least 50% of the holders of our voting securities
immediately prior to the transaction; or
    
    a sale of more than 50% of our assets.
  
    
    our failure to pay Mr. Pennington in accordance with his employment agreement;
    
    our failure to comply with any material provision of his employment agreement; or
    
    cancellation of the Geoscientist Well Bonus Plan or Mr. Penningtons participation
in that plan.
  
    
    his conviction of a felony;
    
    his failure or refusal to comply with our policies;
    
    his engaging in conduct amounting to fraud, dishonesty, gross negligence, willful
misconduct or conduct that is unprofessional, unethical or detrimental to our
reputation; or
    
    his failure to perform his duties under his employment agreement.
 Participation by Mr. Pennington in the Management Well Bonus Plan
  41




---



##### Table of Contents



Employment Agreement with A. Dale Breaux
  Termination of Employment Due to Death, Disability or for Cause
  Termination of Employment Without Cause
   Termination of Employment for Good Reason
   Voluntary Termination by Mr. Breaux
  42




---



##### Table of Contents



Termination of Employment after a Change of Control
   
    
    acquisition by any person of more than 50% of our common stock;
    
    certain changes in the composition of the individuals constituting a majority of the
members of the Board of Directors, except for changes approved by the existing Board;
    
    a merger or other transaction, unless at least 50% of the voting power of the
surviving entity is held by at least 50% of the holders of our voting securities
immediately prior to the transaction; or
    
    a sale of more than 50% of our assets.
  
    
    our failure to pay Mr. Breaux in accordance with his employment agreement;
    
    our failure to comply with any material provision of his employment agreement; or
  
    
    his conviction of a felony;
    
    his failure or refusal to comply with our policies;
    
    his engaging in conduct amounting to fraud, dishonesty, gross negligence, willful
misconduct or conduct that is unprofessional, unethical or detrimental to our
reputation; or
    
    his failure to perform his duties under his employment agreement.
 Participation by Mr. Breaux in the Management Well Bonus Plan
  43




---



##### Table of Contents



Arrangement with Thomas J. Tourek
   44




---



##### Table of Contents



DIRECTOR COMPENSATION
  Change inPensionValue andFees Earned or
    
    
    
    
    
    
    
    
    
    Non-Equity
    
    NonqualifiedPaid in
    
    Stock
    
    Option
    
    Incentive Plan
    
    Deferred
    
    All OtherCash
    
    Awards
    
    Awards(8)
    
    Compensation(8)
    
    Compensation
    
    Compensation
    
    TotalName
    
    ($)
    
    ($)
    
    ($)
    
    ($)
    
    Earnings
    
    ($)
    
    ($)E. L. Henry(1)
    
    
    46,500
    
    
    
    
    
    
    
    28,867
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    75,367Joe Kares(2)
    
    
    42,500
    
    
    
    
    
    
    
    28,867
    
    
    
    
    
    
    
    
    
    
    
    505,664
    (9)(10)
    
    
    577,031Gary A. Messersmith(3)
    
    
    41,000
    
    
    
    
    
    
    
    28,867
    
    
    
    
    
    
    
    
    
    
    
    613,181
    (11)(12)
    
    
    502,225C. Mark Pearson(4)
    
    
    48,000
    
    
    
    
    
    
    
    13,731
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    61,731John B. Simmons(5)
    
    
    60,000
    
    
    
    
    
    
    
    53,129
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    113,129David W. Tauber(6)
    
    
    59,500
    
    
    
    
    
    
    
    36,579
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    96,079Fenner R. Weller(7)
    
    
    59,000
    
    
    
    
    
    
    
    63,129
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    122,129
 
 1.
    
    Mr. Henry is a Member of the Board Affairs Committee and is Chairman of the
Compensation Committee. On June 21, 2007, he was granted 15,000 options to purchase common
stock with a grant date fair value of $17,100. He holds options to purchase 30,000 shares
of our common stock.2.
    
    On June 21, 2007, Mr. Kares was granted 15,000 options to purchase common stock with a
grant date fair value of $17,100. He holds options to purchase 30,000 shares of our common
stock.3.
    
    On June 21, 2007, Mr. Messersmith was granted 15,000 options to purchase common stock
with a grant date fair value of $17,100. He holds options to purchase 30,000 shares of our
common stock.4.
    
    Dr. Pearson is a Member of the Board Affairs Committee and the Compensation Committee.
On June 21, 2007, he was granted 15,000 options to purchase common stock with a grant date
fair value of $17,100. Dr. Pearson holds options to purchase 30,000 shares of our common
stock.5.
    
    Mr. Simmons is Chairman of the Audit Committee. He holds options to purchase 45,000
shares of our common stock. 45




---



##### Table of Contents



6.
    
    Mr. Tauber is a Member of the Audit Committee and the Board Affairs Committee. Mr.
Tauber holds options to purchase 45,000 shares of our common stock.7.
    
    Mr. Weller is a Member of the Audit Committee and the Compensation Committee. Mr.
Weller holds options to purchase 45,000 shares of our common stock.8.
    
    Option awards are stated as the amount included in 2007 share-based compensation
expense for the option awards granted to each named director through the end of fiscal year
2007, including amounts attributable to grants in prior years. See Footnote 1 to the
Consolidated Financial Statements included in our 2007 Annual Report on Form 10-K for
assumptions used in valuing these awards, and the methodology for recognizing the related
expense. The expense has been modified in accordance with disclosure rules for this Item
402 of Regulation S-K, to eliminate forfeiture assumptions in computing the expense for the
year. There were no actual forfeitures during 2007 by any of the named directors. All
options are options to purchase our common stock.9.
    
    Includes $274,626 paid to Mr. Kares as a bonus under the Management Well Bonus Plan.
See Narrative to Summary Compensation Table  Well Bonus Plans for further information.
Mr. Kares participation in the plan is 1/4th of 1%.10.
    
    Includes $231,038 in fees paid to Kares & Cihlar, an accounting firm of which Mr. Kares
is a partner. The fees were for accounting services.11.
    
    Includes $440,602 paid to Mr. Messersmith as a bonus under the Management Well Bonus
Plan. See Narrative to Summary Compensation Table  Well Bonus Plans for further
information. Mr. Messersmith participation in the plan is 1/4th of 1%.12.
    
    Includes a $100,000 payment to Gary A. Messersmith, PC, for corporate management of
legal affairs of the Company and representation under a month to month arrangement with the
Company. Under the terms of the agreement, Mr. Messersmith is paid $8,333 per month. Also
includes $72,579 in fees paid to Looper, Reed & McGraw, a law firm of which Mr. Messersmith
is a member.   46




---



##### Table of Contents



COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
  47




---



##### Table of Contents



ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS.
 STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
  Number of SharesName
    
    Beneficially Owned (1)
    
    PercentJoseph A. Reeves, Jr. (2)
    
    
    5,825,549
    
    
    
    6.15
    %Michael J. Mayell (3)
    
    
    5,512,893
    
    
    
    5.83
    %Lloyd V. DeLano (4)
    
    
    90,554
    
    
    
    *Alan S. Pennington (5)
    
    
    45,293
    
    
    
    *Allen D. Breaux (6)
    
    
    51,493
    
    
    
    *E. L. Henry (7)
    
    
    31,750
    
    
    
    *Joe E. Kares (8)
    
    
    18,750
    
    
    
    *Gary A. Messersmith (9)
    
    
    32,222
    
    
    
    *C. Mark Pearson (10)
    
    
    7,500
    
    
    
    *David W. Tauber (11)
    
    
    43,790
    
    
    
    *John B. Simmons (12)
    
    
    37,500
    
    
    
    *Fenner R. Weller, Jr. (13)
    
    
    97,500
    
    
    
    *G.M. Byrd Larberg
    
    
    11,000
    
    
    
    *Paul Ching
    
    
    -0-All executive officers and
directors as a group (14
persons) (2), (3), (4), (5),
(6), (7), (8), (9), (10), (11),
(12), (13), (14) and (15)
    
    
    11,805,794
    
    
    
    13.21
    %
 
 *
    
    Less than one percent.1.
    
    Shares of Common Stock which are not outstanding but which can be acquired by a
person upon exercise of an option or warrant within sixty days are deemed outstanding
for the purpose of computing the percentage of outstanding shares beneficially owned by
such person. Each such person has sole voting and dispositive power for its shares of
Common Stock, unless otherwise noted.2.
    
    Includes 904,987 shares, 714,000 shares and 1,500,000 shares of Common Stock
that Mr. Reeves has the right to acquire upon the exercise of the General Partner
Warrant, Executive Warrants, and stock options under the Companys stock option plans,
respectively. Also includes 2,250,423 shares 48




---



##### Table of Contents



underlying deferred compensation
arrangements. Mr. Reeves business address is 1401 Enclave Parkway, Suite 300,
Houston, Texas 77077.3.
    
    Includes 904,987 shares, 714,000 shares and 1,500,000 shares of Common Stock
that Mr. Mayell has the right to acquire upon the exercise of the General Partner
Warrant, Executive Warrants, and stock options under the Companys stock option plans,
respectively. Also includes 2,061,003 shares underlying deferred compensation
arrangements. Mr. Mayells business address is 1401 Enclave Parkway, Suite 300,
Houston, Texas 77077.4.
    
    Includes 25,000 shares of Common Stock that Mr. DeLano has the right to acquire
upon the exercise of stock options.5.
    
    Includes 5,000 shares of Common Stock that Mr. Pennington has the right to
acquire upon the exercise of stock options.6.
    
    Includes 15,000 shares of Common Stock that Mr. Breaux has the right to acquire
upon the exercise of stock options.7.
    
    Includes 18,750 shares of Common Stock that Mr. Henry has the right to acquire
upon the exercise of stock options. Excludes 11,250 shares of Common Stock that are not
exercisable within 60 days.8.
    
    Includes 18,750 shares of Common Stock that Mr. Kares has the right to acquire
upon the exercise of stock options. Excludes 11,250 shares of Common Stock that are not
exercisable within 60 days.9.
    
    Includes 18,750 shares of Common Stock that Mr. Messersmith has the right to
acquire upon the exercise of stock options. Excludes 11,250 shares of Common Stock that
are not exercisable within 60 days.10.
    
    Includes 7,500 shares of Common Stock that Mr. Pearson has the right to acquire
upon the exercise of stock options. Excludes 22,500 shares of Common Stock that are not
exercisable within 60 days.11.
    
    Includes 37,500 shares of Common Stock that Mr. Tauber has the right to acquire
upon the exercise of stock options. Excludes 7,500 shares underlying options that are
not exercisable within 60 days.12.
    
    Includes 37,500 shares of Common Stock that Mr. Simmons has the right to
acquire upon the exercise of stock options. Excludes 7,500 shares underlying options
that are not exercisable within 60 days.13.
    
    Includes 45,000 shares of Common Stock that Mr. Weller has the right to acquire
upon the exercise of stock options.14.
    
    Excludes 15,000 shares of Common Stock underlying options owned by Mr. Larberg
that are not exercisable within 60 days.15.
    
    Excludes 15,000 shares of Common Stock underlying options owned by Mr. Ching
that are not exercisable within 60 days. 49




---



##### Table of Contents



STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
  Number ofSharesBeneficiallyName and Address of Beneficial Owner
    
    Owned
    
    PercentDonald Smith & Co. (1)
    
    
    8,934,789
    
    
    
    10.0
    %152 West 57th StreetNew York, NY 10019Dimensional Fund Advisors Inc. (2)
    
    
    7,319,360
    
    
    
    8.19
    %1299 Ocean Avenue, 11th FloorSanta Monica, CA 90401Barclays Global Investors, NA (3)
    
    
    4,852,680
    
    
    
    5.43
    %45 Freemont StreetSan Francisco, CA 94105Wellington Management Company, LLP (4)
    
    
    9,282,600
    
    
    
    10.39
    %75 State StreetBoston, MA 02109
 
 (1)
    
    This information is based on information contained in a Schedule 13G filing made by
Donald Smith & Co., Inc. with the Securities and Exchange Commission on February 8, 2008.
All securities reported in this schedule are owned by advisory clients of Donald Smith &
Co., Inc., no one of which, to the knowledge of Donald Smith & Co., Inc., owns more than 5%
of the class.(2)
    
    This information is based on information contained in a Schedule 13G/A filing made
by Dimensional Fund Advisors Inc. (Dimensional) with the Securities and Exchange
Commission on February 6, 2008. Dimensional, an investment advisor registered under Section
203 of the Investment Advisors Act of 1940, furnishes investment advice to four investment
companies registered under the Investment Company Act of 1940, and serves as investment
manager to certain other commingled group trusts and separate accounts. These investment
companies, trusts and accounts are the Funds. In its role as investment advisor or
manager, Dimensional possesses investment and/or voting power over Common Stock held by the
Funds. However, all securities reported by Dimensional are owned by the Funds.(3)
    
    This information is based on information contained in a Schedule 13G filing made by
Barclays Global Investors, NA and Barclays Global Funds Advisors (Barclays) with the
Securities and Exchange Commission on February 5, 2008.(4)
    
    This information is based on information contained in a Schedule 13G filing made by
Wellington Management Company, LLP, with the Securities and Exchange Commission on January
10, 2008. All securities reported in this schedule are owned by advisory clients of
Wellington Management Company, LLP, no one of which, to the knowledge of Wellington
Management Company, LLP, owns more than 5% of the class. 50




---



##### Table of Contents



SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
  Number of securitiesremaining available forNumber of securities to
    
    
    Weighted-average
    
    
    future issuance underbe issued upon exercise
    
    
    exercise price of
    
    
    equity compensation plansof outstanding options,
    
    
    outstanding options,
    
    
    (excluding securitiesPlan Category
    
    warrants and rights
    
    
    warrants and rights
    
    
    reflected in column (a)(1))(a)
    
    
    (b)
    
    
    (c)Equity compensation
plans approved by
security holders
    
    
    6,636,204
    
    
    $
    3.11
    
    
    
    3,850,000Equity compensation
plans not approved
by security holders
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    6,636,204
    
    
    $
    3.11
    
    
    
    3,850,000
 
 (1)
    
    Does not include 4,650,000 shares which have been reserved for issuance in lieu of cash
compensation under the Companys deferred compensation plan, which plan was approved by security
holders. 
 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
 Participation Interests
   51




---



##### Table of Contents



Other
    52




---



##### Table of Contents



Review Policy
  Board Independence
  
 ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
  Audit Fees
 53




---



##### Table of Contents



2007
    
    
    2006Audit Fees
    
    $
    589,075
    
    
    $
    624,296
  54




---



##### Table of Contents



PART IV
 
 ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
 
  10.1
    
    Employment Agreement, dated April 29, 2008, by and between The Meridian Resource Corporation
and Joseph A. Reeves, Jr.10.2
    
    Employment Agreement, dated April 29, 2008, by and between The Meridian Resource Corporation
and Michael J. Mayell.10.3
    
    Termination Agreement, dated April 29, 2008, by and between The Meridian Resource Corporation
and Joseph A. Reeves, Jr.10.4
    
    Termination Agreement, dated April 29, 2008, by and between The Meridian Resource Corporation
and Michael J. Mayell.10.5
    
    Agreement (regarding Net Profits Interests), effective January 1, 1994, between Joseph A.
Reeves, Jr. and Texas Meridian Resources Corporation (n/k/a The Meridian Resource
Corporation).10.6
    
    Agreement (regarding Net Profits Interests), effective January 1, 1994, between Michael J.
Mayell and Texas Meridian Resources Corporation (n/k/a The Meridian Resource Corporation).31.1
    
    Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) under
the Securities Exchange Act of 1934, as amended.31.2
    
    Certification of President pursuant to Rule 13a-14(a) or Rule 15d-14(a) under the Securities
Exchange Act of 1934, as amended.31.3
    
    Certification of Chief Accounting Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) under
the Securities Exchange Act of 1934, as amended.32.1
    
    Certification of Chief Executive Officer pursuant to Rule 13a-14(b) or Rule 15d-14(b) under
the Securities Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350.32.2
    
    Certification of President pursuant to Rule 13a-14(b) or Rule 15d-14(b) under the Securities
Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350.32.3
    
    Certification Chief Accounting Officer pursuant to Rule 13a-14(b) or Rule 15d-14(b) under the
Securities Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350.
 55




---



##### Table of Contents



SIGNATURES
  THE MERIDIAN RESOURCE CORPORATIONBY:
    /s/           JOSEPH A. REEVES, JR.Chief Executive Officer(Principal Executive Officer)   Name
    
    Title
    
    DateBY:
    
    /s/ Joseph A. Reeves Jr.

Joseph A. Reeves, Jr.
    
    Chief Executive Officer
(Principal Executive Officer)
Director
    
    April 29, 2008BY:
    
    /s/ Michael J. Mayell

Michael J. Mayell
    
    President and Director
    
    April 29, 2008BY:
    
    /s/ Lloyd V. DeLano
    
    Chief Accounting Officer
    
    April 29, 2008Lloyd V. DeLanoBY:
    
    /s/ Paul D. Ching

Paul D. Ching
    
    Director and
Chairman of the Board
    
    April 29, 2008BY:
    
    /s/ E. L. Henry
    
    Director
    
    April 29, 2008E. L. HenryBY:
    
    /s/ Joe E. Kares
    
    Director
    
    April 29, 2008Joe E. KaresBY:
    
    /s/ Gary A. Messersmith
    
    Director
    
    April 29, 2008Gary A. MessersmithBY:
    
    /s/ David W. Tauber
    
    Director
    
    April 29, 2008David W. TauberBY:
    
    /s/ John B. Simmons
    
    Director
    
    April 29, 2008John B. Simmons




---



##### Table of Contents



Name
    
    Title
    
    DateBY:
    
    /s/ Fenner R. Weller Jr.
    
    Director
    
    April 29, 2008Fenner R. Weller, Jr.BY:
    
    /s/ C. Mark Pearson
    
    Director
    
    April 29, 2008C. Mark PearsonBY:
    
    /s/ G.M. Larberg
    
    Director
    
    April 29, 2008G.M. Larberg




---



##### Table of Contents



10.1
    
    Employment Agreement, dated April 29, 2008, by and between The Meridian Resource Corporation
and Joseph A. Reeves, Jr.10.2
    
    Employment Agreement, dated April 29, 2008, by and between The Meridian Resource Corporation
and Michael J. Mayell.10.3
    
    Termination Agreement, dated April 29, 2008, by and between The Meridian Resource Corporation
and Joseph A. Reeves, Jr.10.4
    
    Termination Agreement, dated April 29, 2008, by and between The Meridian Resource Corporation
and Michael J. Mayell.10.5
    
    Agreement (regarding Net Profits Interests), effective January 1, 1994, between Joseph A.
Reeves, Jr. and Texas Meridian Resources Corporation (n/k/a The Meridian Resource
Corporation).10.6
    
    Agreement (regarding Net Profits Interests), effective January 1, 1994, between Michael J.
Mayell and Texas Meridian Resources Corporation (n/k/a The Meridian Resource Corporation).31.1
    
    Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) under
the Securities Exchange Act of 1934, as amended.31.2
    
    Certification of President pursuant to Rule 13a-14(a) or Rule 15d-14(a) under the Securities
Exchange Act of 1934, as amended.31.3
    
    Certification of Chief Accounting Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) under
the Securities Exchange Act of 1934, as amended.32.1
    
    Certification of Chief Executive Officer pursuant to Rule 13a-14(b) or Rule 15d-14(b) under
the Securities Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350.32.2
    
    Certification of President pursuant to Rule 13a-14(b) or Rule 15d-14(b) under the Securities
Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350.32.3
    
    Certification Chief Accounting Officer pursuant to Rule 13a-14(b) or Rule 15d-14(b) under the
Securities Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350.