##### Table of Contents



UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
      Form 10-K
  þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934For the Fiscal Year Ended
    December 31, 2006Oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934   Commission File
    No. 0-19136
      National Energy Group,
    Inc.
 (Exact name of registrant as
    specified in its charter)
  Delaware

58-1922764(State or other jurisdiction
    of
    incorporation or organization)

(IRS Employer
    Identification No.)  4925 Greenville Avenue
 Dallas, Texas 75206
 (Address of principal executive
    offices) (Zip code)
  (214) 692-9211
 (Registrants telephone
    number, including area code)
  Securities registered pursuant to Section 12(b) of the
    Act:
  None
  Securities registered pursuant to Section 12(g) of the
    Act:
 Common Stock, $0.01 par value
 (Title of Class)
  o þ
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. o
  rule 12b-2
 o o þ
  Rule 12b-2 þ o




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##### Table of Contents



TABLE OF
    CONTENTS
  PageDisclosure
    Regarding Forward-Looking Statements

3PART IITEMS 1. AND
    2.


BUSINESS AND
    PROPERTIES

3Introduction

3Sale of our
    Non-controlling Membership Interest in Holding LLC and
    Termination of our Management Contracts

4Termination of
    Previously Announced Merger Agreement

6Ownership and
    Control of Outstanding Stock

6The Holding LLC
    Operating Agreement

6Former Management
    Agreements

7Former Operating
    LLC Credit Agreements

8Senior
    Notes

9Our Properties and
    Principal Areas of Operations

9Former Investment
    in Holding LLC

9Holding
    LLC  Pre-November 21, 2006  Oil and
    Natural Gas Production and Unit Economics

11Holding
    LLC  Pre-November 21,
    2006  Drilling Activity

11Holding
    LLC  Pre-November 21,
    2006  Markets and Customers

11Holding
    LLC  Pre-November 21,
    2006  Regulation

12Holding
    LLC  Pre-November 21,
    2006  Operational Hazards and
    Insurance

12Holding
    LLC  Pre-November 21,
    2006  Competition

12Our Office
    Space

12Our
    Employees

13Access to Public
    Filings

13ITEM 1A.


RISK
    FACTORS

13ITEM 1B.


UNRESOLVED STAFF
    COMMENTS

15ITEM 3.


LEGAL
    PROCEEDINGS

15ITEM 4.


SUBMISSION OF
    MATTERS TO A VOTE OF SECURITY HOLDERS

15PART IIITEM 5.


MARKET FOR
    REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER
    MATTERS

16Market
    Information

16Holders

17Dividends on Common
    Stock

17ITEM 6.


SELECTED FINANCIAL
    DATA

18ITEM 7.


MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS

18Overview of Our
    Business

19Sale of our
    Membership Interest in Holding LLC and Termination of our
    Management Contracts

20Termination of
    Previously Announced Merger Agreement

21Ownership and
    Control of Outstanding Stock

21The Holding LLC
    Operating Agreement

22Former Management
    Agreements

23Former Operating
    LLC Credit Agreements

24Senior
    Notes

25 1




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##### Table of Contents



PageResults of
    Operations

25Our Investment in
    Holding LLC

25Management Fees
    from Affiliates

26Costs and
    Expenses

26Income Tax
    Expense

27Liquidity and
    Capital Resources

28Table of
    Contractual Obligations

28Employment
    Agreement

28Off Balance Sheet
    Arrangements

29Critical Accounting
    Policies and Estimates

29Recent Accounting
    Pronouncements

29Inflation

30ITEM 7A.


QUANTITATIVE AND
    QUALITATIVE DISCLOSURES ABOUT
    MARKET RISK

30ITEM 8.


FINANCIAL
    STATEMENTS AND SUPPLEMENTARY DATA

30ITEM 9.


CHANGES IN AND
    DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
    DISCLOSURE

30ITEM 9A.


CONTROLS AND
    PROCEDURES

31Conclusion
    Regarding the Effectiveness of Disclosure Controls and
    Procedures

31Changes in Internal
    Control Over Financial Reporting

31Managements
    Report on Internal Control Over Financial Reporting

31Auditors
    Report on Internal Control Over Financial Reporting

32ITEM 9B.


OTHER
    INFORMATION

33PART IIIITEM 10.


DIRECTORS AND
    EXECUTIVE OFFICERS

33Board of
    Directors

34Audit
    Committee

35Report of the Audit
    Committee

35Compensation
    Committee

35Report of the
    Compensation Committee

36Special
    Committee

36Code of
    Ethics

36Section 16(a)
    Beneficial Ownership Reporting Compliance

36ITEM 11.


EXECUTIVE
    COMPENSATION

37Compensation
    Discussion and Analysis

37Summary
    Compensation Table

39Non-employee
    Director Compensation

41ITEM 12.


SECURITY OWNERSHIP
    OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

41ITEM 13.


CERTAIN
    RELATIONSHIPS AND RELATED TRANSACTIONS

43ITEM 14.


PRINCIPAL
    ACCOUNTING FEES AND SERVICES

46PART IVITEM 15.


EXHIBITS AND FINANCIAL
    STATEMENT SCHEDULE

47Signatures

48Computation of Ratio of Earnings to Fixed ChargesCertification of CEO Pursuant to Section 302Certification of CFO Pursuant to Section 302Certification of CEO Pursuant to Section 906Certification of CFO Pursuant to Section 906   2




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##### Table of Contents



Disclosure
    Regarding Forward-Looking Statements  Form 10-K
   PART I  Items 1.
    and 2.
    Business
    and Properties Introduction    Rule 12b-2
     3




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##### Table of Contents



Rule 3a-2 Rule 3a-2,
             Sale of
    Our Non-controlling Membership Interest in Holding LLC and
    Termination of Our Management Contracts     4




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##### Table of Contents




    NEG Oil & Gas exercised its option to purchase our
    non-controlling 50% membership interest in Holding LLC for net
    cash proceeds of approximately $260.8 million;
    We paid in full the outstanding principal balance and accrued
    interest on our 10.75% senior notes due October 31,
    2007 (the Senior Notes) in the aggregate amount of
    $149.6 million. Such payment was made to AREP O&G
    Holding LLC (AREP O&G), as the holder of the
    Senior Notes;
    The liens in favor of NEG Oil & Gas with respect to our
    membership interest in Holding LLC, and the proceeds thereof,
    under the Operating LLC credit facility were released and
    terminated;
    Our management agreements pursuant to which we managed the
    operations of Operating LLC, National Onshore and National
    Offshore were terminated;
    The previously announced Agreement and Plan of Merger dated
    December 7, 2005 (the Merger Agreement) among
    us, NEG Oil & Gas, NEG IPOCO, Inc. and, for certain
    purposes, AREH, pursuant to which we were to have been merged
    into NEG IPOCO, Inc in connection with its proposed initial
    public offering, was terminated;
    Any assets or property of NEG Oil & Gas and its
    subsidiaries owned by them but in our possession (including,
    without limitation, information technology, software and data
    relevant to the oil and gas operations of NEG Oil & Gas
    or its subsidiaries) were transferred and delivered to NEG
    Oil & Gas or its subsidiaries, as designated by NEG
    Oil & Gas; and
    Most of our employees became employees of SandRidge, including
    the following principal officers: Randy Cooley, our chief
    financial officer, as well as Rick Kirby, Kent Lueders, David
    Rigby, Jenny Robins, Lori Mauk and Wayne Campbell, each of whom
    was a vice president. Bob G. Alexander and Philip D. Devlin
    remained our chief executive officer and vice president, general
    counsel and secretary, respectively, and our board of directors
    was unchanged. Subsequently, Jon Weber resigned as director and
    was replaced by Vincent Intrieri and Philip D. Devlin resigned
    as our general counsel and secretary.   5




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Termination
    of Previously Announced Merger Agreement     Ownership
    and Control of Outstanding Stock   The
    Holding LLC Operating Agreement     6




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1 2 1 2
     Former
    Management Agreements Former
    Operating LLC Management Agreement  day-to-day
   7




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##### Table of Contents



Former
    National Onshore Management Agreement
    day-to-day
    Former
    National Offshore Management Agreement
      Former
    Operating LLC Credit Agreements
     8




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Senior
    Notes  3 4
 Our
    Properties and Principal Areas of Operations   Former
    Investment in Holding LLC   9




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10




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##### Table of Contents



Holding
    LLC  Pre-November 21, 2006  Oil and
    Natural Gas Production and Unit Economics    Period fromJanuary 1, 2006Year Ended


throughDecember 31,


November 21,2004


2005


2006Net production:Oil (Mbbls)


565



527



415Natural gas (Mmcf)


13,106



16,250



15,463Natural gas equivalent (Mmcfe)


16,496



19,411



17,953Average sales price:Oil (per Bbl)

$
28.37


$
49.11


$
54.51Natural gas (per Mcf)


5.21



6.02



5.33Unit economics (per Mcfe):Average sales price

$
5.11


$
6.37


$
5.85Lease operating expenses


.82



.95



1.18Oil and natural gas production
    taxes


.35



.44



.29Depletion rate


1.28



1.65



1.93General and administrative expenses


.25



.20



.21  Holding
    LLC  Pre-November 21,
    2006  Drilling Activity    Period fromJanuary 1, 2006Year Ended December 31,


through2004


2005


November 21, 2006Gross


Net


Gross


Net


Gross


NetExploratory wellsProductive


52



17.4



41



17.9



66



28.8Non-productive


11



3.3



6



2.4



3



1.2Total


63



20.7



47



20.3



69



30.0Development wellsProductive


39



19.0



38



24.5



54



34.8Non-productive










1



.2



24



4.8Total


39



19.0



39



24.7



78



39.6Combined Total


102



39.7



86



45.0



147



69.6  Holding
    LLC  Pre-November 21, 2006  Markets
    and Customers   11




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##### Table of Contents



Holding
    LLC  Pre-November 21, 2006 
    Regulation   Holding
    LLC  Pre-November 21, 2006 
    Operational Hazards and Insurance   Holding
    LLC  Pre-November 21, 2006 
    Competition   Our
    Office Space   12




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##### Table of Contents



Our
    Employees   Access to
    Public Filings  Form 10-K, Form 10-Q, Form 8-K, http://www.neg-inc.com http://www.sec.gov
  Item 1A.
    Risk
    Factors  Risks
    Related to our current operations
  We
    have no business operations
    We
    have no sources of revenues other than our interest
    income.
    We
    rely upon outside consultants and advisors to perform critical
    functions
  day-to-day
    The
    loss of our president and chief executive officer could
    adversely affect our internal controls over financial reporting
    and may limit future operations of the Company
   13




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Our
    chief financial officer is not an employee of our
    company
    We may
    be deemed to be an Investment Company under the Investment
    Company Act of 1940
  Rule 3a-2 Rule 3a-2,
    The
    interest of AREP and its affiliates may conflict with the
    interests of our other stockholders
   14




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##### Table of Contents



Item 1B.
    Unresolved
    Staff Comments    Item 3.
    Legal
    Proceedings        Item 4.
    Submission
    of Matters to a Vote of Security Holders   15




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##### Table of Contents



PART II  Item 5.
    Market
    for Registrants Common Equity and Related Stockholder
    Matters Market
    Information  mark-up,
  Common StockPriceHigh


LowCalendar Years by
    Quarter2006First

$
5.85


$
4.60Second


6.70



5.01Third


6.75



5.00Fourth


6.45



5.002005:First

$
3.40


$
2.25Second


3.09



2.12Third


5.50



2.40Fourth


7.75



3.70      16




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##### Table of Contents



Comparison
    5-Year Cumulative Total Return
 Among National Energy Group,
 NASDAQ Market Index and Peer Group Index
  
  Assumes $100
    invested on December 31, 2001 and dividends, if any are
    reinvested.
      Holders   Dividends
    on Common Stock   17




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##### Table of Contents



Item 6.
    Selected
    Financial Data    Year Ended December 31,2002


2003


2004


2005


2006(1)(In thousands, except per unit data)Statement of Operations
    Data:Accretion of Investment in Holding
    LLC

$
32,879


$
30,141


$
34,432


$
44,306


$
48,488Management fees 
    affiliates


7,637



7,967



11,563



14,587



15,554Gain on sale of Holding LLC
    membership interest


















112,188Interest income and other, net


36



34



39



78



530Total revenue


40,552



38,142



46,034



58,971



176,760Costs and expenses:Salaries and wages


4,256



4,349



7,225



8,790



12,541Insurance


588



638



1,002



809



1,035Rent and utilities


624



669



699



798



817Other G&A expenses


1,637



1,575



2,219



4,508



4,245Interest expense


18,964



15,115



13,940



13,940



12,549Total costs and expenses


26,069



22,346



25,085



28,845



31,187Income before income taxes


14,483



15,796



20,949



30,126



145,573Income tax expense


(5,068
)


(225
)


(6,664
)


(4,852
)


(42,114
)Net income

$
9,415


$
15,571


$
14,285


$
25,274


$
103,459Net income per common share, basic
    and diluted

$
.84


$
1.39


$
1.28


$
2.26


$
9.25Cash Flow Data:Net cash used in operating
    activities

$
(21,266
)

$
(59,053
)

$
(16,650
)

$
(15,407
)

$
(42,986
)Net cash provided by investing
    activities


21,653



58,735



15,978



15,978



276,763Net cash used in financing
    activities


















(148,637
)Balance Sheet Data (at period
    end):Cash and cash equivalents

$
3,477


$
3,159


$
2,488


$
3,059


$
88,200Working capital (deficit)


(40,001
)


1,699



2,200



1,784



85,545Total assets


138,805



99,684



112,113



135,727



88,503Long-term debt


159,576



148,637



148,637



148,637



Stockholders equity (deficit)


(72,989
)


(57,418
)


(43,133
)


(17,859
)


85,601     (1)
    
    See Sale of our Membership interest in Holding LLC
    discussed in Item 7. Managements Discussion and
    Analysis of Financial Condition and Results of Operations.  Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations   18




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Overview
    of our Business    Rule 12b-2
      Rule 3a-2 Rule 3a-2,
     19




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##### Table of Contents



Sale of
    Our Membership Interest in Holding LLC and Termination of Our
    Management Contracts          
    NEG Oil & Gas exercised its option to purchase our
    non-controlling 50% membership interest in Holding LLC for net
    cash proceeds of approximately $260.8 million;
    We paid in full the outstanding principal balance and accrued
    interest on our 10.75% senior notes due October 31,
    2007 (the Senior Notes) in the aggregate amount of
    $149.6 million. Such payment was made to AREP O&G
    Holding LLC (AREP O&G), as the holder of the
    Senior Notes; 20




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##### Table of Contents




    The liens in favor of NEG Oil & Gas with respect to our
    membership interest in Holding LLC, and the proceeds thereof,
    under the Operating LLC credit facility were released and
    terminated;
    Our management agreements pursuant to which we managed the
    operations of Operating LLC, National Onshore and National
    Offshore were terminated;
    The previously announced Agreement and Plan of Merger dated
    December 7, 2005 (the Merger Agreement) among
    us, NEG Oil & Gas, IPOCO, Inc. and, for certain
    purposes, AREH, pursuant to which we were to have been merged
    into IPOCO, Inc in connection with its proposed initial public
    offering, was terminated;
    Any assets or property of NEG Oil & Gas and its
    subsidiaries owned by them but in our possession (including,
    without limitation, information technology, software and data
    relevant to the oil and gas operations of NEG Oil & Gas
    or its subsidiaries) were transferred and delivered to NEG
    Oil & Gas or its subsidiaries, as designated by NEG
    Oil & Gas; and
    Most of our employees became employees of SandRidge, including
    the following principal officers: Randy Cooley, our chief
    financial officer, as well as Rick Kirby, Kent Lueders, David
    Rigby, Jenny Robins, Lori Mauk and Wayne Campbell, each of whom
    was a vice president. Bob G. Alexander and Philip D. Devlin
    remained our chief executive officer and vice president, general
    counsel and secretary, respectively, and our board of directors
    was unchanged. Subsequently, Jon Weber resigned as director and
    was replaced by Vincent Intrieri and Philip D. Devlin resigned
    as our general counsel and secretary.   Termination
    of Previously Announced Merger Agreement     Ownership
    and Control of Outstanding Stock   21




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The
    Holding LLC Operating Agreement          1 2 1 2
     22




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Former
    Management Agreements  Former
    Operating LLC Management Agreement
  day-to-day
    Former
    National Onshore Management Agreement
    day-to-day
   23




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##### Table of Contents



Former
    National Offshore Management Agreement
     Former
    Operating LLC Credit Agreements           24




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##### Table of Contents



Senior
    Notes  3 4
 Results
    of Operations   Our
    Investment in Holding LLC     25




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##### Table of Contents



Net Proceeds

$
260,825,071Book basis in Holding LLC as of
    November 21, 2006


(148,637,004
)Gain on sale of Holding LLC

$
112,188,067  Management
    Fees from Affiliates    2004


2005


2006Operating LLC

$
6,161,919


$
5,597,737


$
6,446,751National Onshore


4,675,525



4,768,036



4,272,296National Offshore


725,282



4,221,433



4,835,064Total

$
11,562,726


$
14,587,206


$
15,554,111    Costs and
    Expenses    Year Ended December 31,2004


2005


Variance


%


2005


2006


Variance


%Salaries and wages

$
7,224,605


$
8,789,555


$
1,564,950



22


$
8,789,555


$
12,541,595


$
3,752,040



43Insurance


1,001,644



809,099



(192,545
)


(19
)


809,099



1,035,020



225,921



28Rent and utilities


699,674



804,353



104,679



15



797,522



816,701



19,179



2Other G&A Expenses


2,218,752



4,501,433



2,282,681



103



4,508,264



4,244,668



(263,596
)


(6
)Interest expense


13,940,391



13,940,383



(8
)






13,940,383



12,549,062



(1,391,321
)


(10
)Total cost & expenses

$
25,085,066


$
28,844,823


$
3,759,757



15


$
28,844,823


$
31,187,046


$
2,342,223



8      26




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##### Table of Contents



month-to-month
         Income
    Tax Expense       27




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##### Table of Contents



Liquidity
    and Capital Resources                      Table of
    Contractual Obligations    Payment Due by PeriodLess Than


One-Three


Four-Five


AfterTotal


One Year


Years


Years


Five YearsRent

$
568,003


$
568,003


$



$



$
CEO Employment Contract


1,000,000



1,000,000Total

$
1,568,003


$
1,568,003


$



$



$
  Employment
    Agreement   28




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Off
    Balance Sheet Arrangements   Critical
    Accounting Policies and Estimates   Recent
    Accounting Pronouncements    Fair Value Measurements.
  Employers Accounting for Defined Benefit Pension
    and Other Postretirement Plans. Employers Accounting for Settlement and Curtailments of
    Defined Benefit Pension Plans and for Termination Benefits Employers Disclosures about Pensions and Other
    Postretirement Benefits
 29




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##### Table of Contents



Inflation    Item 7A.
    Quantitative
    and Qualitative Disclosures About Market Risk        Item 8.
    Financial
    Statements and Supplementary Data    Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure   30




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##### Table of Contents



Item 9A.
    Controls
    and Procedures Conclusion
    Regarding the Effectiveness of Disclosure Controls and
    Procedures  Rules 13a-15 15d-15,
 Changes
    In Internal Control Over Financial Reporting   Managements
    Report on Internal Control Over Financial Reporting  Rules 13a-15(f) 15d-15(f). Internal
    Control  Integrated Framework Internal Control  Integrated Framework
   31




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##### Table of Contents



Auditors
    Report on Internal Control Over Financial Reporting  REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
     Internal Control  Integrated Framework
        Internal
    Control  Integrated Framework Internal Control  Integrated
    Framework
        32




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##### Table of Contents



Item 9B.  Other
    Information   PART III  Item 10.
    Directors
    and Executive Officers    Name

Age

Present Position with the CompanyBob G. Alexander


73


Chairman of the Board of
    Directors, President and Chief Executive Officer, SecretaryVincent Intrieri


48


DirectorRobert H. Kite


52


DirectorRobert J. Mitchell


60


DirectorJack G. Wasserman


70


DirectorGrace Bricker


53


Vice President, AdministrationHillel Moerman


34


Chief Financial Officer   Bob G. Alexander.
  Vincent Intrieri.
  Robert H. Kite.
  Robert J. Mitchell.
 33




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##### Table of Contents



Jack G. Wasserman.
  Grace Bricker.
  Hillel Moerman.
   Board of
    Directors   34




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Audit
    Committee   Report of
    the Audit Committee  Rule 10A-3
      Regulation S-K.
  Form 10-K
      Compensation
    Committee   35




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##### Table of Contents



Report of
    the Compensation Committee        Special
    Committee   Code of
    Ethics  Form 8-K
 Section 16(a)
    Beneficial Ownership Reporting Compliance     36




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##### Table of Contents



Item 11.
    Executive
    Compensation Compensation
    Discussion and Analysis        Base Salary.
  Management Incentive Plan. 2 3
 37




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##### Table of Contents



Company Goals


Cash Bonus


Deferred BonusPercentage of  Company Goals Achieved

Percentage


Portion


Portion95%-104.99%


41.25
%


27.50
%


13.75
%105-109.99


48.00



32.00



16.00110-114.99


55.50



37.00



18.50115-119.99


60.00



40.00



20.00120-124.99


64.50



43.00



21.50125-129.99


69.00



46.00



23.00130-134.99


73.50



49.00



24.50135-139.99


79.50



53.00



26.50140-144.99


85.50



57.00



28.50145-149.99


91.50



61.00



30.50150+


99.00



66.00



33.00         Severance





Total TerminationCalculated in


Amount of 2005


and SeveranceAccordance with


Deferred


Payments toNamed Executive Officer

the 2006 MIP


MIP Portion


Named OfficersWayne Campbell

$
90,000


$
35,000


$
125,000Randall Cooley


95,000



36,800



131,800Philip Devlin


95,000



40,000



135,000Rick Kirby


76,313



35,000



111,313Total

$
356,313


$
146,800


$
503,113     Bonus for Mr. Alexander.
 38




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##### Table of Contents



401-K
    Plan.
  Health and Welfare Benefits.
  Employment Agreements, Severance Benefits and Change in
    Control Provisions.
    Tax Deductibility of Executive
    Compensation.
    Summary
    Compensation Table
    2006
 Named Officer Compensation.  The following
    table sets forth the total compensation received by (i) the
    Companys Chief Executive Officer (CEO) or any person
    serving as the CEO at any time during 2006, (ii) our other
    executive officers other than the CEO who were serving as
    executive officers as of December 31, 2006 and
    (iii) two additional executive officers for whom disclosure
    would have been required under clause (ii) but for the fact that
    they were not serving as executive officers as of
    December 31, 2006 our two most highly compensated executive
    officers during 2006, other than the CEO. In accordance with SEC
    regulation SX Item 402 (a) (5) certain
    tables or

39




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##### Table of Contents



AnnualCompensation


All Other


TotalName and Principal Position

Year


Salary ($)


Bonus ($)


Compensation


Compensation ($)Bob G. Alexander


2006


$
356,731


$
672,500
(1)

$
10,000
(2)

$
1,039,231President and Chief


2005



350,000



250,000



9,000
(2)


609,000Executive Officer, Secretary


2004



300,000



175,000



8,000
(2)


483,000Randall D. Cooley


2006


$
178,897


$
73,600


$
140,433
(3)

$
392,930Vice President, Chief


2005



184,000



70,000



8,512
(3)


262,512Financial Officer


2004



154,000



55,000



7,700
(3)


216,700Philip D. Devlin


2006


$
218,679


$
80,000


$
145,000
(4)

$
443,679Vice President, General


2005



200,000



80,000



9,000
(4)


289,000Counsel and Secretary


2004



200,000



70,000



8,000
(4)


278,000Rick L. Kirby


2006


$
164,814


$
70,000


$
119,554
(5)

$
354,368Vice President, Drilling


2005



156,800



56,000



7,840
(5)


220,640and Production


2004



135,300



56,000



6,765
(5)


198,065F. Wayne Campbell


2006


$
182,948


$
70,000


$
134,147
(6)

$
387,095Vice President, Exploration


2005



152,083



45,000



7,840
(6)


204,9232004



110,000



45,000



5,500
(6)


160,500Grace Bricker


2006


$
67,136


$
14,250


$
23,982
(7)

$
105,368Vice President, Administration


2005



57,000



10,500



2,850



70,3502004



53,500



8,000



2,675



64,175     (1)
    
    Mr. Alexanders bonus amount includes his 2005 bonus
    paid in March 2006 and his 2006 bonus paid in December 2006. Not
    included in the bonus amount is an additional cash bonus paid to
    Mr. Alexander in the amount of $1,177,500 by AREP O&G.
    Mr. Alexander was President of AREP O&G through
    November 2006.(2)
    
    Mr. Alexander received $8,000, $9,000 and $10,000 in
    matching funds contributed by us to the 401(k) plan during 2004,
    2005, and 2006, respectively.(3)
    
    In addition to the 2006 termination and severance payment
    described earlier, Mr. Cooley received $7,700, $8,512 and
    $8,633 in matching funds contributed by us to the 401(k) Plan
    during 2004, 2005 and 2006, respectively. Mr. Cooley
    resigned effective November 21, 2006.(4)
    
    In addition to the 2006 termination and severance payment
    described earlier, Mr. Devlin received $8,000. $9,000 and
    $10,000 in matching funds contributed by us to the 401(k) Plan
    during 2004, 2005 and 2006, respectively. Mr. Devlin
    resigned effective January 16, 2007(5)
    
    In addition to the 2006 termination and severance payment
    described earlier, Mr. Kirby received $6,765, $7,840 and
    $8,241 in matching funds contributed by us to the 401(k) Plan
    during 2004, 2005 and 2006, respectively. Mr. Kirby
    resigned effective November 21, 2006.(6)
    
    In addition to the 2006 termination and severance payment
    described earlier, Mr. Campbell received $5,500, $7,840 and
    $9,147 in matching funds contributed by us to the 401(k) plan
    during 2004, 2005, and 2006, respectively. Mr. Campbell
    resigned effective November 21, 2006.(7)
    
    Ms. Brickers 2006 bonus was paid on November 21,
    2006. Ms. Bricker also received $2,675, $2,850, and $3,357
    in matching funds contributed by us to the 401(k) plan during
    2004, 2005 and 2006, respectively.    Board of Director Compensation.
 40




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##### Table of Contents



NON-EMPLOYEE
    DIRECTOR COMPENSATION
    For the year ended December 31, 2006  Fees EarnedName

or Paid in Cash


TotalVincent Intrieri(3)


(4)



(4)Martin L. Hirsch(1)

$
4,500


$
4,500Robert H. Kite


37,500



37,500Robert J. Mitchell


8,750



8,750Jon F. Weber(2)


6,500



6,500Jack G. Wasserman


36,750



36,750Total

$
94,000


$
94,000     (1)
    
    Mr. Hirsch resigned from our Board of Directors effective
    August 8, 2006.(2)
    
    Mr. Weber was appointed to fill the vacancy on the Board
    created by Mr. Hirschs resignation effective
    August 9, 2006. Mr. Weber served on our Board of
    Directors until December 27, 2006.(3)
    
    Mr. Intrieri was appointed to the Board of Directors on
    December 27, 2006 to serve the remainder of
    Mr. Webers term.(4)
    
    Mr. Intrieri does not receive any fees for his service as a
    Board or Committee Member.  Item 12.
    Security
    Ownership of Certain Beneficial Owners and
    Management    Security Ownership of Certain Beneficial
    Owners.
  Title

Number

PercentName and Address of Beneficial Owner

of Class

of Shares

of Class(1)AREP Oil & Gas LLC


Common Stock



5,597,824
(2)


50.01
%767 Fifth Avenue, 47th Floor
    New York, NY 10153     (1)
    
    Based upon the 11,190,650 shares of Common Stock that were
    outstanding on February 28, 2007.(2)
    
    AREP Oil & Gas directly owns these shares and may be
    deemed to be the beneficial owner thereof. Mr. Carl C.
    Icahn, by virtue of his relationship to AREP Oil & Gas,
    may be deemed to beneficially own (as that term is
    defined in
    Rule 13d-3
    under the Exchange Act) these shares. Mr. Icahn disclaims
    beneficial ownership of such 41




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##### Table of Contents



shares for all other purposes. Mr. Mitchell, a present
    director of our Company and a former employee of affiliates of
    AREP Oil & Gas, and Mr. Vincent Intrieri, a
    present director of our Company and employee of affiliates of
    AREP Oil & Gas, also disclaim any beneficial ownership
    of these shares.  Security Ownership of Directors and
    Management.
  Title


Number


%Name and Address of Beneficial Owner

of Class


of Shares


of Class(1)Bob G. Alexander


Common Stock



57,000
(2)


(9
)4925 Greenville Avenue
    Suite 1400
    Dallas, TX 75206Robert H. Kite


Common Stock



84,262
(3)


(9
)6910 East Fifth Street
    Scottsdale, AZ 85251Vincent Intrieri


Common Stock




(4)767 Fifth Avenue
    New York, NY 10153Hillel Moerman


Common Stock




(5)767 Fifth Avenue
    New York, NY 10153Robert J. Mitchell


Common Stock




(6)767 Fifth Avenue
    New York, NY 10153Jack G. Wasserman


Common Stock




(7)111 Broadway
    New York, NY 10006Grace Bricker


Common Stock




(8)4925 Greenville Avenue
    Suite 1400
    Dallas, TX 75206All executive officers and
    directors as a group (7 people)






205,679



1.83
%     (1)
    
    As of February 28, 2007, there were 11,190,650 shares
    of our Common Stock outstanding. All stock options and warrants
    were cancelled pursuant to the Plan of Reorganization, and no
    new options or warrants have been authorized or issued.(2)
    
    Shares held directly by Mr. Alexander.(3)
    
    Robert H. Kite is Chief Operating Officer and a 33.0% beneficial
    owner of KFT, LLLP and may be deemed to be the beneficial owner
    of shares held by KFT, LLLP. 59,285 shares are held by KFT,
    LLLP and Mr. Kite holds 24,977 shares directly.(4)
    
    Mr. Intrieri holds no shares of our common stock and
    disclaims beneficial ownership of any shares attributable to
    AREP Oil & Gas.(5)
    
    Mr. Moerman holds no shares of our common stock and
    disclaims beneficial ownership of any shares attributable to
    AREP Oil & Gas..(6)
    
    Mr. Mitchell holds no shares of our common stock and
    disclaims beneficial ownership of any shares attributable to
    AREP Oil & Gas.(7)
    
    Mr. Wasserman holds no shares of our common stock.(8)
    
    Ms. Bricker holds no shares of our common stock.(9)
    
    Less than one percent. 42




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##### Table of Contents



Item 13.  Certain
    Relationships and Related Transactions          
    NEG Oil & Gas exercised its option to purchase our
    non-controlling 50% membership interest in Holding LLC for net
    cash proceeds of approximately $260.8 million;
    We paid in full the outstanding principal balance and accrued
    interest on our 10.75% senior notes due October 31,
    2007 (the Senior Notes) in the aggregate amount of
    $149.6 million. Such payment was made to AREP O&G
    Holding LLC (AREP O&G), as the holder of the
    Senior Notes;
    The liens in favor of NEG Oil & Gas with respect to our
    membership interest in Holding LLC, and the proceeds thereof,
    under the Operating LLC credit facility were released and
    terminated;
    Our management agreements pursuant to which we managed the
    operations of Operating LLC, National Onshore and National
    Offshore were terminated;
    The previously announced Agreement and Plan of Merger dated
    December 7, 2005 (the Merger Agreement) among
    us, NEG Oil & Gas, NEG IPOCO, Inc. and, for certain
    purposes, AREH, pursuant to which we were to have been merged
    into NEG IPOCO, Inc in connection with its proposed initial
    public offering, was terminated;
    Any assets or property of NEG Oil & Gas and its
    subsidiaries owned by them but in our possession (including,
    without limitation, information technology, software and data
    relevant to the oil and gas operations of NEG Oil & Gas
    or its subsidiaries) were transferred and delivered to NEG
    Oil & Gas or its subsidiaries, as designated by NEG
    Oil & Gas; and
    Most of our employees became employees of SandRidge, including
    the following principal officers: Randy Cooley, our chief
    financial officer, as well as Rick Kirby, Kent Lueders, David
    Rigby, Jenny Robins, Lori Mauk and Wayne Campbell, each of whom
    was a vice president. Bob G. Alexander and Philip D. Devlin
    remained our chief executive officer and vice president, general
    counsel and secretary, respectively, and our board of directors
    was unchanged. Subsequently, Jon Weber resigned as director and
    was replaced by Vincent Intrieri and Philip D. Devlin resigned
    as our general counsel and secretary. 43




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##### Table of Contents



Ownership
    and Control of Outstanding Stock
    Related
    Party Transaction Policy
     44




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##### Table of Contents



Holding
    LLC Credit Facility
               45




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##### Table of Contents



Item 14.
    Principal
    Accounting Fees and Services    2006


2005Audit Fees(1)

$
265,300


$
175,300Audit Related Fees


5,000



Audit and Audit Related Fees

$
270,300


$
175,300Tax Fees(2)






All Other Fees(3)






90,000Total Fees

$
270,300


$
265,300     (1)
    
    Represents fees for professional services rendered for the audit
    of our annual financial statements for 2005 and 2006 and the
    reviews of the financial statements included in our quarterly
    reports on
    Form 10-Q
    for each of those years.(2)
    
    Represents fees for professional services rendered for tax
    preparation and tax audit services in 2005 and 2006.(3)
    
    Represents fees for professional services rendered for
    consulting and Sarbanes Oxley compliance in 2005 and 2006.   46




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PART IV  Item 15.
    Exhibits
    and Financial Statement Schedule    Financial Statements: page F-1
  Financial Statement Schedules: page F-1
  Exhibits:
   47




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##### Table of Contents



SIGNATURES      By:
    /s/  BOB
    G. ALEXANDER   President and Chief Executive Officer
    By:
    /s/  Hillel
    Moerman   Vice President and Chief Financial Officer
    POWER OF
    ATTORNEY AND SIGNATURES
  attorney-in-fact Form 10-K attorney-in-fact,
    /s/  BOB
    G.
    ALEXANDERBob
    G. Alexander

President, Chief Executive Officer
    and Director/s/  VINCENT
    INTRIERIVincent
    Intrieri

Director/s/  ROBERT
    H. KITERobert
    H. Kite

Director/s/  ROBERT
    J. MITCHELLRobert
    J. Mitchell

Director/s/  JACK
    G.
    WASSERMANJack
    G. Wasserman

Director  48




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##### Table of Contents



INDEX TO
    FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
  FINANCIAL STATEMENTS
  PageNational Energy Group,
    Inc.Report of
    Independent Registered Public Accounting Firm  Grant
    Thornton LLP


F-2Balance Sheets as
    of December 31, 2005 and 2006


F-3Statements of
    Operations for the years ended December 31, 2004, 2005 and
    2006


F-4Statements of Cash
    Flows for the years ended December 31, 2004, 2005 and
    2006


F-5Statements of
    Stockholders Equity (Deficit) for the years ended
    December 31, 2004, 2005 and 2006


F-6Notes to Financial
    Statements


F-7NEG Holding LLC(1)Report of
    Independent Registered Public Accounting Firm  Grant
    Thornton LLP


F-21Consolidated
    Balance Sheets as of December 31, 2005 and
    November 21, 2006


F-22Consolidated
    Statements of Operations for the years ended December 31,
    2004 and 2005 and for the period January 1, 2006 through
    November 21, 2006


F-23Consolidated
    Statements of Cash Flows for years ended December 31, 2004
    and 2005 and for the period January 1, 2006 through
    November 21, 2006


F-24Consolidated
    Statements of Members Equity for the years ended
    December 31, 2004 and 2005 and for the period
    January 1, 2006 through November 21, 2006


F-25Notes to
    Consolidated Financial Statements


F-26   Financial
    Statement Schedules
      (1)
    
    Pursuant to Securities and Exchange Commission
    Regulation SX
    Rule 3-09,
    NEG Holding LLC, is deemed to be a significant, unconsolidated
    subsidiary of National Energy Group, Inc. (NEG).
    Consequently the financial statements of NEG Holding LLC are
    presented as of December 31, 2005 and November 21,
    2006 (the date of disposition by NEG) and for the years ended
    December 31, 2004, and 2005 and the period January 1,
    2006 through November 21, 2006. F-1




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REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM           Internal Control 
    Integrated Framework
  GRANT
    THORNTON LLP
    F-2




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##### Table of Contents



NATIONAL
    ENERGY GROUP, INC.



BALANCE
    SHEETS  December 31,2005


2006ASSETSCurrent assets:Cash and cash equivalents

$
3,059,007


$
88,199,910Accounts receivable 
    other






193,350Accounts receivable 
    affiliates


1,659,816



46,242Other


314,966



Total current assets


5,033,789



88,439,502Property, plant and equipment, net


24,877



63,369Investment in Holding LLC


116,127,681



Deferred tax assets


14,540,446



Total assets

$
135,726,793


$
88,502,871LIABILITIES AND
    STOCKHOLDERS EQUITY (DEFICIT)Current liabilities:Accounts payable

$
435,594


$
177,440Income taxes payable


151,270



2,717,652Accrued interest on senior
    notes  affiliates


2,663,080



Total current liabilities


3,249,944



2,895,092Long-term Liabilities:Senior Notes  affiliates


148,637,000



Deferred tax liability






7,016Deferred gain on Senior Note
    redemption


1,698,413



Commitments and contingenciesStockholders equity
    (deficit):Common stock, $.01 par value:Authorized shares 
    15,000,000 at December 31, 2005 and 2006; Issued and
    outstanding shares  11,190,650 at December 31,
    2005 and 2006


111,907



111,907Additional paid-in capital


123,020,121



123,020,121Accumulated deficit


(140,990,592
)


(37,531,265
)Total stockholders equity
    (deficit)


(17,858,564
)


85,600,763Total liabilities and
    stockholders equity (deficit)

$
135,726,793


$
88,502,871    F-3




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##### Table of Contents



NATIONAL
    ENERGY GROUP, INC.



STATEMENTS
    OF OPERATIONS  Year Ended December 31,2004


2005


2006Revenues:Accretion of Investment in Holding
    LLC

$
34,431,731


$
44,306,411


$
48,487,799Management fees from affiliates


11,562,726



14,587,206



15,554,111Gain on sale of Holding LLC
    interest










112,188,067Interest income and other, net


39,310



77,679



530,302Total revenue


46,033,767



58,971,296



176,760,279Costs and expenses:Salaries and wages


7,224,605



8,789,555



12,541,595Insurance


1,001,644



809,099



1,035,020Rent and utilities


699,674



797,522



816,701Other general and administrative
    expenses


2,218,752



4,508,264



4,244,668Interest expense


13,940,391



13,940,383



12,549,062Total costs and expenses


25,085,066



28,844,823



31,187,046Income before income taxes


20,948,701



30,126,473



145,573,233Income tax expense


(6,663,834
)


(4,852,353
)


(42,113,906
)Net income

$
14,284,867


$
25,274,120


$
103,459,327Earnings per share:Net income per common share, basic
    and diluted

$
1.28


$
2.26


$
9.25Weighted average number of common
    shares outstanding


11,190,650



11,190,650



11,190,650    F-4




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##### Table of Contents



NATIONAL
    ENERGY GROUP, INC.



STATEMENTS
    OF CASH FLOWS  Year Ended December 31,2004


2005


2006Operating Activities:Net income

$
14,284,867


$
25,274,120


$
103,459,327Deferred gain
    amortization  interest reduction


(2,038,095
)


(2,038,095
)


(1,698,413
)Depreciation and depletion










1,581Accretion of Investment in Holding
    LLC


(34,431,731
)


(44,306,411
)


(48,487,799
)Deferred income taxes


6,663,834



4,701,083



14,547,462Gain on sale of Holding LLC










(112,188,067
)Changes in operating assets and
    liabilities:Accounts receivable


(1,394,197
)


739,753



1,420,224Other current assets


83,841



(155,654
)


314,966Accounts payable and accrued
    liabilities


181,859



378,061



(354,852
)Net cash used in operating
    activities


(16,649,622
)


(15,407,143
)


(42,985,571
)Investing Activities:Sale of investment in Holding LLC










260,825,071Guaranteed Payment from Holding LLC


15,978,478



15,978,478



15,978,476Purchases of furniture, fixtures
    and equipment










(56,925
)Sale of furniture, fixtures and
    equipment










16,852Net cash provided by investing
    activities


15,978,478



15,978,478



276,763,474Financing Activities:Repayments of long term
    debt  affiliates










(148,637,000
)Net cash used in financing
    activities










(148,637,000
)Increase (decrease) in cash and
    cash equivalents


(671,144
)


571,335



85,140,903Cash and cash equivalents at
    beginning of period


3,158,816



2,487,672



3,059,007Cash and cash equivalents at end
    of period

$
2,487,672


$
3,059,007


$
88,199,910Supplemental Cash Flow
    InformationInterest paid in cash

$
15,978,478


$
15,978,478


$
14,247,475Income taxes paid

$



$



$
25,000,000    F-5




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##### Table of Contents



NATIONAL
    ENERGY GROUP, INC.



STATEMENTS
    OF STOCKHOLDERS EQUITY (DEFICIT)  Additional





TotalCommon Stock


Paid-In


Accumulated


StockholdersShares


Amount


Capital


Deficit


Equity (Deficit)Balance at December 31, 2003


11,190,650


$
111,907


$
123,020,121


$
(180,549,579
)

$
(57,417,551
)Net income 2004














14,284,867



14,284,867Balance at December 31, 2004


11,190,650


$
111,907


$
123,020,121


$
(166,264,712
)

$
(43,132,684
)Net income 2005














25,274,120



25,274,120Balance at December 31, 2005


11,190,650


$
111,907


$
123,020,121


$
(140,990,592
)

$
(17,858,564
)Net income 2006














103,459,327



103,459,327Balance at December 31, 2006


11,190,650


$
111,907


$
123,020,121


$
(37,531,265
)

$
85,600,763    F-6




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##### Table of Contents



NATIONAL
    ENERGY GROUP, INC.



NOTES TO
    FINANCIAL STATEMENTS

December 31, 2006 1.
    Background
    and Basis of Presentation    Rule 12b-2
    Rule 3a-2 Rule 3a-2,
     F-7




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##### Table of Contents



NATIONAL
    ENERGY GROUP, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
          2.
    Sale of
    Our Non-controlling Membership in Holding LLC and Termination of
    Our Management Contracts          
    NEG Oil & Gas exercised its option to purchase our
    non-controlling 50% membership interest in Holding LLC for net
    cash proceeds of approximately $260.8 million;
    We paid in full the outstanding principal balance and accrued
    interest on our 10.75% senior notes due October 31,
    2007 (the Senior Notes) in the aggregate amount of
    $149.6 million. Such payment was made to AREP O&G
    Holding LLC (AREP O&G), as the holder of the
    Senior Notes;
    The liens in favor of NEG Oil & Gas with respect to our
    membership interest in Holding LLC, and the proceeds thereof,
    under the Operating LLC credit facility were released and
    terminated; F-8




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##### Table of Contents



NATIONAL
    ENERGY GROUP, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
   
    Our management agreements pursuant to which we managed the
    operations of Operating LLC, National Onshore and National
    Offshore were terminated;
    The previously announced Agreement and Plan of Merger dated
    December 7, 2005 (the Merger Agreement) among
    us, NEG Oil & Gas, IPOCO, Inc. and, for certain
    purposes, AREH, pursuant to which we were to have been merged
    into IPOCO, Inc in connection with its proposed initial public
    offering, was terminated (see Note 3);
    Any assets or property of NEG Oil & Gas and its
    subsidiaries owned by them but in our possession (including,
    without limitation, information technology, software and data
    relevant to the oil and gas operations of NEG Oil & Gas
    or its subsidiaries) were transferred and delivered to NEG
    Oil & Gas or its subsidiaries, as designated by NEG
    Oil & Gas; and
    Most of our employees became employees of SandRidge, including
    the following principal officers: Randy Cooley, our chief
    financial officer, as well as Rick Kirby, Kent Lueders, David
    Rigby, Jenny Robins, Lori Mauk and Wayne Campbell, each of whom
    was a vice president. Bob G. Alexander and Philip D. Devlin
    remained our chief executive officer and vice president, general
    counsel and secretary, respectively, and our Board of Directors
    was unchanged. Subsequently, Jon Weber resigned as director and
    was replaced by Vincent Intrieri and Philip D. Devlin resigned
    as our general counsel and secretary.      Net Proceeds

$
260,825,071Book basis in Holding LLC as of
    November 21, 2006


(148,637,004
)Gain on sale of Holding LLC

$
112,188,067   3.
    Termination
    of Previously Announced Merger Agreement     F-9




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##### Table of Contents



NATIONAL
    ENERGY GROUP, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
      4.
    Significant
    Accounting Policies  Accounting
    Estimates
    Cash
    and Cash Equivalents
  and/or
  Accounts
    Receivable
    Investment
    in Holding LLC
     F-10




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##### Table of Contents



NATIONAL
    ENERGY GROUP, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
   and/or
    Income
    Taxes
    Financial
    Instruments
      Earnings
    (Loss) Per Share
    Comprehensive
    Income
    401-K
    Plan
  401-K 401-K
  Related
    Parties
   F-11




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##### Table of Contents



NATIONAL
    ENERGY GROUP, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    Recent
    Accounting Pronouncements
    Fair Value Measurements.
  Employers Accounting for Defined Benefit Pension
    and Other Postretirement Plans. Employers Accounting for Settlement and Curtailments of
    Defined Benefit Pension Plans and for Termination Benefits Employers Disclosures about Pensions and Other
    Postretirement Benefits
   F-12




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##### Table of Contents



NATIONAL
    ENERGY GROUP, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
      Reclassifications
    4.
    Management
    Agreements  day-to-day
    The
    National Onshore Management Agreement
   F-13




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##### Table of Contents



NATIONAL
    ENERGY GROUP, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    day-to-day
    The
    National Offshore Management Agreement
      5.
    Credit
    Facility/Pledge of Our Membership Interest in Holding,
    LLC     F-14




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##### Table of Contents



NATIONAL
    ENERGY GROUP, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
          Pledge
    of Our Membership Interest in Holding LLC
    6.
    Senior
    Notes Due 2006       F-15




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##### Table of Contents



NATIONAL
    ENERGY GROUP, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
        7.
    Commitments
    and Contingencies        8.
    Investment
    in Holding LLC   F-16




---



##### Table of Contents



NATIONAL
    ENERGY GROUP, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
     Period fromJanuary 1 toYear Ended December 31,


November 21,2004


2005


2006Total revenues

$
79,621,556


$
88,426,341


$
165,477,836Total cost and expenses


(48,207,118
)


(66,023,312
)


(67,171,165
)Operating income


31,414,438



22,403,029



98,306,671Other income (expense)


(2,291,924
)


(1,311,872
)


(6,784,172
)Net income before tax


29,122,514



21,091,157



91,522,499Provision for income taxes










(1,479,933
)Net income

$
29,122,514


$
21,091,157


$
90,042,566         2005


2006Investment in Holding LLC at
    beginning of year

$
87,799,748


$
116,127,681Guaranteed Payment from Holding LLC


(15,978,478
)


(15,978,476
)Accretion of investment in Holding
    LLC


44,306,411



48,487,799Sale of membership interest






(148,637,004
)Investment in Holding LLC at end
    of year

$
116,127,681


$
  F-17




---



##### Table of Contents



NATIONAL
    ENERGY GROUP, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
              9.
    Stockholders
    Equity  Common
    Stock
  winding-up
   F-18




---



##### Table of Contents



NATIONAL
    ENERGY GROUP, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
   10.
    Income
    Taxes    Year Ended December 31,2004


2005


2006Current

$



$
(151,270
)

$
(27,566,444
)Deferred


(6,663,834
)


(4,701,083
)


(14,547,462
)$
(6,663,834
)

$
(4,852,353
)

$
(42,113,906
)     Year Ended December 31,2004


2005


2006Income tax expense at statutory
    rate

$
(7,332,045
)

$
(10,544,266
)

$
(50,950,632
)Reversal of valuation allowance on
    deferred tax assets


1,286,986



5,709,342



8,878,582Other


(618,775
)


(17,429
)


(41,856
)$
(6,663,834
)

$
(4,852,353
)

$
(42,113,906
)     December 31,2005


2006Deferred tax assets related to:Investment in Holding LLC

$



$
Net operating loss carryforwards


29,375,108



AMT credit carryforwards


759,467



Other, net


594,445



30,729,020



Less valuation allowance


(8,878,582
)


$
21,850,438


$
Deferred tax liabilities related
    to:Investment in Holding LLC


(7,303,588
)


Property, plant and equipment


(6,404
)


(7,016
)Total deferred tax liabilities


(7,309,992
)


(7,016
)Net deferred tax
    assets/(liabilities)

$
14,540,446


$
(7,016
)    F-19




---



##### Table of Contents



NATIONAL
    ENERGY GROUP, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
   11.
    Subsequent
    Events    12.
    Quarterly
    Financial Results (Unaudited)    Three Months EndedMarch 31


June 30


September 30


December 31Year ended December 31,
    2005:Total revenues

$
13,178


$
13,814


$
15,248


$
16,731Total costs and expenses

$
6,540


$
6,391


$
7,187


$
8,727Net income

$
4,315


$
4,825


$
5,240


$
10,894Per common share:Net income

$
0.39


$
0.43


$
0.47


$
0.97Year ended December 31,
    2006:Total revenues

$
18,695


$
17,659


$
19,676


$
120,730Total costs and expenses

$
9,611


$
6,749


$
7,583


$
7,244Net income

$
5,904


$
7,071


$
16,728


$
73,756Per common share:Net income

$
0.53


$
0.63


$
1.49


$
6.60  F-20




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM           GRANT
    THORNTON LLP
    F-21




---



##### Table of Contents



NEG
    HOLDING LLC AND SUBSIDIARY



CONSOLIDATED
    BALANCE SHEET  December 31,


November 21,2005


2006ASSETSCurrent assets:Cash and cash equivalents

$
25,680,447


$
6,465,681Accounts receivable 
    oil and natural gas sales


32,971,655



20,211,759Accounts receivable 
    joint interest and other (net of allowance of $104,000 in 2005
    and 2006)


933,366



4,621,790Notes receivable  other
    (net of allowance of $1,259,000 in 2005 and 2006)


10,176



8,948Drilling prepayments


2,411,011



2,341,105Other


4,127,339



3,137,570Total current assets


66,133,994



36,786,853Oil and natural gas properties, at
    cost (full cost method):Subject to ceiling limitation


693,826,614



802,664,581Accumulated depreciation,
    depletion, and amortization


375,460,827



410,146,867Net oil and natural gas properties


318,365,787



392,517,714Other property and equipment


5,476,230



5,681,863Accumulated depreciation


4,395,827



4,711,014Net other property and equipment


1,080,403



970,849Other long term assets


12,803



12,803Total assets

$
385,592,987


$
430,288,219LIABILITIES AND MEMBERS
    EQUITYCurrent liabilities:Accounts payable  trade

$
7,002,735


$
17,235,428Accounts payable 
    related party


723,039



7,289,238Accounts payable 
    revenue


6,990,277



6,307,158Advance payable 
    affiliate


1,500,000



Prepayments from partners


73,583



510,247Other


265,722



95,327Accrued interest 
    related party


266,093



4,459,506Derivative financial instruments


38,404,009



131,137Total current liabilities


55,225,458



36,028,041Long term liabilities:Gas balancing


904,964



904,964Credit facility 
    related party


132,357,634



132,357,634Asset retirement obligation


3,729,200



4,605,027Derivative financial instruments


14,081,645



1,554,444Deferred income tax liability






1,479,933Commitments and contingenciesMembers equity


179,294,086



253,358,176Total liabilities and
    members equity

$
385,592,987


$
430,288,219    F-22




---



##### Table of Contents



NEG
    HOLDING LLC AND SUBSIDIARY



CONSOLIDATED
    STATEMENTS OF OPERATIONS  For the PeriodJanuary 1, 2006throughYear Ended December 31,


November 21,2004


2005


2006Revenues:Oil and natural gas
    sales  gross

$
85,091,674


$
123,659,406


$
110,707,722Unrealized derivative gain (loss)


(7,520,383
)


(38,369,796
)


50,800,074Field operations


326,960



401,035



476,498Plant operations


1,723,305



2,735,696



3,493,542Total revenue


79,621,556



88,426,341



165,477,836Costs and expenses:Lease operating


14,399,433



18,502,854



17,672,640Field operations


334,443



390,395



421,857Plant operations


680,066



916,996



1,228,443Oil and natural gas production
    taxes


5,732,265



8,482,417



8,751,394Depreciation, depletion and
    amortization


21,385,529



32,377,328



35,093,047Accretion of asset retirement
    obligation


261,471



265,319



256,405Amortization of loan cost


494,386



1,147,783



General and administrative


4,919,525



3,940,220



3,747,379Total costs and expenses


48,207,118



66,023,312



67,171,165Operating income


31,414,438



22,403,029



98,306,671Other income (expense):Interest expense


(2,222,009
)


(6,085,899
)


(126,352
)Interest income and other, net


299,327



645,996



2,395,195Interest expense 
    related party






(266,093
)


(9,053,015
)Interest income from affiliate


149,650







Gain (loss) on equity method
    investment


(518,892
)


4,394,124



Income before income taxes


29,122,514



21,091,157



91,522,499Provision for income taxes










(1,479,933
)Net income

$
29,122,514


$
21,091,157


$
90,042,566    F-23




---



##### Table of Contents



NEG
    HOLDING LLC AND SUBSIDIARY



CONSOLIDATED
    STATEMENTS OF CASH FLOWS  For the PeriodJanuary 1, 2006throughYear Ended December 31,


November 21,2004


2005


2006Operating ActivitiesNet income

$
29,122,514


$
21,091,157


$
90,042,566Adjustments to reconcile net
    income to net cash provided by operating activities:Depreciation, depletion and
    amortization


21,385,529



32,377,328



35,093,047Change in fair value of derivative
    contracts


7,520,383



38,369,796



(50,800,074
)Gain on sale of assets


(6,136
)


(8,553
)


(2,181
)Deferred income taxes










1,479,933Equity in (gain) loss on investment


518,892



(4,394,124
)


Accretion of asset retirement
    obligation


261,471



265,319



256,405Provision for doubtful account


790,000



469,037



Amortization of note costs


494,386



1,147,783



Changes in operating assets and
    liabilities:Accounts receivable


(5,078,989
)


(15,067,889
)


9,071,472Notes receivable


(1,258,198
)


3,098,420



1,228Drilling prepayments


248,758



(1,552,897
)


69,906Derivative broker deposit


1,700,000







Other current assets


(2,086,257
)


(1,965,266
)


989,769Accounts payable and accrued
    liabilities


8,017,822



2,063,119



19,075,456Net cash provided by operating
    activities


61,630,175



75,893,230



105,277,527Investing ActivitiesOil and natural gas exploration
    and development expenditures


(67,487,412
)


(120,738,756
)


(108,237,994
)Purchases of other property and
    equipment


(245,250
)


(497,923
)


(317,471
)Proceeds from sales of oil and
    natural gas properties


1,202,263



274,365



Proceeds from equity investment
    sale






7,227,070



Sale of oil and gas properties










19,448Sale of other property and
    equipment






11,935



22,200Equity investment


(1,200,000
)


(453,837
)


Net cash used in investing
    activities


(67,730,399
)


(114,177,146
)


(108,513,817
)Financing ActivitiesProceeds from Mizuho credit
    facility


8,000,000



79,100,000



Loan issuance costs


(439,890
)


(40,000
)


Guaranteed Payment to member


(15,978,478
)


(15,978,478
)


(15,978,476
)Net cash provided by (used in)
    financing activities


(8,418,368
)


63,081,522



(15,978,476
)Increase (decrease) in cash and
    cash equivalents


(14,518,592
)


24,797,606



(19,214,766
)Cash and cash equivalents at
    beginning of period


15,401,433



882,841



25,680,447Cash and cash equivalents at end
    of period

$
882,841


$
25,680,447


$
6,465,681Supplemental Cash Flow
    InformationInterest paid in cash

$
1,713,136


$
4,715,895


$
4,985,954    F-24




---



##### Table of Contents



NEG
    HOLDING LLC AND SUBSIDIARY



CONSOLIDATED
    STATEMENTS OF MEMBERS EQUITY  Balance at December 31, 2003

$
161,037,371Guaranteed Payment to member


(15,978,478
)Net income


29,122,514Balance at December 31, 2004


174,181,407Guaranteed Payment to member


(15,978,478
)Net income


21,091,157Balance at December 31, 2005


179,294,086Guaranteed Payment to member


(15,978,476
)Net income


90,042,566Balance at November 21, 2006

$
253,358,176    F-25




---



##### Table of Contents



NEG
    HOLDING LLC AND SUBSIDIARY



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS

November 21, 2006 1.
    Basis of
    Presentation and Background  Rule 3-09,
    National EnergyGroup, Inc.


Gascon


TotalCurrent assets

$
11,535,745


$
97,183,477


$
108,719,222Net oil and natural gas properties


84,983,139



30,573,625



115,556,764Hedge assets


4,807,689







4,807,689Intercompany receivable






4,783,737



4,783,737Total assets

$
101,326,573


$
132,540,839


$
233,867,412Current liabilities

$
4,157,430


$
2,657,190


$
6,814,620Long-term liabilities


940,033



1,377,782



2,317,815Intercompany payable


4,783,737







4,783,737Members equity


91,445,373



128,505,867



219,951,240Total liabilities and
    members equity

$
101,326,573


$
132,540,839


$
233,867,412      F-26




---



##### Table of Contents



NEG
    HOLDING LLC
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     2.
    Significant
    Accounting Policies  Consolidation
    Accounting
    Estimates
    Cash
    and Cash Equivalents
  and/or
  Oil
    and Natural Gas Properties
  units-of-production
     F-27




---



##### Table of Contents



NEG
    HOLDING LLC
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    and/or
    Other
    Property and Equipment
        Income
    Taxes
    Financial
    Instruments
   F-28




---



##### Table of Contents



NEG
    HOLDING LLC
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Accounts
    Receivable
      Revenue
    Recognition
    Natural
    Gas Production Imbalances
    Comprehensive
    Income
    Derivatives
  Accounting
    for Certain Derivative Instruments and Certain Hedging
    Activities Accounting for Certain Derivative Instruments and
    Certain Hedging Activity an Amendment of
    SFAS 133
   F-29




---



##### Table of Contents



NEG
    HOLDING LLC
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2004


2005


2006Gross cash receipts

$
1,327,200


$



$
5,915,730Gross cash payments

$
13,694,010


$
31,895,230


$
17,076,720Unrealized derivative loss (gain)

$
7,520,383


$
38,369,796


$
(50,800,074
)         Type Contract

Production Year


Volume per Month


Floor


CeilingNo Cost Collars


Remainder of 2006



500,000 MMBTU


$
4.50


$
5.00No Cost Collars


Remainder of 2006



120,000 MMBTU


$
6.00


$
7.28No Cost Collars


2007



730,000 MMBTU


$
8.00


$
10.23No Cost Collars


2008



610,000 MMBTU


$
7.00


$
10.35No Cost Collars


Remainder of 2006



16,000 Bbls


$
41.75


$
45.40No Cost Collars(1)


Remainder of 2006



16,000 Bbls


$
60.00


$
68.50No Cost Collars


2007



12,000 Bbls


$
57.00


$
70.50No Cost Collars


2007



12,000 Bbls


$
57.50


$
72.00No Cost Collars


2008



21,000 Bbls


$
55.00


$
69.00     (1)
    
    This contract has a second ceiling at $84.50.    Recent
    Accounting Pronouncements
   F-30




---



##### Table of Contents



NEG
    HOLDING LLC
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Fair Value Measurements.
  Employers Accounting for Defined Benefit Pension
    and Other Postretirement Plans. Employers Accounting for Settlement and Curtailments of
    Defined Benefit Pension Plans and for Termination Benefits Employers Disclosures about Pensions and Other
    Postretirement Benefits
     F-31




---



##### Table of Contents



NEG
    HOLDING LLC
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Reclassifications
    3.
    Management
    Agreement  day-to-day
    4.
    Acquisitions    5.
    Investments/Note Receivable     F-32




---



##### Table of Contents



NEG
    HOLDING LLC
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    6.
    Credit
    Facilities           F-33




---



##### Table of Contents



NEG
    HOLDING LLC
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          7.
    Income
    Taxes    December 31,2004


2005


2006(In thousands)Federal income tax provision:Current

$



$



$
Deferred










State income tax provision:Current






Deferred










1,480$



$



$
1,480   Deferred
    Tax Assets & Liabilities
    December 31,2005


2006(In thousands)Deferred tax assets:Other






Total deferred tax assets






Less valuation allowance






Total deferred tax assets after
    valuation allowances






Deferred tax liabilities:Non-current:Other






(1,480
)Total deferred tax liabilities






(1,480
)Net deferred tax assets
    (liabilities)

$



$
(1,480
)  F-34




---



##### Table of Contents



NEG
    HOLDING LLC
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    December 31,2004


2005


2006Expected federal tax


35.0
%


35.0
%


35.0
%Income taxed at member level


(35.0
)%


(35.0
)%


(35.0
)%State taxes


0.00
%


0.0
%


1.6
%0.0
%


0.0
%


1.6
%   8.
    Commitments
    and Contingencies             F-35




---



##### Table of Contents



NEG
    HOLDING LLC
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   9.
    Asset
    Retirement Obligation  Accounting for Asset
    Retirement Obligations and/or
    Balance as of January 1, 2005

$
3,055,240Add: Accretion


265,319Additions


690,961Less: Revisions


(261,540
)Settlements


(17,601
)Dispositions


(3,179
)Balance as of December 31,
    2005

$
3,729,200Add: Accretion


256,405Additions


619,422Balance as of November 21,
    2006

$
4,605,027   9.
    Distributions
    under the Holding LLC Operating Agreement         F-36




---



##### Table of Contents



NEG
    HOLDING LLC
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     1 2 1 2
      11.
    Crude Oil
    and Natural Gas Producing Activities    Period fromJanuary 1, 2006throughYear Ended December 31,


November 21,2004


2005


2006Acquisition of properties

$



$
31,913,309


$
Exploration costs


29,006,772



41,797,225



32,697,530Development costs


38,480,640



47,028,222



75,540,464Depletion rate per Mcfe

$
1.28


$
1.65


$
1.93     Period fromJanuary 1, 2006throughYear Ended December 31,


November 21,2004


2005


2006Plains Marketing and Transportation

$
19,786,979


$
25,591,281


$
24,171,734Riata Energy, Inc.


29,884,850



46,126,024



44,362,378Seminole Energy Services


19,572,461



27,314,857



14,154,185   12.
    Supplementary
    Crude Oil and Natural Gas Reserve Information
    (Unaudited)     F-37




---



##### Table of Contents



NEG
    HOLDING LLC
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
         Crude Oil


Natural Gas(Barrels)


(Thousand cubic feet)December 31, 2003


5,041,450



167,604,295Sales of reserves in place


(15,643
)


(344,271
)Extensions and discoveries


445,636



33,350,666Revisions of previous estimates


(30,249
)


15,441,298Production


(565,100
)


(13,106,103
)December 31, 2004


4,876,094



202,945,885Purchase of reserves in place


277,580



28,463,590Sales of reserves in place






(75,112
)Extensions and discoveries


736,501



64,000,863Revisions of previous estimates


(199,165
)


13,458,970Production


(526,915
)


(16,249,769
)December 31, 2005


5,164,095



292,544,427Extensions and discoveries


649,428



39,398,630Revisions of previous estimates


(553,559
)


(21,297,187
)Production


(414,965
)


(15,462,892
)November 21, 2006


4,844,999



295,182,978Proved developed reserves:December 31, 2004


3,798,341



111,126,829December 31, 2005


3,608,666



141,262,660November 21, 2006


3,375,017



144,797,257    F-38




---



##### Table of Contents



NEG
    HOLDING LLC
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          December 31,


November 21,2005


2006Future cash inflows

$
3,179,810,738


$
2,064,797,998Future production and development
    costs


(1,000,499,398
)


(874,608,888
)Future net cash flows


2,179,311,340



1,190,189,11010% annual discount for estimated
    timing of cash flows


(1,103,430,089
)


(595,431,195
)Standardized measure of discounted
    future net cash flows

$
1,075,881,251


$
594,757,915     For thePeriod fromJanuary 1, 2006Year Ended December 31,


to November 21,2004


2005


2006Purchases of reserves

$



$
110,452,993


$
Sales of reserves in place


(1,375,463
)


(220,054
)


Sales and transfers of crude oil
    and natural gas produced, net of production costs


(83,004,073
)


(96,674,135
)


(95,444,678
)Net changes in prices and
    production costs


31,039,998



240,976,967



(570,846,822
)Development costs incurred during
    the period and changes in estimated future development costs


(81,370,910
)


(127,488,468
)


57,659,492Extensions and discoveries, less
    related costs


118,570,850



322,710,871



90,319,976Revisions of previous quantity
    estimates


49,194,080



35,280,975



(76,152,843
)Accretion of discount


45,606,010



53,482,361



107,588,125Changes in production rates
    (timing) and other


103,030



2,536,115



5,753,414Net change

$
78,763,522


$
541,057,625


$
(481,123,336
)  F-39




---



##### Table of Contents



NEG
    HOLDING LLC
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   F-40




---



##### Table of Contents



INDEX TO
    EXHIBITS
  2
.1

Debtors Joint Plan of
    Reorganization under Chapter 11 of the Bankruptcy Code
    dated May 12, 2000(4)2
.2

Debtors and Official
    Committee of Unsecured Creditors Joint Disclosure Statement
    under Section 1125 of the Bankruptcy Code Regarding the
    Debtors and Official Committee of Unsecured
    Creditors Joint Plan of Reorganization under
    Chapter 11 of the Bankruptcy Code, dated May 12,
    2000(4)3
.1

Restated Certificate of
    Incorporation filed with the Secretary of State of Delaware on
    October 16, 2000(5)3
.2

By-laws of the Company(1)3
.3

Amendment to Restated Certificate
    of Incorporation filed with the Secretary of State of Delaware
    on November 10, 2003(8)4
.1

Indenture dated as of
    November 1, 1996, among the Company, National Energy Group
    of Oklahoma, Inc. (the Guarantor), formerly NEG-OK,
    and Bank One, Columbus, N.A.(2)4
.2

Indenture dated August 21,
    1997, among the Company and Bank One, N.A.(3)10
.1

NEG Holding LLC Operating
    Agreement dated May 1, 2001 between the Company and Gascon
    Partners.(6)10
.2

NEG Operating LLC Operating
    Agreement dated May 1, 2001 executed by NEG Holding LLC.(6)10
.3

Shana National LLC Amended and
    Restated Operating Agreement dated September 12, 2001
    executed by NEG Operating LLC.(6)10
.4

Management Agreement dated
    September 12, 2001 between the Company and NEG Operating
    LLC.(6)10
.5

Final Decree of Bankruptcy Court(7)10
.6

Management Agreement with National
    Onshore LP dated August 28, 2003(8)10
.7

Credit Agreement dated as of
    December 29, 2003 among NEG Operating LLC, Certain
    Commercial Lending Institutions, Mizuho Corporate Bank, Ltd.,
    Bank of Texas N.A., and the Bank of Nova Scotia(9)10
.8

Security Agreement dated as of
    December 29, 2003 made by NEG Operating LLC in favor of
    Bank of Texas, N.A.(9)10
.9

Pledge Agreement and Irrevocable
    Proxy dated as of December 29, 2003 made by NEG Operating
    LLC in favor of Bank of Texas, N.A.(9)10
.10

Pledge Agreement and Irrevocable
    Proxy dated as of December 29, 2003 made by National Energy
    Group, Inc. in favor of Bank of Texas, N.A.(9)10
.11

First Amendment to the Credit
    Agreement dated April 5, 2004 among NEG Operating LLC,
    certain commercial lending institutions, Mizuho Corporate Bank
    LTD, Bank of Texas N.A. and the Bank of Nova Scotia(11)10
.12

Management Agreement effective
    November 16, 2004 between NEG and National Offshore LP.(12)10
.13

National Energy Group, Inc.
    Incentive Plan(13)10
.14

Agreement and Plan of Merger dated
    as of December 7, 2005, by and among National Energy Group,
    Inc., NEG Oil & Gas LLC, NEG IPOCO, Inc. and American
    Real Estate Holdings Limited Partnership.(14)10
.15

Amended and Restated Credit
    Agreement, dated as of December 22, 2005, among NEG
    Operating LLC, NEG Oil & Gas LLC and Citicorp USA,
    Inc.(15)10
.16

Affirmation of Obligations Among
    NEG Operating LLC, NEG Holding LLC, Shana National LLC, NGX GP
    of Delaware LLC, NGX of Delaware LLC NGX Energy Limited
    Partnership, AREP Oil & Gas LLC and Citicorp USA, Inc.
    dated December 20, 2005(16)10
.17

Supplemental Indenture dated
    March 16, 2006(16)10
.18

Agreement dated October 25,
    2006, among NEGI, NEG Oil & Gas, Newco and AREH(17)10
.19

Employment Agreement of
    Mr. Bob G. Alexander(18)12
.1

Computation of Ratio of Earnings
    to Fixed Charges(19)14
.1

Code of Business Conduct and
    Ethics Adopted March 24, 2004(10)24
.1

Power of Attorney (included in
    signature pages to this
    Form 10-K)(19)31
.1

Certification of Chief Executive
    Officer pursuant to Section 302 of the Sarbanes-Oxley Act
    of 2002(19)31
.2

Certification of Chief Financial
    Officer pursuant to Section 302 of the Sarbanes-Oxley Act
    of 2002(19) F-41




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##### Table of Contents



32
.1

Certification of Chief Executive
    Officer pursuant to Section 906 of the Sarbanes-Oxley Act
    of 2002, 18 U.S.C. Section 1350(19). Pursuant to SEC
    Release
    34-47551
    this Exhibit is furnished to the SEC and shall not be deemed to
    be filed.32
.2

Certification of Chief Financial
    Officer pursuant to Section 906 of the Sarbanes-Oxley Act
    of 2002, 18 U.S.C. Section 1350(19). Pursuant to SEC
    Release
    34-47551
    this Exhibit is furnished to the SEC and shall not be deemed to
    be filed.     (1)
    
    Incorporated by reference to the Companys Registration
    Statement on Form
    S-4
    (No. 33-38331),
    dated April 3, 1991.(2)
    
    Incorporated by reference to the Companys Quarterly Report
    on
    Form 10-Q
    for the quarter ended September 30, 1996.(3)
    
    Incorporated by reference to the Companys
    Form S-4
    (No. 333-38075),
    filed October 16, 1997.(4)
    
    Incorporated by reference to the Companys Quarterly Report
    on
    Form 10-Q
    for the quarter ended March 31, 2000.(5)
    
    Incorporated by reference to the Companys Quarterly Report
    on
    Form 10-Q
    for the quarter ended September 30, 2000.(6)
    
    Incorporated by reference to the Companys Quarterly Report
    on
    Form 10-Q
    for the quarter ended September 30, 2001.(7)
    
    Incorporated by reference to the Companys Annual Report on
    Form 10-K
    for the year ended December 31, 2001.(8)
    
    Incorporated by reference to the Companys Quarterly Report
    on
    Form 10-Q
    for the quarter ended September 30, 2003.(9)
    
    Incorporated by reference to the Companys
    Form 8-K
    filed January 14, 2004.(10)
    
    Incorporated by reference to the Companys Annual Report on
    Form 10-K
    for the year ended December 31, 2003.(11)
    
    Incorporated by reference to the Companys Quarterly Report
    Form 10-Q
    for the quarter ended March 31, 2004.(12)
    
    Incorporated by reference to the Companys Quarterly Report
    Form 10-Q
    for the quarter ended September 30, 2004.(13)
    
    Incorporated by reference to the Companys
    Form 8-K,
    filed November 12, 2004.(14)
    
    Incorporated by reference to the Companys
    Form 8-K,
    filed December 8, 2005.(15)
    
    Incorporated by reference to the Companys
    Form 8-K,
    filed December 29, 2005.(16)
    
    Incorporated by reference to the Companys Annual Report on
    Form 10-K for the year ended December 31, 2005.(17)
    
    Incorporated by reference to the Companys
    Form 8-K,
    filed October 26, 2006.(18)
    
    Incorporated by reference to the Companys 8-K, filed
    January 22, 2007.(19)
    
    Filed herewith. F-42