##### 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,
    2009ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934   Commission file number 1-32747
      MARINER ENERGY, INC.
 (Exact name of registrant as
    specified in its charter)
      Delaware

86-0460233(State or other jurisdiction
    of
    incorporation or organization)

(I.R.S. Employer
    Identification Number)   One
    BriarLake Plaza, Suite 2000
    2000 West Sam Houston Parkway South
    Houston, Texas 77042 (Address
    of principal executive offices and zip code)
  (713) 954-5500
  (Registrants telephone
    number, including area code)
      Securities registered pursuant to Section 12(b) of the
    Act:
  Title of Each Class

Name of Each Exchange on Which RegisteredCommon Stock, $.0001 par value
    Rights to Purchase Preferred Stock

New York Stock Exchange
    New York Stock Exchange   Securities
    registered pursuant to section 12(g) of the Act:
  None
  þ o
  o þ
  þ o
  o o
  Regulation S-K Form 10-K Form 10-K. o
  Rule 12b-2
  Large accelerated
    filer þ

Accelerated
    filer o

Non-accelerated
    filer o

Smaller reporting
    company o(Do not check if a smaller reporting company)   Rule 12b-2 o þ
    DOCUMENTS
    INCORPORATED BY REFERENCE
  Form 10-K.




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##### 





TABLE OF
    CONTENTS
   
 PART IItem 1.


Business


3Item 1A.


Risk Factors


30Item 1B.


Unresolved Staff Comments


41Item 2.


Properties


41Item 3.


Legal Proceedings


41Item 4.


Submission of Matters to a Vote of Security
    Holders


42PART IIItem 5.


Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities


45Item 6.


Selected Financial Data


48Item 7.


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


49Item 7A.


Quantitative and Qualitative Disclosures About
    Market Risk


70Item 8.


Financial Statements and Supplementary Data


72Item 9.


Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosures


129Item 9A.


Controls and Procedures


129Item 9B.


Other Information


129PART IIIItem 10.


Directors, Executive Officers and Corporate
    Governance


129Item 11.


Executive Compensation


129Item 12.


Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


130Item 13.


Certain Relationships and Related Transactions,
    and Director Independence


130Item 14.


Principal Accounting Fees and Services


130PART IVItem 15.


Exhibits, Financial Statement Schedules


130EX-10.23EX-10.24EX-12EX-21EX-23.1EX-23.2EX-31.1EX-31.2EX-32.1EX-32.2EX-99.1   1




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CAUTIONARY
    STATEMENT REGARDING FORWARD-LOOKING INFORMATION
    
    the volatility of oil and natural gas prices;
    discovery, estimation, development and replacement of oil and
    natural gas reserves;
    cash flow, liquidity and financial position;
    business strategy;
    amount, nature and timing of capital expenditures, including
    future development costs;
    availability and terms of capital;
    timing and amount of future production of oil and natural gas;
    availability of drilling and production equipment;
    operating costs and other expenses;
    prospect development and property acquisitions;
    risks arising out of our hedging transactions;
    marketing of oil and natural gas;
    competition in the oil and natural gas industry;
    the impact of weather and the occurrence of natural events and
    natural disasters such as loop currents, hurricanes, fires,
    floods and other natural events, catastrophic events and natural
    disasters;
    governmental regulation of the oil and natural gas industry;
    environmental liabilities;
    developments in oil-producing and natural gas-producing
    countries;
    uninsured or underinsured losses in our oil and natural gas
    operations;
    risks related to our level of indebtedness;
    risks related to significant acquisitions or other strategic
    transactions, such as failure to realize expected benefits or
    objectives for future operations; and
    foreign currency risks. 2




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##### Table of Contents



PART I  The following discussion is intended to assist you in
    understanding our business and the results of our operations. It
    should be read in conjunction with the Consolidated Financial
    Statements and the related notes that appear elsewhere in this
    report. Certain statements made in our discussion may be forward
    looking. Forward-looking statements involve risks and
    uncertainties and a number of factors could cause actual results
    or outcomes to differ materially from our expectations. See
    Cautionary Statements at the beginning of this
    report on
    Form 10-K
    for additional discussion of some of these risks and
    uncertainties. Unless the context otherwise requires or
    indicates, references to Mariner, we,
    our, ours, and us refer to
    Mariner Energy, Inc. and its consolidated subsidiaries
    collectively. Certain oil and natural gas industry terms used in
    this annual report are defined in the Glossary of Oil and
    Natural Gas Terms set forth in Item 1.
    Business of this annual report.
  Item 1.
    Business.  General
  (713) 954-5500
    
    Permian Basin, where we are an active driller in the prolific
    Spraberry field at depths between 6,000 and 10,000 feet.
    Our increasing Permian Basin operation, which is characterized
    by long reserve life, stable drilling and production
    performance, and relatively lower capital requirements, somewhat
    counterbalances the higher geological risk, operational
    challenges and capital requirements attendant to most of our
    Gulf of Mexico deepwater operations. We have expanded our
    presence in the region, targeting a combination of infill
    drilling activities in established producing trends, including
    the Spraberry, Dean and Wolfcamp trends, as well as exploration
    activities in emerging plays such as the Wolfberry and newer
    Wolfcamp trends.
    Gulf Coast, where, in December 2009, we acquired interests
    predominantly in the Vicksburg, Queen City and Deep Frio
    producing trends in South Texas. As is the case with our Permian
    Basin operation, we expect the relatively lower risk and cost of
    exploiting our Gulf Coast properties to further counterbalance
    those of our Gulf of Mexico deepwater operations.
    Gulf of Mexico Deepwater, where we have actively conducted
    exploration and development projects since 1996 in water depths
    ranging from approximately 1,300 feet up to
    7,100 feet. Employing our experienced geoscientists, rich
    seismic database, and extensive subsea tieback expertise, we
    have participated in more than 79 deepwater wells. Our deepwater
    exploration operation targets larger potential reserve
    accumulations than are generally accessible onshore or on the
    Gulf of Mexico shelf.
    Gulf of Mexico Shelf, where we drill or participate in
    conventional shelf wells and deep shelf wells extending to 1,300
    foot water depths. We currently pursue a two-pronged strategy on
    the shelf, combining exploration and exploitation activities
    targeting conventional and deep shelf opportunities. Given the
    highly mature nature of this area and the steep production
    declines characteristic of most wells in this region, the goal
    of our shallow water or shelf operation is to maximize cash flow
    for reinvestment in our deepwater and onshore operations, as
    well as for expansion into new operating areas.   3




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##### Table of Contents



1-800-SEC-0330
  Recent
    Developments
  Onshore Acquisition
  Balanced
    Growth Strategy
    
    Exploration:  Our exploration program is
    designed to facilitate organic growth through exploration in a
    wide variety of exploratory drilling projects, including
    higher-risk, high-impact projects that have the potential to
    create substantial value for our stockholders. We view
    exploration as a core competency. We typically dedicate a
    significant portion of our capital program each year to
    prospecting for new oil and gas fields, including in the Gulf of
    Mexico deepwater where reserve accumulations are typically much
    larger than those found onshore or on the shelf. Our
    explorationists have a distinguished track record in the Gulf of
    Mexico, making a number of significant deepwater discoveries in
    the Gulf of Mexico in the last five years. In addition, we
    believe our reputation for generating high-quality exploration
    prospects creates potentially valuable partnering opportunities,
    which enables us to participate in exploration projects
    developed by other operators. 4




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##### Table of Contents




    Development:  Our development and exploitation
    efforts are intended to complement our higher-risk, high-impact
    exploration projects through a variety of moderate-risk
    activities targeted at maximizing recovery and production from
    known reservoirs. These activities are also aimed at finding
    overlooked oil and gas accumulations in and around existing
    fields and are designed to establish critical operating mass
    from which to expand in our focus areas. Our geoscientists and
    engineers have a excellent track record in effectively
    developing new fields, redeveloping legacy fields, rejuvenating
    production, controlling unit costs, and adding incremental
    reserves at attractive finding costs in both onshore and
    offshore fields.
    Acquisitions:  In addition to our internal
    exploration and development activities on our existing
    properties, we also compete actively for new oil and gas
    properties through property acquisitions as well as corporate
    transactions. Our management team has substantial experience
    identifying and executing a wide variety of tactical and
    strategic transactions that augment our existing operations or
    present opportunities to expand into new operating regions. Due
    to our existing prospect inventory, we are not compelled to make
    acquisitions in order to grow; however, we expect to continue to
    pursue acquisitions aggressively on an opportunistic basis as an
    integral part of our growth strategy.  Our
    Competitive Strengths
    Diversity of assets and activities.
  Large prospect inventory.
  Exploration expertise.
  Operational control and substantial working
    interests.
  Extensive seismic library. 3-D
 5




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##### Table of Contents



3-D
  Subsea tieback expertise.
  Properties
    NetApproximate





Estimated


EstimatedWorking


2009 Net


Proved


Proved ReservesOperator


Interest %


Production(2)


Reserves


% Oil /% Gas(1)(Bcfe)


(Bcfe)Permian Basin:Spraberry (Aldwell Unit)


Mariner



75
%


8.0



245.8



66%/34%Spraberry (Tamarack)


Mariner



93
%


4.7



142.3



77%/23%Spraberry (Texas Scottish Rite Hospital)


Mariner



100
%


1.1



43.5



74%/26%Deadwood


Mariner



73
%


0.5



21.9



77%/23%Spraberry (North Stiles Unit)


Mariner



50
%


1.7



14.0



70%/30%Gulf Coast:Flores


Mariner



41
%






43.9



31%/69%Chapman Ranch


Mariner



90
%






11.2



30%/70%Muy Grande


Mariner



100
%






7.4



0%/100%Duson


BTA



44
%






6.1



22%/78%Midway Dome


Mariner



89
%






4.4



16%/84%Gulf of Mexico Deepwater:Atwater Valley 426 (Bass Lite)


Mariner



54
%


18.4



77.0



0%/100%Garden Banks 462 (Geauxpher)


Mariner



60
%


13.0



24.1



10%/90%Green Canyon 646 (Daniel Boone)


W&T Offshore



40
%


1.1



19.1



69%/31%East Breaks 597


Mariner



50
%






9.9



61%/39%Ewing Bank 921 (North Black Widow)


ENI



35
%


1.8



8.5



93%/7%Gulf of Mexico Shelf:Brazos A19


Mariner



100
%






38.8



0%/100%Vermilion 380


Mariner



100
%


1.1



33.2



47%/53%West Cameron 110


Mariner



100
%


3.0



24.6



2%/98%South Pass 24


Mariner



97
%


1.5



21.2



59%/41%South Timbalier 49


Mariner



100
%






18.2



59%/41%    (1)
    
    NGLs are included in Oil(2)
    
    No production results are included for properties of the Edge
    subsidiaries we acquired on December 31, 2009. 6




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##### Table of Contents



Permian
    Basin Operations
          Gulf
    Coast Operations
    7




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##### Table of Contents



Gulf
    of Mexico Deepwater Operations
      56-mile
   8




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##### Table of Contents



Gulf
    of Mexico Shelf Operations
           9




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##### Table of Contents



A-1 well
  Estimated
    Proved Reserves
  12-month first-day-of-the-month 12-month
 10




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##### Table of Contents



Summary
    of Oil and Gas Reserves as of December 31, 2009
    Based on Average 2009 Prices
  Natural gas


Oil


NGLs


TotalReserves Category:

(Bcf)


(MMBbls)


(MMBbls)


(Bcfe)Proved Developed


406.8



31.5



20.1



716.4Proved Undeveloped


164.6



21.0



13.4



370.7Total estimated proved oil and gas reserves


571.4



52.5



33.5



1,087.1   PV10 value(1) ($ in millions):Proved developed reserves

$
1,350.0Proved undeveloped reserves


152.2Total PV10 value(1)

$
1,502.2Standardized measure of discounted future net cash flows

$
1,468.4Twelve-month average prices used in calculating proved
    reserve measures (excluding effects of hedging):Natural gas ($/MMBtu)

$
3.87Oil ($/Bbl)

$
61.18   Sensitivity
    of Reserves to Prices
  By
    Principal Product Type and Price Scenario
  NaturalGas


Oil


NGLs(Bcf)


(MMBbls)


(MMBbls)Proved oil and natural gas reserves:10% Increase in Price


576.9



53.0



33.910% Decrease in Price


565.7



51.8



32.9      Estimated Proved Developed


Estimated Proved Undeveloped


Estimated ProvedReserve Quantities


Reserve Quantities


Reserve QuantitiesNatural











NaturalGas


Oil


NGLs


Total


Gas


Oil


NGLs


Total


TotalGeographic Area

(Bcf)


(MMBbls)


(MMBbls)


(Bcfe)


(Bcf)


(MMBbls)


(MMBbls)


(Bcfe)


(Bcfe)Permian Basin


84.7



16.4



15.7



277.1



63.9



16.7



12.3



237.9



515.0Gulf Coast


43.2



0.7



2.0



59.5



16.3



0.2



0.8



22.1



81.6Gulf of Mexico Deepwater


111.5



3.5



0.5



135.7



9.3



2.8







26.0



161.7Gulf of Mexico Shelf


160.2



10.3



1.9



233.2



72.9



1.2



0.3



81.9



315.1Other onshore


7.2



0.6







10.9



2.2



0.1







2.8



13.7Total


406.8



31.5



20.1



716.4



164.6



21.0



13.4



370.7



1,087.1   11




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##### Table of Contents



PV10 Value(1)


StandardizedGeographic Area

Developed


Undeveloped


Total


Measure(In millions)


(In millions)Permian Basin

$
440.8


$
51.6


$
492.4Gulf Coast


103.8



9.8



113.6Gulf of Mexico Deepwater


324.8



54.7



379.5Gulf of Mexico Shelf


458.0



33.0



491.0Other onshore


22.6



3.1



25.7Total

$
1,350.0


$
152.2


$
1,502.2


$
1,468.4     (1)
    
    PV10 value (PV10) is not a measure under generally
    accepted accounting principles in the United States of America
    (GAAP) and differs from the corollary GAAP measure
    standardized measure of discounted future net cash
    flows or standardized measure in that PV10 is
    calculated without regard to future income taxes. Management
    believes that the presentation of PV10 values is relevant and
    useful to our investors because it presents the discounted
    future net cash flows attributable to our estimated proved
    reserves independent of our individual income tax attributes,
    thereby isolating the intrinsic value of the estimated future
    cash flows attributable to our reserves. Because many factors
    that are unique to each individual company affect the amount of
    future income taxes to be paid, the use of a pre-tax measure
    provides greater comparability of assets when evaluating
    companies. For these reasons, management uses, and believes the
    industry generally uses, the PV10 measure in evaluating and
    comparing acquisition candidates and assessing the potential
    return on investment related to investments in oil and natural
    gas properties.PV10 is not a measure of financial or operating performance
    under GAAP, nor should it be considered in isolation or as a
    substitute for the standardized measure of discounted future net
    cash flows as defined under GAAP. For our presentation of the
    standardized measure of discounted future net cash flows, please
    see Note 16 Supplemental Oil and Gas Reserve and
    Standardized Measure Information in the Notes to the
    Consolidated Financial Statements in Part II, Item 8
    in this Annual Report on
    Form 10-K.
    The table below provides a reconciliation of PV10 to
    standardized measure of discounted future net cash flows.  Year Ended December 31,Non-GAAP Reconciliation:

2009


2008


2007(In millions)Present value of estimated future net revenues (PV10)

$
1,502.2


$
1,667.5


$
3,064.2Future income taxes, discounted at 10%


(33.8
)


(184.5
)


(832.3
)Standardized measure of discounted future net cash flows

$
1,468.4


$
1,483.0


$
2,231.9      12




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##### Table of Contents



tm year-over-year Form 10-K.
    Form 10-K.
  Proved
    Undeveloped Reserves
     13




---



##### Table of Contents



Year Ended December 31,2009


2008


2007ProductionPermian Basin:Natural gas (Bcf)


5.0



4.0



3.7Oil (MBbls)


1,468.0



1,242.8



861.2NGLs (MBbls)


744.0



578.5



387.3Total Natural Gas Equivalent (Bcfe)


18.3



14.9



11.2Gulf of Mexico Deepwater:Natural gas (Bcf)


42.1



27.7



14.7Oil (MBbls)


1,427.0



1,850.5



1,301.9NGLs (MBbls)


362.2



264.7



126.2Total Natural Gas Equivalent (Bcfe)


52.8



40.4



23.3Gulf of Mexico Shelf:Natural gas (Bcf)


43.7



48.1



49.4Oil (MBbls)


1,576.5



1,787.7



2,050.3NGLs (MBbls)


371.7



714.7



686.3Total Natural Gas Equivalent (Bcfe)


55.4



63.1



65.8Total Production:Natural gas (Bcf)


90.8



79.8



67.8Oil (MBbls)


4,471.5



4,881.0



4,213.4NGLs (MBbls)


1,477.9



1,557.9



1,199.8Total Natural Gas Equivalent (Bcfe)


126.5



118.4



100.3 14




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##### Table of Contents



Year Ended December 31,2009


2008


2007(In thousands)Revenue (excluding the effects of hedges)Permian Basin:Natural gas

$
19,775


$
31,339


$
25,153Oil


87,153



122,005



61,528NGLs


23,794



30,765



17,871Total

$
130,722


$
184,109


$
104,552Gulf of Mexico Deepwater:Natural gas

$
168,564


$
271,979


$
104,840Oil


86,524



180,131



90,631NGLs


12,611



15,053



5,538Total

$
267,699


$
467,163


$
201,009Gulf of Mexico Shelf:Natural gas

$
176,063


$
467,099


$
346,078Oil


97,164



190,504



145,634NGLs


12,516



39,897



30,783Total

$
285,743


$
697,500


$
522,495Total Revenues:Natural gas

$
364,402


$
770,417


$
476,071Oil


270,841



492,640



297,793NGLs


48,921



85,715



54,192Total

$
684,164


$
1,348,772


$
828,056   Average
    Sales Prices and Production Costs
    Year Ended December 31,2009


2008


2007Average realized sales prices:Natural gas (per Mcf)

$
6.08


$
9.31


$
7.88Oil (per Bbl)


70.59



86.02



67.50Natural gas liquids (per Bbl)


33.10



55.02



45.16Total natural gas equivalent ($/Mcfe)


7.25



10.54



8.71Average realized sales prices excluding the effects of
    hedging:Natural gas (per Mcf)

$
4.01


$
9.66


$
7.02Oil (per Bbl)


60.57



100.93



70.68Natural gas liquids (per Bbl)


33.10



55.02



45.16Total natural gas equivalent ($/Mcfe)


5.41



11.39



8.26Average production costs per Mcfe:

$
1.97


$
1.96


$
1.52  15




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##### Table of Contents



Productive
    Wells
    Year Ended December 31,2009


2008Gross


Net


Gross


NetOil


1,037.0



792.0



936.0



733.0Natural gas


380.0



213.8



154.0



90.2Total


1,417.0



1,005.8



1,090.0



823.2   Acreage
    Year Ended December 31, 2009Developed Acres


Undeveloped Acres


Total AcresGross


Net


Gross


Net


Gross


NetPermian Basin


103,507



81,861



165,894



66,256



269,401



148,117Gulf Coast


64,229



27,273



37,689



19,967



101,918



47,240Gulf of Mexico Deepwater


87,757



39,610



432,691



226,386



520,448



265,996Gulf of Mexico Shelf


697,131



383,911



313,684



228,936



1,010,815



612,847Other Onshore


19,800



7,984



104,511



81,145



124,311



89,129Total


972,424



540,639



1,054,469



622,690



2,026,893



1,163,329     Undeveloped AcreageSubject to Expiration in the Year Ended December 31,2010


2011


2012


ThereafterGross


Net


Gross


Net


Gross


Net


Gross


NetPermian Basin


22,735



16,950



29,653



27,229



3,526



3,450



49,840



17,943Gulf Coast


22,460



19,505



17,256



13,164



224



516



7,200



3,612Gulf of Mexico Deepwater


57,600



17,856



34,560



17,280



34,560



4,212



305,971



186,930Gulf of Mexico Shelf


32,665



22,864



101,336



73,508



32,454



25,150



147,229



107,414Other Onshore


32,370



25,884



6,087



5,472



1,765



1,424



921



513Total


167,830



103,059



188,892



136,653



72,529



34,752



511,161



316,412  16




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##### Table of Contents



Drilling
    Activity
    Year Ended December 31,2009


2008


2007Gross


Net


Gross


Net


Gross


NetExploratory wells:Productive


10.00



5.97



15.00



8.59



11.00



5.96Dry


10.00



7.00



5.00



2.98



8.00



4.91Total


20.00



12.97



20.00



11.57



19.00



10.87Development wells:Productive


33.00



30.08



125.00



88.93



121.00



60.43Dry






















Total


33.00



30.08



125.00



88.93



121.00



60.43Extension wells:Productive


14.00



9.49



3.00



3.00







Dry






















Total


14.00



9.49



3.00



3.00







Total wells:Productive


57.00



45.54



143.00



100.52



132.00



66.39Dry


10.00



7.00



5.00



2.98



8.00



4.91Total


67.00



52.54



148.00



103.50



140.00



71.30     ApproximateWell Name

Operator

Working Interest


Location

Gross


NetWest Cameron 112
    A-2

Mariner


55
%

Shelf


1.00



0.55South Marsh 11 #58

Mariner


100
%

Shelf


1.00



1.00Green Canyon 903 #1

Anadarko


13
%

Deepwater


1.00



0.13Cathey 2906 #1

Mariner


61
%

Permian Basin


1.00



0.61SRH 1609

Mariner


100
%

Permian Basin


1.00



1.00Keathley 46 #2

Mariner


100
%

Permian Basin


1.00



1.00Currie 23 #1

Mariner


50
%

Permian Basin


1.00



0.50SRH 1705

Mariner


100
%

Permian Basin


1.00



1.00Cowden E #5

Mariner


55
%

Permian Basin


1.00



0.55   Marketing
    and Customers
   17




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##### Table of Contents



Percentage of TotalRevenues forYear EndedDecember 31,Customer

2009


2008


2007Williams Gas and affiliates


12
%


5
%


<1
%ChevronTexaco and affiliates


13
%


16
%


23
%Plains Marketing LP


11
%


5
%


7
%Shell


9
%


10
%


10
%   Title to
    Properties
      Competition
  3-D
  Royalty
    Relief
   18




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##### Table of Contents



Water Depth

Royalty Relief200-400
    meters

no royalty payable on the first 17.5 million BOE produced400-800
    meters

no royalty payable on the first 52.5 million BOE produced800 meters or deeper

no royalty payable on the first 87.5 million BOE produced            19




---



##### Table of Contents



Regulation
    Transportation
    and Sale of Natural Gas and Crude Oil
         20




---



##### Table of Contents



Regulation
    of Production
        Environmental
    and Safety Regulations
    
    require acquisition of a permit before drilling commences;
    restrict the types, quantities and concentrations of various
    materials that can be released into the environment in
    connection with drilling and production activities; and
    limit or prohibit construction or drilling activities in certain
    ecologically sensitive and other protected areas. 21




---



##### Table of Contents



Spills and Releases.
  clean-up
  The Oil Pollution Act (OPA). clean-up.
   22




---



##### Table of Contents



Water Discharges.
    Air Emissions.
  Climate Change.
 23




---



##### Table of Contents



facility-by-facility
    Waste Handling.
  Endangered Species Act.
  Safety. right-to-know
 24




---



##### Table of Contents



Employees
    Insurance
    Matters
  Current
    Insurance Against Hurricanes
        Hurricane
    Ike (2008)
   25




---



##### Table of Contents



Hurricanes
    Katrina and Rita (2005)
        Glossary
    of Oil and Natural Gas Terms
    3-D
    seismic data. 3-D
  Acquisition of properties.
  Analogous reservoir. Rule 4-10(a)(2) Regulation S-X.
  Appraisal well.
  Bbl.
  Bcf.
  Bcfe.
 26




---



##### Table of Contents



Block.
  Boe.
  Btu or British Thermal Unit.
  Completion.
  Condensate.
  Conventional shelf well.
  Deep shelf well.
  Deepwater.
  Developed acreage.
  Developed reserves. Rule 4-10(a)(6) Regulation S-X.
  Development costs. Rule 4-10(a)(7) Regulation S-X.
  Development project.
  Development well.
  Differential. and/or
  Dry well.
  Dry well costs.
  Economically producible. Rule 4-10(a)(10) Regulation S-X.
  Estimated ultimate recovery (EUR).
  Exploration costs.
 27




---



##### Table of Contents



Rule 4-10(a)(12) Regulation S-X.
  Exploratory well.
  Extension well.
  Farm-in or farm-out.
  Field. and/or Rule 4-10(a)(15) Regulation S-X.
  Gas.
  Gross acres or gross wells.
  Lease operating expenses.
  MBbls.
  Mcf.
  Mcfe.
  MMBbls.
  MMBtu.
  MMcf.
  MMcfe.
  MMS.
  Net acres or net wells.
  Net revenue interest.
  Oil. Crude oil.
  Operator. and/or and/or
 28




---



##### Table of Contents



Payout.
  Plugging and abandonment.
  Possible reserves. Rule 4-10(a)(17) Regulation S-X.
  Present value of estimated future net revenues or
    PV10.
  Probable reserves. Rule 4-10(a)(18) Regulation S-X.
  Production costs. Rule 4-10(a)(20) Regulation S-X.
  Productive well.
  Prospect.
  Proved area.
  Proved developed non-producing
    reserves.
  Proved developed producing reserves.
  Proved properties.
  Proved reserves. Rule 4-10(a)(22) Regulation S-X.
  Recompletion.
 29




---



##### Table of Contents



Reserves. Rule 4-10(a)(26) Regulation S-X.
  Reservoir. and/or
  Service well.
  Shelf.
  Standardized measure of discounted future net cash
    flows.
  Stratigraphic test well.
  Subsea tieback.
  Subsea trees.
  Tcfe.
  Undeveloped acreage.
  Undeveloped reserves. Rule 4-10(a)(31) Regulation S-X.
  Unproved properties.
  Working interest.
  Item 1A.
    Risk
    Factors.  Risks
    Relating to the Oil and Natural Gas Industry and to Our
    Business
  Oil
    and natural gas prices are volatile, and a decline in oil and
    natural gas prices would reduce our revenues, profitability and
    cash flow and impede our growth.
   30




---



##### Table of Contents




    domestic and foreign supply of oil and natural gas;
    price and quantity of foreign imports;
    actions of the Organization of Petroleum Exporting Countries and
    other state-controlled oil companies relating to oil price and
    production controls;
    level of consumer product demand;
    domestic and foreign governmental regulations;
    political conditions in or affecting other oil-producing and
    natural gas-producing countries, including the current conflicts
    in the Middle East and conditions in South America and Russia;
    weather conditions;
    technological advances affecting oil and natural gas consumption;
    overall U.S. and global economic conditions; and
    price and availability of alternative fuels.    The
    recent worldwide financial and credit crisis could lead to an
    extended worldwide economic recession and have a material
    adverse effect on our results of operations and
    liquidity.
     31




---



##### Table of Contents



Reserve
    estimates depend on many assumptions that may turn out to be
    inaccurate. Any material inaccuracies in these reserve estimates
    or underlying assumptions will affect materially the quantities
    and present value of our reserves, which may lower our bank
    borrowing base and reduce our access to capital.
    In
    estimating future net revenues from estimated proved reserves,
    we assume that future prices and costs are fixed and apply a
    fixed discount factor. If any such assumption or the discount
    factor is materially inaccurate, our revenues, profitability and
    cash flow could be materially less than our
    estimates.
  first-day-of-the 12-month
    If oil
    and natural gas prices decrease, we may be required to
    write-down the carrying value and/or the estimates of total
    reserves of our oil and natural gas properties.
   32




---



##### Table of Contents



We
    need to replace our reserves at a faster rate than companies
    whose reserves have longer production periods. Our failure to
    replace our reserves would result in decreasing reserves and
    production over time.
    Of our
    total estimated proved reserves, approximately 30% are
    undeveloped and ultimately may be reclassified as unproved or
    not be developed, and 20% are developed non-producing and may
    not be produced.
    Any
    production problems related to our Gulf of Mexico properties
    could reduce our revenue, profitability and cash flow
    materially.
    Our
    exploration and development activities may not be commercially
    successful.
    
    unexpected drilling conditions; 33




---



##### Table of Contents




    pressure or irregularities in formations;
    equipment failures or accidents;
    adverse weather conditions, including hurricanes, which are
    common in the Gulf of Mexico during certain times of the year;
    compliance with governmental regulations;
    unavailability or high cost of drilling rigs, equipment or labor;
    reductions in oil and natural gas prices; and
    limitations in the market for oil and natural gas.    Our
    exploratory drilling projects are based in part on seismic data,
    which is costly and cannot ensure the commercial success of the
    project.
  3-D 3-D 3-D
  Oil
    and gas drilling and production involve many business and
    operating risks, any one of which could reduce our levels of
    production, cause substantial losses or prevent us from
    realizing profits.
    
    fires;
    explosions;
    blow-outs and surface cratering;
    uncontrollable flows of underground natural gas, oil and
    formation water;
    natural events and natural disasters, such as loop currents, and
    hurricanes and other adverse weather conditions;
    pipe or cement failures;
    casing collapses;
    lost or damaged oilfield drilling and service tools;
    abnormally pressured formations; and
    environmental hazards, such as natural gas leaks, oil spills,
    pipeline ruptures and discharges of toxic gases.   34




---



##### Table of Contents



clean-up
  Our
    offshore operations involve special risks that could increase
    our cost of operations and adversely affect our ability to
    produce oil and natural gas.
      Our
    hedging transactions may not protect us adequately from
    fluctuations in oil and natural gas prices and may limit future
    potential gains from increases in commodity prices or result in
    losses.
    Counterparty
    contract default could have an adverse effect on
    us.
    Market
    conditions or transportation impediments may hinder our access
    to oil and natural gas markets or delay our
    production.
   35




---



##### Table of Contents



The
    unavailability or high cost of drilling rigs, equipment,
    supplies or personnel could affect adversely our ability to
    execute on a timely basis our exploration and development plans
    within budget, which could have a material adverse effect on our
    financial condition and results of operations.
    Competition
    in the oil and natural gas industry is intense and many of our
    competitors have resources that are greater than ours, giving
    them an advantage in evaluating and obtaining properties and
    prospects.
    Financial
    difficulties encountered by our farm-out partners, working
    interest owners or third-party operators could adversely affect
    our ability to timely complete the exploration and development
    of our prospects.
   36




---



##### Table of Contents



We
    cannot control the timing or scope of drilling and development
    activities on properties we do not operate, and therefore we may
    not be in a position to control the associated costs or the rate
    of production of the reserves.
    Compliance
    with environmental and other government regulations could be
    costly and could affect production negatively.
    clean-up
  Compliance
    with MMS regulations could significantly delay or curtail our
    operations or require us to make material expenditures, all of
    which could have a material adverse effect on our financial
    condition or results of operations.
    Our
    insurance may not fully protect us against our business and
    operating risks.
   37




---



##### Table of Contents



The
    proposed U.S. federal budget for fiscal year 2010 includes
    certain provisions that, if passed as originally submitted, will
    have an adverse effect on our financial position, results of
    operations, and cash flows.
    Risks
    Relating to Significant Acquisitions and Other Strategic
    Transactions
  The
    evaluation and integration of significant acquisitions may be
    difficult.
    
    diversion of our managements attention to evaluating,
    negotiating and integrating significant acquisitions and
    strategic transactions;
    challenge and cost of integrating acquired operations,
    information management and other technology systems and business
    cultures with those of ours while carrying on our ongoing
    business;
    our exposure to unforeseen liabilities of acquired businesses,
    operations or properties;
    possibility of faulty assumptions underlying our expectations,
    including assumptions relating to reserves, future production,
    volumes, revenues, costs and synergies;
    difficulty associated with coordinating geographically separate
    organizations; and
    challenge of attracting and retaining personnel associated with
    acquired operations.   38




---



##### Table of Contents



If we
    fail to realize the anticipated benefits of a significant
    acquisition, our results of operations may be lower than we
    expect.
    Financing
    and other liabilities of a significant acquisition may adversely
    affect our financial condition and results of operations or be
    dilutive to stockholders.
    Properties
    we acquire may not produce as projected, and we may be unable to
    determine reserve potential, identify liabilities associated
    with the properties or obtain protection from sellers against
    such liabilities.
    Risks
    Relating to Financings
  We
    will require additional capital to fund our future activities.
    If we fail to obtain additional capital, we may not be able to
    implement fully our business plan, which could lead to a decline
    in reserves.
     39




---



##### Table of Contents



We may
    not be able to generate enough cash flow to meet our debt
    obligations.
    Our
    debt level and the covenants in the agreements governing our
    debt could negatively impact our financial condition, results of
    operations and business prospects and prevent us from fulfilling
    our obligations under our debt obligations.
    
    making it more difficult for us to satisfy our debt obligations
    and increasing the risk that we may default on our debt
    obligations;
    requiring us to dedicate a substantial portion of our cash flow
    from operations to required payments on debt, thereby reducing
    the availability of cash flow for working capital, capital
    expenditures and other general business activities;
    limiting our ability to obtain additional financing in the
    future for working capital, capital expenditures, acquisitions
    and general corporate and other activities;
    limiting managements discretion in operating our business;
    limiting our flexibility in planning for, or reacting to,
    changes in our business and the industry in which we operate;
    detracting from our ability to withstand, successfully, a
    downturn in our business or the economy generally;
    placing us at a competitive disadvantage against less leveraged
    competitors; and
    making us vulnerable to increases in interest rates, because
    debt under our bank credit facility will, in some cases, vary
    with prevailing interest rates.     40




---



##### Table of Contents



Ownership
    of property interests and production operations in areas outside
    the United States is subject to foreign currency
    risks.
    Item 1B.
    Unresolved
    Staff Comments.    Item 2.
    Properties.      Item 3.
    Legal
    Proceedings.   41




---



##### Table of Contents



Kerr-McGee
    Oil & Gas Corp. v. Allred cert denied Dept of the
    Interior v.
    Kerr-McGee
    Oil & Gas Corp. Kerr-McGee Kerr-McGee Oil & Gas Corp. v. Allred
  and/or
  Item 4.
    Submission
    of Matters to a Vote of Security Holders.    Executive
    Officers of the Registrant
    Name

Age

Position with CompanyScott D. Josey


52


Chairman of the Board, Chief Executive Officer and PresidentDalton F. Polasek


58


Chief Operating OfficerJesus G. Melendrez


51


Senior Vice President, Chief Commercial Officer, Acting Chief
    Financial Officer and TreasurerMike C. van den Bold


47


Senior Vice President and Chief Exploration OfficerJudd A. Hansen


54


Senior Vice President  Shelf and OnshoreTeresa G. Bushman


60


Senior Vice President, General Counsel and SecretaryCory L. Loegering


54


Senior Vice President  DeepwaterMurray W. Grigg


54


Vice President  Unconventional ResourcesEmily R. McClung


44


Vice President  Human ResourcesMichael C. McCullough


64


Vice President  Acquisitions and DivestituresRichard A. Molohon


55


Vice President  Reservoir EngineeringKenneth E. Moore, Jr.


63


Vice President  Onshore LandCharles H. Odom


56


Vice President  Offshore Land and Business DevelopmentR. Cris Sherman


49


Vice President and Chief Accounting Officer   Scott D. Josey
 42




---



##### Table of Contents



Dalton F. Polasek
  Jesus G. Melendrez
  Mike C. van den Bold
  Judd A. Hansen
  Teresa G. Bushman
 43




---



##### Table of Contents



Cory L. Loegering
  Murray W. Grigg
  Emily R. McClung
  Michael C. McCullough
  Richard A. Molohon
  Kenneth E. Moore, Jr.
  Charles H. Odom
 44




---



##### Table of Contents



R. Cris Sherman
 PART II  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities.    Year


Period Ended

High


Low2008


First Quarter

$
29.60


$
23.69Second Quarter


37.01



26.84Third Quarter


36.45



19.77Fourth Quarter


19.54



7.482009


First Quarter

$
12.59


$
6.85Second Quarter


15.53



7.87Third Quarter


15.19



9.88Fourth Quarter


16.09



11.47      45




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##### Table of Contents



Performance
    Graph
    COMPARISON
    OF CUMULATIVE TOTAL RETURN AMONG
    MARINER ENERGY, INC., THE S&P 500 INDEX AND A DEFINED PEER
    GROUP(1),(2)
  
    Cumulative Total Return(1)Initial

12/31/06

12/31/07

12/31/08

12/31/09Mariner Energy, Inc.

$
100.00


$
96.69


$
112.88


$
50.32


$
57.28S&P 500 Index

$
100.00


$
110.18


$
114.07


$
70.17


$
86.63Peer Group(2)

$
100.00


$
96.98


$
103.61


$
37.10


$
43.61     (1)
    
    Total return assuming reinvestment of dividends. Assumes $100
    invested on March 3, 2006 in each of Mariners common
    stock, the S&P 500 Index, and a peer group of companies.
    Initial data is taken from March 3, 2006, the date on which
    Mariners common stock began regular way trading on the
    NYSE.(2)
    
    Composed of the following seven independent oil and gas
    exploration and production companies: ATP Oil & Gas
    Corporation, Callon Petroleum Co., Energy Partners, Ltd.,
    McMoRan Exploration Co., Plains Exploration &
    Production Company, Stone Energy Corporation, and W&T
    Offshore, Inc. The 2009 data for Energy Partners, Ltd. reflects
    adjustment for its issuance on September 21, 2009 of
    0.06166332 share of new common stock in exchange for each
    former one share of common stock outstanding before its
    emergence from bankruptcy.  The above information under the caption Performance
    Graph shall not be deemed to be soliciting
    material and shall not be deemed to be incorporated by
    reference by any general statement incorporating by reference
    this
    Form 10-K
    into any filing under the Securities Act of 1933, as amended, or
    the Securities Exchange Act of 1934, as amended, and shall not
    otherwise be deemed filed under such acts.
 46




---



##### Table of Contents



Issuer
    Purchases of Equity Securities
  Total Numberof Shares


Maximum Number(or Units)


(or ApproximatePurchased as


Dollar Value) ofTotal Number


Average


Part of Publicly


Shares (or Units)of Shares


Price Paid


Announced


that May Yet Be(or Units)


per Share


Plans or


Purchased Under thePeriod

Purchased


(or Unit)


Programs


Plans or ProgramsOctober 1, 2009 to October 31, 2009(1)


41,032


$
15.74







November 1, 2009 to November 30, 2009(1)





$








December 1, 2009 to December 31, 2009(1)


495


$
13.35







Total


41,527


$
15.68







     (1)
    
    These shares were withheld upon the vesting of employee
    restricted stock grants in connection with payment of required
    withholding taxes. 47




---



##### Table of Contents



Item 6.
    Selected
    Financial Data.  Form 10-K,
  Year Ended December 31,2009


2008


2007


2006


2005(In thousands, except per share data)Statement of Operations Data(1):Total revenues(2)

$
942,941


$
1,300,507


$
874,765


$
659,505


$
199,710Operating expenses(3)


282,353



264,832



174,522



105,739



32,218Depreciation, depletion and amortization


399,400



467,265



384,321



292,180



59,469General and administrative expense


79,960



60,613



42,151



33,622



36,766Operating (loss) income(4)


(581,403
)


(381,712
)


268,710



227,470



69,168Interest expense, net of amounts capitalized


70,134



56,398



54,665



39,649



8,172(Benefit) Provision for income taxes


(224,370
)


(48,223
)


77,324



67,344



21,294Net (loss) income attributable to Mariner Energy, Inc.


(319,409
)


(388,713
)


143,934



121,462



40,481Earnings per common share:Net (loss) income per common share  basic

$
(3.34
)

$
(4.44
)

$
1.68


$
1.59


$
1.24Net (loss) income per common share  diluted

$
(3.34
)

$
(4.44
)

$
1.67


$
1.58


$
1.20     (1)
    
    There are no operating results included for the Edge
    subsidiaries we acquired on December 31, 2009.(2)
    
    Includes effects of hedging.(3)
    
    Operating expenses include lease operating expense, severance
    and ad valorem taxes and transportation expenses.(4)
    
    Includes $754.3 million and $575.6 million of full
    cost ceiling test impairments for the years ended
    December 31, 2009 and 2008.  48




---



##### Table of Contents



December 31,2009


2008


2007


2006


2005(In thousands)Balance Sheet Data(1):Current Assets

$
212,321


$
374,953


$
248,980


$
306,018


$
141,432Current Liabilities


372,611



425,564



315,189



239,727



204,006Working capital deficit

$
(160,290
)

$
(50,611
)

$
(66,209
)

$
66,291


$
(62,574
)Property and equipment, net


2,572,559



2,929,877



2,420,194



2,012,062



515,943Total assets


2,867,205



3,392,793



3,083,635



2,680,153



665,536Long-term debt, less current maturities


1,194,850



1,170,000



779,000



654,000



156,000Stockholders equity


882,955



1,120,320



1,391,018



1,302,591



213,336   Year Ended December 31,2009


2008


2007


2006


2005(In thousands)Cash Flow Data(1):Net cash provided by operating activities

$
577,667


$
862,017


$
536,114


$
277,161


$
165,444Net cash used in investing activities

$
(747,108
)

$
(1,264,784
)

$
(643,780
)

$
(561,390
)

$
(247,799
)Net cash provided by financing activities

$
175,109


$
387,429


$
116,676


$
289,252


$
84,370     (1)
    
    The fair market value of the Edge assets and liabilities we
    acquired on December 31, 2009 and cash flows from the
    transaction are included in the tables above.  Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations.  Business
    Overview
       49




---



##### Table of Contents



Securities Offering. 3 4
  Acquisitions
  Business Combinations
       50




---



##### Table of Contents



Results
    of Operations
  Year
    Ended December 31, 2009 compared to Year Ended
    December 31, 2008
  Operating
    and Financial Results for the Year Ended December 31,
    2009
    Compared to the Year Ended December 31, 2008
  Year Ended December 31,


Increase2009


2008


(Decrease)


% change(In thousands, except average sales price and unit costs)Summary Operating Information:Net Production:Natural gas (MMcf)


90,801



79,756



11,045



14
%Oil (MBbls)


4,472



4,881



(409
)


(8
)%Natural gas liquids (MBbls)


1,478



1,558



(80
)


(5
)%Total natural gas equivalent (MMcfe)


126,498



118,389



8,109



7
%Average daily production (MMcfe per day)


347



323



24



7
%Hedging Activities:Natural gas revenue gain (loss)

$
187,857


$
(28,047
)

$
215,904



770
%Oil revenue gain (loss)


44,801



(72,762
)


117,563



162
%Total hedging revenue gain (loss)

$
232,658


$
(100,809
)

$
333,467



331
%Average Sales Prices:Natural gas (per Mcf) realized(1)

$
6.08


$
9.31


$
(3.23
)


(35
)%Natural gas (per Mcf) unhedged


4.01



9.66



(5.65
)


(58
)%Oil (per Bbl) realized(1)


70.59



86.02



(15.43
)


(18
)%Oil (per Bbl) unhedged


60.57



100.93



(40.36
)


(40
)%Natural gas liquids (per Bbl) realized(1)


33.10



55.02



(21.92
)


(40
)%Natural gas liquids (per Bbl) unhedged


33.10



55.02



(21.92
)


(40
)%Total natural gas equivalent ($/Mcfe) realized(1)


7.25



10.54



(3.29
)


(31
)%Total natural gas equivalent ($/Mcfe) unhedged


5.41



11.39



(5.98
)


(53
)%Summary of Financial Information:Natural gas revenue

$
552,259


$
742,370


$
(190,111
)


(26
)%Oil revenue


315,642



419,878



(104,236
)


(25
)%Natural gas liquids revenue


48,921



85,715



(36,794
)


(43
)%Other revenues


26,119



52,544



(26,425
)


(50
)%Lease operating expense


249,449



231,645



17,804



8
%Severance and ad valorem taxes


14,410



18,191



(3,781
)


(21
)%Transportation expense


18,494



14,996



3,498



23
%General and administrative expense


79,960



60,613



19,347



32
%Depreciation, depletion and amortization


399,400



467,265



(67,865
)


(15
)%Full cost ceiling test impairment


754,325



575,607



178,718



31
%Goodwill impairment






295,598



(295,598
)


(100
)%Other property impairment






15,252



(15,252
)


(100
)%Other miscellaneous expense


8,306



3,052



5,254



172
%Net interest expense


69,635



55,036



14,599



27
%Gain on acquisition


107,259







107,259



N/ALoss before taxes


(543,779
)


(436,748
)


107,031



25
%Benefit for income taxes


(224,370
)


(48,223
)


176,147



365
%Net Loss


(319,409
)


(388,525
)


(69,116
)


(18
)%Less: Net income attributable to noncontrolling interest






(188
)


(188
)


(100
)%Net Loss attributable to Mariner Energy, Inc.

$
(319,409
)

$
(388,713
)

$
(69,304
)


(18
)%Average Unit Costs per Mcfe:Lease operating expense

$
1.97


$
1.96


$
0.01



1
%Severance and ad valorem taxes


0.11



0.15



(0.04
)


(27
)%Transportation expense


0.15



0.13



0.02



15
%General and administrative expense


0.63



0.51



0.12



24
%Depreciation, depletion and amortization


3.16



3.95



(.79
)


(20
)%     (1)
    
    Average realized prices include the effects of hedges. 51




---



##### Table of Contents



Net Loss attributable to Mariner Energy, Inc.
  Net Production
      
    Increased production of 3.4 Bcfe, or 23%, from our onshore
    properties, primarily as a result of our drilling and
    development of existing acreage in the Permian Basin.
    Increased production of 12.4 Bcfe, or 31%, from our Gulf of
    Mexico deepwater properties, due primarily to Bass Lite located
    in Atwater Valley 426 (which contributed 9.9 Bcfe) and
    Geauxpher located in Garden Banks 462 (which contributed
    13.0 Bcfe), partially offset by decreases at Pluto located
    in Mississippi Canyon 674 (which contributed 3.1 Bcfe) and
    Northwest Nansen located in East Breaks 602 (which contributed
    6.0 Bcfe).
    Decreased production of 7.7 Bcfe, or 12%, from our Gulf of
    Mexico shelf properties as a result of normal depletion declines
    and production interruptions due to repairs on certain fields
    totaling 18.8 Bcfe, partially offset by increased
    production of 11.1 Bcfe at certain of our properties
    including High Island 116 (which contributed 3.4 Bcfe) and
    South Marsh Island 76 (which contributed 1.1 Bcfe).  Natural gas, oil and NGL revenues
   52




---



##### Table of Contents



HedgingRealized


Unhedged


(Loss) Gain


% ChangeYear Ended December 31, 2009:Natural gas (per Mcf)

$
6.08


$
4.01


$
2.07



52
%Oil (per Bbl)


70.59



60.57



10.02



17
%Year Ended December 31, 2008:Natural gas (per Mcf)

$
9.31


$
9.66


$
(0.35
)


(4
)%Oil (per Bbl)


86.02



100.93



(14.91
)


(15
)%   Other revenues
  Lease operating expense
  Severance and ad valorem tax
  Transportation expense
  General and administrative expense Form 10-K
  Depreciation, depletion, and amortization expense
  Full cost ceiling test impairment
 53




---



##### Table of Contents



Goodwill impairment
  Other property impairment
  Other miscellaneous expense
  Net interest expense 3 4
  Gain on acquisition Form 10-K
  Provision for income taxes
 54




---



##### Table of Contents



Year
    Ended December 31, 2008 compared to Year Ended
    December 31, 2007
  Operating and Financial Results for the Year Ended
    December 31, 2008
 Compared to the Year Ended December 31, 2007
  Year Ended December 31,


Increase2008


2007


(Decrease)


% change(In thousands, except average sales price and unit costs)Summary Operating Information:Net Production:Natural gas (MMcf)


79,756



67,793



11,963



18
%Oil (MBbls)


4,881



4,214



667



16
%Natural gas liquids (MBbls)


1,558



1,200



358



30
%Total natural gas equivalent (MMcfe)


118,389



100,273



18,116



18
%Average daily production (MMcfe per day)


323



275



48



18
%Hedging Activities:Natural gas revenue gain (loss)

$
(28,047
)

$
58,465


$
(86,512
)


(148
)%Oil revenue loss


(72,762
)


(13,388
)


(59,374
)


443
%Total hedging revenue gain (loss)

$
(100,809
)

$
45,077


$
(145,886
)


(324
)%Average Sales Prices:Natural gas (per Mcf) realized(1)

$
9.31


$
7.88


$
1.43



18
%Natural gas (per Mcf) unhedged


9.66



7.02



2.64



38
%Oil (per Bbl) realized(1)


86.02



67.50



18.52



27
%Oil (per Bbl) unhedged


100.93



70.68



30.25



43
%Natural gas liquids (per Bbl) realized(1)


55.02



45.16



9.86



22
%Natural gas liquids (per Bbl) unhedged


55.02



45.16



9.86



22
%Total natural gas equivalent ($/Mcfe) realized(1)


10.54



8.71



1.83



21
%Total natural gas equivalent ($/Mcfe) unhedged


11.39



8.26



3.13



38
%Summary of Financial Information:Natural gas revenue

$
742,370


$
534,537


$
207,833



39
%Oil revenue


419,878



284,405



135,473



48
%Natural gas liquids revenue


85,715



54,192



31,523



58
%Other revenues


52,544



1,631



50,913



3,122
%Lease operating expense


231,645



152,627



79,018



52
%Severance and ad valorem taxes


18,191



13,101



5,090



39
%Transportation expense


14,996



8,794



6,202



71
%General and administrative expense


60,613



42,151



18,462



44
%Depreciation, depletion and amortization


467,265



384,321



82,944



22
%Full cost ceiling test impairment


575,607







575,607



N/AGoodwill impairment


295,598







295,598



N/AOther property impairment


15,252







15,252



N/AOther miscellaneous expense


3,052



5,061



(2,009
)


(40
)%Other income






5,811



(5,811
)


(100
)%Net interest expense


55,036



53,262



1,774



3
%Income (Loss) before taxes


(436,748
)


221,259



(658,007
)


(297
)%(Benefit) Provision for income taxes


(48,223
)


77,324



(125,547
)


(162
)%Net Income (Loss)


(388,525
)


143,935



(532,460
)


(370
)%Less: Net income attributable to noncontrolling interest


(188
)


(1
)


(187
)


(18,700
)%Net Income (Loss) attributable to Mariner Energy,
    Inc.

$
(388,713
)

$
143,934


$
(532,647
)


(370
)%Average Unit Costs per Mcfe:Lease operating expense

$
1.96


$
1.52


$
0.44



29
%Severance and ad valorem taxes


0.15



0.13



0.02



15
%Transportation expense


0.13



0.09



0.04



44
%General and administrative expense


0.51



0.42



0.09



21
%Depreciation, depletion and amortization


3.95



3.83



0.12



3
%     (1)
    
    Average realized prices include the effects of hedges.  Net Loss attributable to Mariner Energy, Inc.
 55




---



##### Table of Contents



Net production
      Natural gas, oil and NGL revenues
      HedgingRealized


Unhedged


(Loss) Gain


% ChangeYear Ended December 31, 2008:Natural gas (per Mcf)

$
9.31


$
9.66


$
(0.35
)


(4
)%Oil (per Bbl)


86.02



100.93



(14.91
)


(15
)%Year Ended December 31, 2007:Natural gas (per Mcf)

$
7.88


$
7.02


$
0.86



12
%Oil (per Bbl)


67.50



70.68



(3.18
)


(4
)%   Other revenues
  Lease operating expense
  start-up per-unit
 56




---



##### Table of Contents



Severance and ad valorem tax
  Transportation expense
  General and administrative expense Form 10-K
  Depreciation, depletion, and amortization expense start-up
  Full cost ceiling test impairment
  Goodwill impairment
  Other property impairment
  Net interest expense
  Provision for income taxes
 57




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##### Table of Contents



Liquidity
    and Capital Resources
  Financial
    Condition
  Years Ended December 31,2009


2008(In thousands, except ratios)Current ratio(1)


0.6 to 1



0.9 to 1Working capital deficit(2)

$
(160,290
)

$
(50,611
)Total debt

$
1,194,850


$
1,170,000Operating cash flow(3)

$
531,149


$
885,887Interest expense, net of capitalization

$
70,134


$
56,398Fixed-charge coverage ratio(4)






Total cash and marketable securities less debt(5)

$
(1,185,931
)

$
(1,166,749
)Stockholders equity

$
882,955


$
1,120,320Total liabilities to equity


2.25 to 1



2.03 to 1     (1)
    
    Current ratio is current assets divided by current liabilities.(2)
    
    Working capital deficit is the difference between current assets
    and current liabilities.(3)
    
    Operating cash flow is net cash provided by operating
    activities, plus or minus changes in operating assets and
    liabilities. See the following Reconciliation of
    Non-GAAP Measure: Operating Cash Flow.(4)
    
    Fixed-charge coverage ratio is net earnings before taxes, net
    income attributable to noncontrolling interest and fixed charges
    divided by fixed charges (interest expense, net of
    capitalization plus amortization of discounts). Due to loss from
    operations in 2009 and 2008, the ratio coverage was less than
    1:1. We would have needed to generate additional earnings of
    $558,440 and $446,399 respectively, to achieve a coverage of 1:1
    for that period.(5)
    
    Total cash and marketable securities less debt is cash and cash
    equivalents less long-term debt.  Reconciliation
    of Non-GAAP Measure: Operating Cash Flow
    Years Ended December 31,2009


2008(In thousands)Net cash provided by operating activities (GAAP)

$
577,667


$
862,017Changes in operating assets and liabilities


(46,518
)


23,870Operating cash flow (Non-GAAP)

$
531,149


$
885,887   2009 Cash
    Flows
    Years Ended December 31,2009


2008


2007(In millions)Cash payments for interest, net of capitalized interest

$
68.9


$
62.2


$
49.1Net cash (refunds) payments for income taxes


(2.0
)


2.9


$
0.6  58




---



##### Table of Contents



2009 Uses of Capital.
  
    funding capital expenditures (excluding hurricane repairs and
    acquisitions) of approximately $524.3 million;
    funding hurricane repairs and hurricane-related abandonment
    expenditures (net of insurance recoveries) of approximately
    $6.6 million;
    paying interest of approximately $68.9 million;
    funding the purchase of the Edge subsidiaries and operations for
    approximately $213.6 million; and
    paying routine operating and administrative expenses.  2009 Capital Expenditures.
  Year Ended December 31,2009


2008(In thousands)Capital expenditures:Oil and natural gas development

$
306,834


$
588,456Oil and natural gas property acquisitions


236,661



302,629Oil and natural gas exploration


182,863



270,767Leasehold acquisitions


21,942



152,567Corporate expenditures and other


38,462



66,668Total capital expenditures, net of proceeds from property
    conveyances

$
786,762


$
1,381,087   2009 Hurricane Expenditures.
 59




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##### Table of Contents



2009 Sources of Capital.
  
    cash flow from operations;
    net proceeds from sale of senior notes and common stock;
    borrowings under our revolving bank credit facility; and
    insurance proceeds.  Bank Credit Facility
    3 4
     60




---



##### Table of Contents




    maintain a ratio of consolidated current assets plus the unused
    borrowing base to consolidated current liabilities of not less
    than 1.0 to 1.0; and
    maintain a ratio of total debt to EBITDA (as defined in the
    credit agreement) of not more than 2.5 to 1.0.      Senior Notes
  
    $300 million principal amount of
    113/4% Senior
    Notes due 2016 issued in June 2009 (the
    113/4% Notes);
    $300 million principal amount of 8% Senior Notes due
    2017 issued in April 2007 (the
    8% Notes); and
    $300 million principal amount of
    71/2% Senior
    Notes due 2013 issued in April 2006 (the
    71/2% Notes).  3 4 3 4
     61




---



##### Table of Contents



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

8% Notes

71/2% NotesJune 30, 2013 at 105.875%

May 15, 2012 at 104.000%

April 15, 2010 at 103.750%June 30, 2014 at 102.938%

May 15, 2013 at 102.667%

April 15, 2011 at 101.875%June 30, 2015 and after at 100.000%

May 15, 2014 at 101.333%

April 15, 2012 and after at 100.000%May 15, 2015 and after at 100.000%   3 4 3 4
      
    make investments;
    incur additional indebtedness or issue preferred stock;
    create certain liens;
    sell assets;
    enter into agreements that restrict dividends or other payments
    from our subsidiaries to us;
    consolidate, merge or transfer all or substantially all of its
    assets;
    engage in transactions with affiliates;
    pay dividends or make other distributions on capital stock or
    subordinated indebtedness; and
    create unrestricted subsidiaries.  3 4 1 2
 62




---



##### Table of Contents



Common Stock Offering
  Future Uses of Capital.
  
    funding future capital expenditures;
    funding hurricane repairs and hurricane-related abandonment
    operations;
    financing any future acquisitions that we may identify;
    paying routine operating and administrative expenses; and
    paying other commitments comprised largely of cash settlement of
    hedging obligations and debt service.  2010
    Capital Expenditures.
    Obligations
    and Commitments
  Consolidated Contractual Obligations
  Payments Due By PeriodTotal


2010


2011-2012


2013-2014


Thereafter(In thousands)Debt obligations(1)

$
1,205,000


$



$
305,000


$
300,000


$
600,000Interest obligations(2)


501,434



92,120



174,734



124,973



109,607Operating leases


19,841



2,620



5,089



4,201



7,931Abandonment liabilities


417,887



54,915



105,214



51,844



205,914Seismic obligations


7,933



6,929



1,004







Capital accrual obligations


140,941



140,941











OIL Theoretical Withdrawal(3)


48,000



11,040



24,493



12,467



Rig commitment


15,686



15,686











Other liabilities(4)


103,547



103,547











Total contractual cash commitments

$
2,460,269


$
427,798


$
615,534


$
493,485


$
923,452     (1)
    
    As of December 31, 2009, we had incurred debt obligations
    under our bank credit facility and the Notes.(2)
    
    Interest obligations represent interest due on the bank credit
    facility and the Notes per annum. Future interest obligations
    under our bank credit facility are uncertain, due to the
    variable interest rate on fluctuating balances. Based on a 3.40%
    weighted average interest rate on amounts outstanding under our 63




---



##### Table of Contents



bank credit facility as of December 31, 2009, our cash
    payments for interest would be $10.4 million annually for
    2010 through 2011 and $0.9 million in 2012.(3)
    
    We have accrued approximately $48.0 million as of
    December 31, 2009, for an insurance premium contingency
    related to our membership in OIL. As part of our membership, we
    are obligated to pay a withdrawal premium if we elect to
    withdraw from OIL. We do not anticipate withdrawing from OIL;
    however, due to the contingency, OIL calculates a potential
    withdrawal premium annually based on past losses and we accrue a
    liability for the potential premium.(4)
    
    Other liabilities include accrued LOE of $21.3 million,
    accrued liabilities of $15.2 million, gas balancing of
    $9.7 million, oil and gas payable of $38.8 million,
    accrued compensation of $12.0 million, other G&A of
    $3.3 million and other liabilities for $3.2 million.  Adequacy
    of Capital Sources and Liquidity
  Future Capital Resources.
  
    cash flow from operations in future periods;
    proceeds under our bank credit facility;
    proceeds from insurance policies relating to hurricane
    repairs; and
    proceeds from future capital markets transactions as needed.        Off-Balance
    Sheet Arrangements
   64




---



##### Table of Contents



Fair
    Value Measurement
          Critical
    Accounting Policies and Estimates
  Form 10-K.
  Oil
    and Gas Properties
  unit-of-production
 65




---



##### Table of Contents



Full
    Cost Ceiling Test
  12-month first-day-of-the-month 12-month
    12-month 12-month 12-month
  Estimated
    Proved Reserves
    Unproved
    Properties
   66




---



##### Table of Contents



Future
    Development and Abandonment Costs
    DD&A
    Abandonment
    Liability
   67




---



##### Table of Contents



Goodwill
      Income
    Taxes
     68




---



##### Table of Contents



Derivative
    Financial Instruments
    mark-to-market Mark-to-market
        Revenue
    Recognition
     69




---



##### Table of Contents



Share-Based
    Compensation Expense
    Recent
    Accounting Pronouncements
    Item 7A.
    Quantitative
    and Qualitative Disclosures About Market Risk.  Commodity
    Prices and Related Hedging Activities
    mark-to-market
   70




---



##### Table of Contents



Year Ended December 31,2009


2008


2007(In thousands)Cash Gain (Loss) on Settlements(1)

$
173,684


$
(98,814
)

$
46,732Gain (Loss) on Hedge Ineffectiveness(1)(2)


264



(1,995
)


(1,655
)Reclassification of Liquidated Swaps(3)


58,710







Total

$
232,658


$
(100,809
)

$
45,077     (1)
    
    Designated as cash flow hedges pursuant to accounting for
    derivatives and hedging under GAAP.(2)
    
    Unrealized loss recognized in natural gas revenue related to the
    ineffective portion of open contracts that are not eligible for
    deferral under GAAP due primarily to the basis differentials
    between the contract price and the indexed price at the point of
    sale.(3)
    
    Natural gas and crude oil fixed price swaps liquidated in the
    first and third quarter 2009 that do not qualify for hedge
    accounting. These amounts include net losses of
    $2.8 million for the year ended December 31, 2009.    Weighted-Average


Fair ValueFixed Price Swaps

Quantity


Fixed Price


Asset/(Liability)(In thousands)Natural Gas (MMbtus)January 1  December 31, 2010


22,619,000


$
5.88


$
2,239January 1  December 31, 2011


13,650,000


$
6.45



1,540January 1  December 31, 2012


6,588,000


$
6.62



497January 1  December 31, 2013


5,840,000


$
6.76



410Crude Oil (Bbls)January 1  December 31, 2010


1,934,500


$
67.48



(27,708
)January 1  December 31, 2011


978,100


$
73.24



(11,309
)January 1  December 31, 2012


494,100


$
80.77



(3,058
)January 1  December 31, 2013


408,800


$
82.81



(2,195
)Total









$
(39,584
)     Weighted-Average


Fair ValueFixed Price Swaps

Quantity


Fixed Price


Asset/(Liability)(In thousands)Natural Gas (MMBtus)January 1  December 31, 2009


31,642,084


$
8.48


$
74,709Crude Oil (Bbls)January 1  December 31, 2009


2,172,210


$
76.15



47,220Total









$
121,929    71




---



##### Table of Contents



Interest
    Rate Market Risk
    Item 8.
    Financial
    Statements and Supplementary Data.  Index to
    Financial Statements
  Managements Report on Internal Control over
    Financial Reporting


73Report of Independent Registered Public
    Accounting Firm


74Consolidated Balance Sheets at December 31,
    2009 and 2008


76Consolidated Statements of Operations for the
    years ended December 31, 2009, 2008 and 2007


77Consolidated Statements of Stockholders
    Equity for the years ended December 31, 2009, 2008 and
    2007


78Consolidated Statements of Cash Flows for the
    years ended December 31, 2009, 2008 and 2007


79Notes to the Consolidated Financial Statements


80   72




---



##### Table of Contents



MANAGEMENTS
    REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING    Internal Control  Integrated Framework
  /s/Scott
    D. Josey

/s/Jesus
    G. MelendrezScott D. Josey,
    Chairman of the Board,
    Chief Executive Officer and President

Jesus G. Melendrez,
    Senior Vice President, Chief Commercial Officer, 
    Acting Chief Financial Officer and Treasurer     73




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM             74




---



##### Table of Contents



No. 2010-3, Oil and Gas Reserve Estimation and
    Disclosures Business Combinations
   /s/ DELOITTE &
    TOUCHE LLP
    75




---



##### Table of Contents



MARINER
    ENERGY, INC.
  CONSOLIDATED BALANCE SHEETS
  December 31,


December 31,2009


2008(In thousands, except share data)Current Assets:Cash and cash equivalents

$
8,919


$
3,251Receivables, net of allowances of $3,408 and $3,868, respectively


148,725



219,920Insurance receivables


8,452



13,123Derivative financial instruments


2,239



121,929Intangible assets


22,615



2,353Prepaid expenses and other


11,667



14,377Deferred income tax


9,704



Total current assets


212,321



374,953Property and Equipment:Proved oil and gas properties, full cost method


5,117,273



4,448,146Unproved properties, not subject to amortization


292,237



201,121Total oil and gas properties


5,409,510



4,649,267Other property and equipment


55,695



53,115Accumulated depreciation, depletion and amortization:Proved oil and gas properties


(2,884,411
)


(1,767,028
)Other properties


(8,235
)


(5,477
)Total accumulated depreciation, depletion and amortization


(2,892,646
)


(1,772,505
)Total property and equipment, net


2,572,559



2,929,877Insurance Receivables






22,132Derivative Financial Instruments


902



Deferred Income Tax


12,491



Other Assets, net of amortization


68,932



65,831TOTAL ASSETS

$
2,867,205


$
3,392,793Current Liabilities:Accounts payable

$
3,579


$
3,837Accrued liabilities


137,206



107,815Accrued capital costs


140,941



195,833Deferred income tax






23,148Abandonment liability


54,915



82,364Accrued interest


8,262



12,567Derivative financial instruments


27,708



Total current liabilities


372,611



425,564Long-Term Liabilities:Abandonment liability


362,972



325,880Deferred income tax






319,766Derivative financial instruments


15,017



Long-term debt


1,194,850



1,170,000Other long-term liabilities


38,800



31,263Total long-term liabilities


1,611,639



1,846,909Commitments and Contingencies (see Note 8)Stockholders Equity:Preferred stock, $.0001 par value; 20,000,000 shares
    authorized, no shares issued and outstanding at
    December 31, 2009 and December 31, 2008






Common stock, $.0001 par value; 180,000,000 shares
    authorized, 101,806,825 shares issued and outstanding at
    December 31, 2009; 180,000,000 shares authorized,
    88,846,073 shares issued and outstanding at
    December 31, 2008


10



9Additional
    paid-in-capital


1,257,526



1,071,347Accumulated other comprehensive (loss) income


(25,955
)


78,181Accumulated deficit


(348,626
)


(29,217
)Total stockholders equity


882,955



1,120,320TOTAL LIABILITIES AND STOCKHOLDERS EQUITY

$
2,867,205


$
3,392,793   The accompanying Notes to the Consolidated Financial
    Statements
 are an integral part of these financial statements
 76




---



##### Table of Contents



MARINER
    ENERGY, INC.
  CONSOLIDATED STATEMENTS OF
    OPERATIONS
  Year Ended December 31,2009


2008


2007(In thousands except share data)Revenues:Natural gas

$
552,259


$
742,370


$
534,537Oil


315,642



419,878



284,405Natural gas liquids


48,921



85,715



54,192Other revenues


26,119



52,544



1,631Total revenues


942,941



1,300,507



874,765Costs and Expenses:Lease operating expense


249,449



231,645



152,627Severance and ad valorem taxes


14,410



18,191



13,101Transportation expense


18,494



14,996



8,794General and administrative expense


79,960



60,613



42,151Depreciation, depletion and amortization


399,400



467,265



384,321Full cost ceiling test impairment


754,325



575,607



Goodwill impairment






295,598



Other property impairment






15,252



Other miscellaneous expense


8,306



3,052



5,061Total costs and expenses


1,524,344



1,682,219



606,055OPERATING (LOSS) INCOME


(581,403
)


(381,712
)


268,710Other Income/(Expenses):Interest income


499



1,362



1,403Interest expense, net of amounts capitalized


(70,134
)


(56,398
)


(54,665
)Gain on acquisition


107,259







Other income










5,811(Loss) Income Before Taxes


(543,779
)


(436,748
)


221,259Benefit (Provision) for Income Taxes


224,370



48,223



(77,324
)Net (Loss) Income


(319,409
)


(388,525
)


143,935Less: Net income attributable to noncontrolling interest






(188
)


(1
)NET (LOSS) INCOME ATTRIBUTABLE TO MARINER ENERGY, INC

$
(319,409
)

$
(388,713
)

$
143,934Net (Loss) Income per share attributable to
    Mariner Energy, Inc.:Basic

$
(3.34
)

$
(4.44
)

$
1.68Diluted

$
(3.34
)

$
(4.44
)

$
1.67Weighted average shares outstanding:Basic


95,607,445



87,491,385



85,645,199Diluted


95,607,445



87,491,385



86,125,811   The accompanying Notes to the Consolidated Financial
    Statements
 are an integral part of these financial statements
 77




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##### Table of Contents



MARINER
    ENERGY, INC.
  CONSOLIDATED STATEMENTS OF CHANGES IN
    STOCKHOLDERS EQUITY
  Accumulated





TotalOther


Accumulated


MarinerAdditional


Comprehensive


Retained


Energy, Inc.





TotalCommon


Stock


Paid-In-


Income/


Earnings


Stockholders


Noncontrolling


StockholdersStock


Amount


Capital


(Loss)


(Deficit)


Equity


Interest


Equity(In thousands)Balance at December 31, 2006


86,376


$
9


$
1,043,923


$
43,097


$
215,562


$
1,302,591


$



$
1,302,591Common shares issued  restricted stock


906



























Treasury stock bought and cancelled on same day


(72
)






(1,553
)










(1,553
)






(1,553
)Forfeiture of restricted stock


(45
)






(907
)










(907
)






(907
)Share-based compensation










11,797











11,797







11,797Stock options exercised


64







829











829







829Comprehensive income (loss):


























Net income


















143,934



143,934



1



143,935Change in fair value of derivative hedging
    instruments  net of income taxes of ($52,385)














(94,935
)






(94,935
)






(94,935
)Hedge settlements reclassified to income  net of
    income taxes of $15,815














29,262







29,262







29,262Total comprehensive (loss) income














(65,673
)


143,934



78,261



1



78,262Balance at December 31, 2007


87,229


$
9


$
1,054,089


$
(22,576
)

$
359,496


$
1,391,018


$
1


$
1,391,019Common shares issued  restricted stock


1,734



























Treasury stock bought and cancelled on same day


(144
)






(4,313
)










(4,313
)






(4,313
)Forfeiture of restricted stock


(29
)


























Share-based compensation










20,829











20,829







20,829Stock options exercised


56







742











742







742Comprehensive income (loss):


























Net loss


















(388,713
)


(388,713
)


188



(388,525
)Change in fair value of derivative hedging
    instruments  net of income taxes of $91,316














165,675







165,675







165,675Hedge settlements reclassified to income  net of
    income taxes of ($35,891)














(64,918
)






(64,918
)






(64,918
)Total comprehensive income (loss)














100,757



(388,713
)


(287,956
)


188



(287,768
)Purchase of noncontrolling interest


























(189
)


(189
)Balance at December 31, 2008


88,846


$
9


$
1,071,347


$
78,181


$
(29,217
)

$
1,120,320


$



$
1,120,320Common shares issued  equity offering


11,500



1



159,734











159,735







159,735Common shares issued  restricted stock


1,742



























Treasury stock bought and cancelled on same day


(216
)






(2,666
)










(2,666
)






(2,666
)Forfeiture of restricted stock


(66
)


























Share-based compensation










29,097











29,097







29,097Stock options exercised


1







14











14







14Comprehensive loss:


























Net loss


















(319,409
)


(319,409
)






(319,409
)Change in fair value of derivative hedging
    instruments  net of income taxes of ($140,778)














(253,658
)






(253,658
)






(253,658
)Hedge settlements reclassified to income  net of
    income taxes of $83,129














149,529







149,529







149,529Foreign currency translation adjustment














(7
)






(7
)






(7
)Total comprehensive loss














(104,136
)


(319,409
)


(423,545
)






(423,545
)Balance at December 31, 2009


101,807


$
10


$
1,257,526


$
(25,955
)

$
(348,626
)

$
882,955


$



$
882,955   The accompanying Notes to the Consolidated Financial
    Statements
 are an integral part of these financial statements
 78




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##### Table of Contents



MARINER
    ENERGY, INC.
  CONSOLIDATED STATEMENTS OF CASH
    FLOWS
  Year Ended December 31,2009


2008


2007(In thousands)Operating Activities:Net (loss) income attributable to Mariner Energy, Inc.

$
(319,409
)

$
(388,713
)

$
143,934Adjustments to reconcile net (loss) income to net cash provided
    by operating activities:Deferred income tax


(224,370
)


(49,403
)


77,324Depreciation, depletion and amortization


399,400



467,265



384,321Ineffectiveness of derivative instruments


(264
)


1,995



1,655Full cost ceiling test impairment


754,325



575,607



Goodwill impairment






295,598



Other property impairment






15,252



Gain on acquisition


(107,259
)






Share-based compensation


25,434



21,017



10,890Other


3,292



(52,731
)


4,487Changes in operating assets and liabilities:Receivables


79,950



(63,015
)


(9,805
)Insurance receivables


26,803



47,839



(22,606
)Prepaid expenses and other


(23,777
)


(1,853
)


(23,406
)Accounts payable and accrued liabilities


(36,458
)


(6,841
)


(30,680
)Net cash provided by operating activities


577,667



862,017



536,114Investing Activities:Acquisitions and additions to oil and gas properties


(530,949
)


(1,220,067
)


(674,740
)Acquisition of subsidiaries of Edge Petroleum Corporation


(213,553
)






Additions to other property and equipment


(2,606
)


(49,717
)


Property conveyances










4,130Restricted cash designated for investment






5,000



26,830Net cash used in investing activities


(747,108
)


(1,264,784
)


(643,780
)Financing Activities:Credit facility borrowings


710,221



1,268,000



564,000Credit facility repayments


(975,221
)


(877,000
)


(739,000
)Proceeds from note offering


291,279







300,000Proceeds from equity offering


159,735







Debt redetermination costs


(2,346
)






Repurchase of stock


(2,666
)


(4,313
)


(1,553
)Proceeds from exercise of stock options


14



742



829Deferred offering costs


(5,907
)






(6,600
)Partner distributions










(1,000
)Net cash provided by financing activities


175,109



387,429



116,676Increase (Decrease) in Cash and Cash Equivalents


5,668



(15,338
)


9,010Cash and Cash Equivalents at Beginning of Period


3,251



18,589



9,579Cash and Cash Equivalents at End of Period

$
8,919


$
3,251


$
18,589   The accompanying Notes to the Consolidated Financial
    Statements
 are an integral part of these financial statements
 79




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##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL STATEMENTS
 For the
    Years Ended December 31, 2009, 2008 and 2007
  Note 1.
    Summary
    of Significant Accounting Policies    Principles of Consolidation
  Reclassifications and Use of Estimates in the Preparation of
    Financial Statements
    Cash and Cash Equivalents
  Receivables
  Insurance receivables 
  Oil and Gas Properties unit-of-production
 80




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##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 For the
    Years Ended December 31, 2009, 2008 and 2007
    Full Cost Ceiling Test  12-month first-day-of-the-month 12-month
  12-month 12-month 12-month
  Unproved Properties 
 81




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##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 For the
    Years Ended December 31, 2009, 2008 and 2007
    Future Development and Abandonment Costs 
  Estimated Proved Reserves
  Depreciation, Depletion, and Amortization
  Abandonment Liability
 82




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##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 For the
    Years Ended December 31, 2009, 2008 and 2007
      2009


2008(In thousands)Abandonment liability as of January 1

$
408,244


$
222,006Liabilities incurred


23,842



46,514Liabilities settled


(61,228
)


(73,164
)Accretion expense


33,582



23,511Revisions to previous estimates


7,992



144,957Liabilities from assets acquired


5,455



44,420Abandonment liability as of December 31(1)

$
417,887


$
408,244     (1)
    
    Includes $54.9 million and $82.4 million classified as
    a current accrued liability at December 31, 2009 and 2008.  Other Assets
  2009


2008(In thousands)Oil and gas lease and well equipment held in inventory

$
42,975


$
41,051Debt issuance costs


13,602



13,439Prepaid compression and other


5,850



6,907Long term deposits


5,501



3,767Prepaid seismic


1,004



667Other Assets, net of amortization(1)

$
68,932


$
65,831     (1)
    
    Net of accumulated amortization as of December 31, 2009 and
    2008 of $10.4 million and $6.4 million, respectively.  Derivative Financial Instruments
  mark-to-market Mark-to-market
 83




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##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 For the
    Years Ended December 31, 2009, 2008 and 2007
          Goodwill
   84




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##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 For the
    Years Ended December 31, 2009, 2008 and 2007
  Income Taxes
    Revenue Recognition 
    Major Customers
  Percentage of TotalRevenues forYear EndedDecember 31,Customer

2009


2008


2007Williams Gas and affiliates


12
%


5
%


<1
%ChevronTexaco and affiliates


13
%


16
%


23
%Plains Marketing LP


11
%


5
%


7
%Shell


9
%


10
%


10
%   Operating Costs
 85




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##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 For the
    Years Ended December 31, 2009, 2008 and 2007
        General and Administrative Expense
  Capitalized G&A
  Overhead Recovery
  Concentration of Credit Risk
  Use of Estimates
 86




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##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 For the
    Years Ended December 31, 2009, 2008 and 2007
  Net Income per Share
  Comprehensive Income
  Years Ended December 31,2009


2008


2007(In thousands)Net (Loss) Income

$
(319,409
)

$
(388,525
)

$
143,935Other comprehensive (loss) income, net of tax:Change in unrealized
    mark-to-market
    (losses) gains arising during period, net of tax


(253,658
)


165,675



(94,935
)Derivative contracts settled and reclassified, net of tax


149,529



(64,918
)


29,262Foreign currency translation adjustment


(7
)






Change in accumulated other comprehensive (loss) income


(104,136
)


100,757



(65,673
)Comprehensive (loss) income


(423,545
)


(287,768
)


78,262Comprehensive income attributable to noncontrolling interest






188



1Comprehensive (loss) income attributable to Mariner Energy,
    Inc.

$
(423,545
)

$
(287,956
)

$
78,261   Recent Accounting Pronouncements 
  2010-03,
   87




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##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 For the
    Years Ended December 31, 2009, 2008 and 2007
        Forms 10-K
  
    Oil and gas reserves must be reported using the average price
    over the prior
    12-month
    period, rather than year-end prices;
    Companies are allowed to report, on an optional basis, probable
    and possible reserves;
    Non-traditional reserves, such as oil and gas extracted from
    coal and shales, are included in the definition of oil and
    gas producing activities;
    Companies are permitted to use new technologies to determine
    proved reserves, as long as those technologies have been
    demonstrated empirically to lead to reliable conclusions with
    respect to reserve volumes;
    Companies are required to disclose, in narrative form,
    additional details on their proved undeveloped reserves (PUDs),
    including the total quantity of PUDs at year end, any material
    changes to PUDs that occurred during the year, investments and
    progress made to convert PUDs to developed oil and gas reserves
    and an explanation of the reasons why material concentrations of
    PUDs in individual fields or countries have remained undeveloped
    for five years or more after disclosure as PUDs;
    Companies are required to report the qualifications and measures
    taken to assure the independence and objectivity of any business
    entity or employee primarily responsible for preparing or
    auditing the reserves estimates. 88




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##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 For the
    Years Ended December 31, 2009, 2008 and 2007
   12-month 12-month
        Note 2.
    Acquisitions  Onshore Acquisition
   89




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##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 For the
    Years Ended December 31, 2009, 2008 and 2007
    Proved oil and gas properties

$
206,291Unproved properties


36,695Abandonment liability


(5,455
)$
237,531     Net operating losses

$
61,182Built-in losses from carryover tax basis in the properties


22,097$
83,279     
    Proved properties The Company valued proved
    properties using a discounted cash flow method for the proved
    developed and undeveloped reserves acquired. Market strip prices
    were used for barrels of oil and MMBtus of natural gas as of
    December 31, 2009 for the first five years of the reserve
    life and then held constant for the remaining life of the
    reserves. These prices were adjusted for the Companys
    price differentials. Operating costs associated with those
    reserves were established based on the Companys current
    estimate of operating costs and fixed throughout the life of the
    reserves, including estimates of abandonment costs. Production
    and ad valorem taxes, as a percentage of revenue, were applied
    to the revenue value. Management estimated an additional risk
    associated with PUD volumes and risked those volumes at 80%.
    Unproved properties This amount consists of
    leasehold acreage and unproved properties acquired, and
    proprietary seismic data which may be sold to third parties on a
    licensed basis. The Company valued the leasehold acreage using a
    market transaction approach of reviewing transactions in
    proximate locations as an indication of fair value from a market
    participant perspective. The market values for leasehold acreage
    were obtained for the respective areas of properties acquired
    and a per acre valuation was applied. The Company valued this
    seismic data using a replacement cost approach adjusted for
    technological obsolescence.
    Abandonment Liability The Company used a
    present value technique to measure the fair value of the
    associated abandonment liability. The assumptions applied to
    calculate this amount included the same 90




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##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 For the
    Years Ended December 31, 2009, 2008 and 2007
  credit-adjusted risk-free interest rate and inflation rate used
    to account for other abandonment liabilities recorded, the
    associated estimated settlement date and current cost to settle
    the liability.  
    Deferred Tax Assets The Company measured the
    deferred tax assets based on the expected undiscounted amounts
    to be realized in future periods using the enacted tax rates.
    The tax attributes of the subsidiaries acquired consist of
    federal net operating loss carryforwards estimated at
    $174.8 million and built-in losses estimated at
    $87.1 million associated with the tax basis in the
    properties. The transaction to acquire the reorganized Edge
    subsidiaries was structured as a stock purchase to preserve the
    carryover tax attributes of the Edge subsidiaries.      Pro Forma Financial Information:
  For the Year EndedDecember 31,2009


2008(Unaudited)(In thousands, exceptper share amounts)Pro Forma:Revenue

$
1,005,252


$
1,461,783Net (loss) income available to common stockholders

$
(437,622
)

$
(660,322
)Basic (loss) earnings per share

$
(4.58
)

$
(7.55
)Diluted (loss) earnings per share

$
(4.58
)

$
(7.55
)  91




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##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 For the
    Years Ended December 31, 2009, 2008 and 2007
  Gulf of Mexico Shelf Acquisition
  Permian Basin Acquisitions
  Bass Lite
  Note 3.
    Long-Term
    Debt    December 31,


December 31,2009


2008(In thousands)Bank credit facility

$
305,000


$
570,000113/4% Senior
    Notes, due June 30, 2016, net of discount


291,725



8% Senior Notes, due May 15, 2017


300,000



300,00071/2% Senior
    Notes, due April 15, 2013, net of discount


298,125



300,000Total long-term debt

$
1,194,850


$
1,170,000   Bank Credit Facility
    3 4
 92




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##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 For the
    Years Ended December 31, 2009, 2008 and 2007
          
    maintain a ratio of consolidated current assets plus the unused
    borrowing base to consolidated current liabilities of not less
    than 1.0 to 1.0; and
    maintain a ratio of total debt to EBITDA (as defined in the
    credit agreement) of not more than 2.5 to 1.0.      Senior Notes 3 4 3 4 3 4 3 4
   93




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##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 For the
    Years Ended December 31, 2009, 2008 and 2007
    1 2 1 2 3 4 1 2
      3 4 1 2
  3 4 1 2
  113/4% Notes

8% Notes

71/2% NotesJune 30, 2013 at 105.875%

May 15, 2012 at 104.000%

April 15, 2010 at 103.750%June 30, 2014 at 102.938%

May 15, 2013 at 102.667%

April 15, 2011 at 101.875%June 30, 2015 and after at 100.000%

May 15, 2014 at 101.333%

April 15, 2012 and after at 100.000%May 15, 2015 and after at 100.000%   3 4 3 4
   94




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##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 For the
    Years Ended December 31, 2009, 2008 and 2007
      
    make investments;
    incur additional indebtedness or issue preferred stock;
    create certain liens;
    sell assets;
    enter into agreements that restrict dividends or other payments
    from its subsidiaries to itself;
    consolidate, merge or transfer all or substantially all of its
    assets;
    engage in transactions with affiliates;
    pay dividends or make other distributions on capital stock or
    subordinated indebtedness; and
    create unrestricted subsidiaries.  3 4 1 2
  Capitalized Interest
  Cash Interest Expense
  Bank Debt Issuance Costs
  Note 4.
    Stockholders
    Equity  Common Stock Offering 
  Earnings Per Share
 95




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##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 For the
    Years Ended December 31, 2009, 2008 and 2007
    2009


2008


2007Net








Net








NetIncome





Per-


Income





Per-


Income





Per-Attributed


Weighted-


Share


Attributed


Weighted-


Share


Attributed


Weighted-


Shareto Common


Average


Income/


to Common


Average


Income/


to Common


Average


Income/Stock


Shares


(Loss)


Stock


Shares


(Loss)


Stock


Shares


(Loss)(In thousands, except per share data)Basic net (loss) income attributable to Mariner Energy, Inc. per
    share

$
(319,409
)


95,607


$
(3.34
)

$
(388,713
)


87,491


$
(4.44
)

$
143,934



85,645


$
1.68Effect of dilutive securities:






























481



(0.01
)Diluted net (loss) income attributable to Mariner Energy, Inc.
    per share

$
(319,409
)


95,607


$
(3.34
)

$
(388,713
)


87,491


$
(4.44
)

$
143,934



86,126


$
1.67     Authorized Stock
  Rights Plan
   96




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##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 For the
    Years Ended December 31, 2009, 2008 and 2007
        one-for-one
  Note 5.
    Share-Based
    Compensation      Year Ended December 312009


2008


2007(In thousands)Share-based compensation included in:General and administrative expense

$
25,434


$
21,017


$
10,890Oil and natural gas properties under full cost method


3,663



2,956



Total share-based compensation

$
29,097


$
23,973


$
10,890  97




---



##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 For the
    Years Ended December 31, 2009, 2008 and 2007
    Year Ended December 312009


2008


2007(In thousands)Charged to earnings

$
25,434


$
21,017


$
10,890Tax benefit


(8,775
)


(7,188
)


(3,801
)$
16,659


$
13,829


$
7,089   Applicable Plans 
      
    without the approval of the Companys stockholders, no
    change can be made that would  (i)
    increase the total number of shares that may be issued under the
    Stock Incentive Plan, except as provided in the Stock Incentive
    Plan with respect to stock dividends or splits, or with respect
    to mergers, recapitalizations, reorganizations, spin-offs or
    other unusual transactions or events,(ii)
    permit the exercise price of any outstanding option that is
    underwater to be reduced or for an
    underwater option to be cancelled and replaced with
    a new award,  (iii)
    include participants other than employees, non-employee
    directors and consultants, or  (iv)
    materially increase benefits accrued to participants under the
    Stock Incentive Plan; and  
    no change can materially adversely affect the rights of a
    participant under an award without the participants
    written consent.     98




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##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 For the
    Years Ended December 31, 2009, 2008 and 2007
    Restricted
    Stock Grants
      WeightedAggregate


AverageEquity


Weighted


Intrinsic


RemainingInstruments


Average


Value


Contractual(in thousands)


Fair Value


(in thousands)


Life (Years)Unvested at January 1, 2009


2,697,926


$
28.22


$
76,123Granted


1,742,007



11.25



19,594Vested


(713,694
)


21.33



(15,221
)Forfeited


(65,974
)


26.70



(1,762
)Unvested at December 31, 2009


3,660,265


$
21.51


$
78,734



6.07    99




---



##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 For the
    Years Ended December 31, 2009, 2008 and 2007
    Restricted Shares under the Stock Incentive Plan2009


2008


2007Total unvested shares at beginning of period: January 1


2,697,926



1,484,552



875,380Shares granted(1)


1,742,007



1,734,070



906,104Shares vested


(713,694
)


(490,881
)


(251,332
)Shares forfeited(1)


(65,974
)


(29,815
)


(45,600
)Total unvested shares at end of period: December 31


3,660,265



2,697,926



1,484,552Total shares vested at end of period: December 31


1,460,407



746,713



255,832Available for future grant as options or restricted stock


7,070,824



2,530,388



4,072,801Average fair value of shares granted during the period

$
11.32


$
30.27


$
21.73     (1)
    
    2009 activity includes 4,741 shares granted and forfeited
    under the Stock Incentive Plans 2008 Long-Term
    Performance-Based Restricted Stock Program discussed below.      Long-Term Performance-Based Restricted Stock
    Program
    Year EndedDecember 31,2009Weighted average fair value of grants

$
33.73Expected volatility


42.29
%Risk-free interest rate


4.57
%Dividend yield


0.00
%Expected life


10 years    100




---



##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 For the
    Years Ended December 31, 2009, 2008 and 2007
  10-year,
  Stock
    Option Grants
      Weighted


AggregateAverage


IntrinsicExercise


Value(1)Shares


Price


(in thousands)Outstanding at beginning of year January 1, 2009


645,348


$
13.88


$
(1,462
)Granted










Exercised


(1,188
)


11.59



Forfeited










Outstanding at end of year December 31, 2009


644,160


$
13.88


$
(1,462
)Exercisable at end of year


644,160


$
13.88


$
(1,462
)     (1)
    
    Based upon the difference between the market price of the common
    stock on the last trading date of the year ($11.61) and the
    option exercise price of
    in-the-money
    options.   101




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##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 For the
    Years Ended December 31, 2009, 2008 and 2007
    Options OutstandingWeighted


Options ExercisableShares


Average





WeightedSubject to


Remaining





AverageOutstanding


Contractual


Expected


SharesExercise Price

Options


Life (Years)


Term


Exercisable$9.67


660



4.08



6.08



660$11.44


1,650



4.88



6.88



1,650$11.59


29,045



4.75



6.94



29,045$14.00


612,805



5.25



10.50



612,805Total number of shares subject to options


644,160











644,160     12 Months EndedDecember 31, 2006Black-Scholes Assumptions

Rollover OptionsExpected Term (years)


4.7Risk Free Interest Rate


4.79
%Expected Volatility


35.00
%Dividend Yield


0.00
%     Note 6.
    Employee
    Benefit and Royalty Plans  Employee Capital Accumulation Plan
  Overriding Royalty Interests
 102




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##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 For the
    Years Ended December 31, 2009, 2008 and 2007
    Note 7.
    Derivative
    Financial Instruments          Year Ended December 31,2009


2008


2007(In thousands)Cash Gain (Loss) on Settlements(1)

$
173,684


$
(98,814
)

$
46,732Gain (Loss) on Hedge Ineffectiveness(1)(2)


264



(1,995
)


(1,655
)Reclassification of Liquidated Swaps(3)


58,710







Total

$
232,658


$
(100,809
)

$
45,077     (1)
    
    Designated as cash flow hedges pursuant to accounting for
    derivatives and hedging under GAAP.(2)
    
    Unrealized (loss) gain recognized in natural gas revenue related
    to the ineffective portion of open contracts that are not
    eligible for deferral under GAAP due primarily to the basis
    differentials between the contract price and the indexed price
    at the point of sale. 103




---



##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 For the
    Years Ended December 31, 2009, 2008 and 2007
   (3)
    
    Natural gas and crude oil fixed price swaps liquidated in the
    first and third quarters of 2009 that do not qualify for hedge
    accounting. These amounts include net losses of
    $2.8 million for the year ended December 31, 2009.    Weighted-Average


Fair ValueFixed Price Swaps

Quantity


Fixed Price


Asset/(Liability)(In thousands)Natural Gas (MMbtus)January 1  December 31, 2010


22,619,000


$
5.88


$
2,239January 1  December 31, 2011


13,650,000


$
6.45



1,540January 1  December 31, 2012


6,588,000


$
6.62



497January 1  December 31, 2013


5,840,000


$
6.76



410Crude Oil (Bbls)January 1  December 31, 2010


1,934,500


$
67.48



(27,708
)January 1  December 31, 2011


978,100


$
73.24



(11,309
)January 1  December 31, 2012


494,100


$
80.77



(3,058
)January 1  December 31, 2013


408,800


$
82.81



(2,195
)Total









$
(39,584
)     Weighted-Average


Fair ValueFixed Price Swaps

Quantity


Fixed Price


Asset(In thousands)Natural Gas (MMbtus)January 1  December 31, 2009


31,642,084


$
8.48


$
74,709Crude Oil (Bbls)January 1  December 31, 2009


2,172,210


$
76.15



47,220Total









$
121,929        104




---



##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 For the
    Years Ended December 31, 2009, 2008 and 2007
  Additional
    Disclosures about Derivative Instruments and Hedging
    Activities
    Fair Value of Derivative ContractsAsset DerivativesDecember 31, 2009


December 31, 2008Balance Sheet




Balance SheetLocation

Fair Value


Location

Fair ValueDerivatives designated as cash flow hedging contractsFixed Price Swaps

Current Assets: Derivative 
    financial instruments

$
2,239


Current Assets: Derivative financial instruments

$
121,929Long-Term Assets: Derivative Financial Instruments


902Total

$
3,141


Total

$
121,929   Fair Value of Derivative ContractsLiability DerivativesDecember 31, 2009


December 31, 2008Balance Sheet




Balance SheetLocation

Fair Value


Location

Fair ValueDerivatives designated as cash flow hedging contractsFixed Price Swaps

Current Liabilities: Derivative financial instruments

$
27,708


Current Liabilities: Derivative financial instruments

$
Long-Term Liabilities: Derivative financial instruments


15,017


Long-Term Liabilities: Derivative financial instruments


Total

$
42,725


Total

$
     Amount of Gain/(Loss)Derivatives

Amount of Gain/(Loss)


Location of Gain/(Loss)

Reclassified from




Amount of Gain/(Loss)Designated as Cash

Recognized in OCI on


Reclassified from

Accumulated OCI


Location of Gain/(Loss)

Recognized in IncomeFlow Hedging

Derivative (Effective


Accumulated OCI into

into Income (Effective


Recognized in Income

on DerivativeContracts Under

Portion)


Income (Effective

Portion)


on Derivative

(Ineffective Portion)GAAP

2009


2008


Portion)

2009


2008


(Ineffective Portion)

2009


2008Fixed Price Swaps

$
(39,584
)

$
121,929


Revenues-Natural Gas

$
152,334


$
(26,052
)

Revenues-Natural Gas

$
264


$
(1,995
)Revenues-Crude Oil


21,350



(72,762
)Total

$
173,684


$
(98,814
)   Amount of Gain/(Loss) Recognized inDerivatives not Designated as Cash

Location of Gain/(Loss) Recognized in Income

Income on DerivativeFlow Hedging Contracts

on Derivative

2009


2008Fixed Price Swaps

Revenues-Natural Gas

$
35,259


$
Revenues-Crude Oil


23,451



Total

$
58,710


$
  105




---



##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 For the
    Years Ended December 31, 2009, 2008 and 2007
   Note 8.
    Commitments
    and Contingencies  Minimum Future Lease Payments
  2010


2,5772011


2,5872012


2,5022013


2,1732014 and thereafter


9,959Total

$
19,798     Other Commitments
  Insurance
    Matters
  Current
    Insurance Against Hurricanes
       106




---



##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 For the
    Years Ended December 31, 2009, 2008 and 2007
    Hurricane
    Ike (2008)
    Hurricanes
    Katrina and Rita (2005)
       107




---



##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 For the
    Years Ended December 31, 2009, 2008 and 2007
  MMS Proceedings
  Kerr-McGee Oil & Gas Corp. v. Allred cert denied Dept of
    the Interior v. Kerr-McGee Oil & Gas Corp. Kerr-McGee Kerr-McGee
    Oil & Gas Corp. v. Allred
  Litigation and/or
  Letters of Credit
  Note 9.
    Fair
    Value Measurement     108




---



##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 For the
    Years Ended December 31, 2009, 2008 and 2007
        As of December 31, 2009Fair Value Measurements Using:SignificantQuoted Prices


Other


Significantin Active


Observable


UnobservableTotal Fair


Markets


Inputs


InputsDerivative Financial Instruments

Value


(Level 1)


(Level 2)


(Level 3)(In thousands)Natural gas and crude oil fixed price swaps  Short
    Term

$
25,469


$



$
25,469


$
Natural gas and crude oil fixed price swaps  Long Term


14,115







14,115



Total

$
39,584


$



$
39,584


$
     Level 2
    Fair Value Measurements
    Level 3
    Fair Value Measurements
     109




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##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 For the
    Years Ended December 31, 2009, 2008 and 2007
      September 30, 2009


December 31, 2008Carrying





CarryingLong-term Debt

Amount


Fair Value


Amount


Fair Value(In thousands)Bank credit facility

$
305,000


$
305,000


$
570,000


$
570,00071/2% Notes,
    net of discount


298,125



233,770



300,000



144,9568% Notes


300,000



168,519



300,000



59,978113/4% Notes,
    net of discount


291,725



163,650







Total long-term debt

$
1,194,850


$
870,939


$
1,170,000


$
774,934     Note 10.
    Income
    Taxes    For the Year Ended December 31,2009


2008


2007(In thousands)Current

$
(107
)

$
1,939


$
Deferred


(224,263
)


(50,162
)


77,324Total (Benefit) Provision for Income Taxes

$
(224,370
)

$
(48,223
)

$
77,324     Year Ended December 31,2009


2008


2007(In thousands, except percentages)(Loss) Income before taxes

$
(543,779
)





$
(436,748
)





$
221,259Income tax expense computed at statutory rates


(190,323
)


35.0
%


(152,862
)


35.0
%


77,440



35.0
%State tax expense, net of the federal benefit


(5,307
)


1.0
%


(619
)


0.2
%


2,452



1.1
%Acquisition purchase price adjustment


















(2,034
)


(0.9
)%Share-based compensation shortfall (ACS 718)


9,887



(1.8
)%














Gain on acquisition


(37,552
)


6.9
%














Goodwill impairment










103,460



(23.7
)%






Other


(1,075
)


0.2
%


1,798



(0.5
)%


(534
)


(0.3
)%Total (Benefit) Provision for Income Taxes

$
(224,370
)


41.3
%

$
(48,223
)


11.0
%

$
77,324



34.9
%  110




---



##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 For the
    Years Ended December 31, 2009, 2008 and 2007
      At December 31,2009


2008(In thousands)Current Deferred Tax Assets:Employee share-based compensation

$
782


$
2,484Other comprehensive income-derivative instruments


8,922



Net operating loss carryforwards (current)






17,591Total current deferred tax assets


9,704



20,075Long-Term Deferred Tax Assets:Net operating loss carryforwards


242,068



154,711Alternative minimum tax credit


3,152



3,342Valuation allowance


(223
)


(408
)Other comprehensive income-derivative instruments


4,972



Reserve accruals


5,890



439Other


395



4,499Total long-term deferred tax assets


256,254



162,583Current Deferred Tax Liabilities:Deferred gain






Other comprehensive income-derivative instruments






(43,223
)Other






Total current deferred tax liabilities






(43,223
)Long-Term Deferred Tax Liabilities:Deferred gain






Other comprehensive income-derivative instruments






Differences between book and tax basis properties


(238,218
)


(472,718
)Texas margins tax


(1,254
)


(98
)Louisiana franchise tax


(4,291
)


(9,533
)Other






Total long-term deferred tax liabilities


(243,763
)


(482,349
)Total net deferred asset (liability)

$
22,195


$
(342,914
)    111




---



##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 For the
    Years Ended December 31, 2009, 2008 and 2007
          Note 11.
    Segment
    Information   112




---



##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 For the
    Years Ended December 31, 2009, 2008 and 2007
  project-by-project
  Note 12.
    Quarterly
    Financial Information (Unaudited)    Quarter Ended 2009December 31


September 30


June 30


March 31(In thousands, except share data)Total revenues

$
240,289


$
227,346


$
231,970


$
243,336Operating (loss) income(1)


(17,493
)


26,814



52,411



(643,135
)Income (Loss) before taxes(1)


70,764



7,168



35,741



(657,452
)Provision (Benefit) for income taxes(1)


(12,510
)


2,946



18,528



(233,334
)Net income (loss) attributable to Mariner Energy, Inc.(1)

$
83,274


$
4,222


$
17,213


$
(424,118
)Earnings per share:(3)Net income (loss) per share  basic

$
0.83


$
0.04


$
0.19


$
(4.77
)Net income (loss) per share  diluted

$
0.82


$
0.04


$
0.19


$
(4.77
)Weighted average shares outstanding  basic


100,825,884



100,752,532



91,798,761



88,864,648Weighted average shares outstanding  diluted


101,406,275



101,084,502



92,152,933



88,864,648   Quarter Ended 2008December 31


September 30


June 30


March 31(In thousands, except share data)Total revenues

$
237,268


$
317,890


$
429,452


$
315,897Operating (loss) income(2)


(839,221
)


117,668



208,186



131,655(Loss) Income before taxes(2)


(841,592
)


100,530



190,904



113,410(Benefit) Provision for income taxes(3)


(192,672
)


35,839



67,416



41,194Net (loss) income(2)


(648,920
)


64,691



123,488



72,216Net income attributable to noncontrolling interest










98



90Net (loss) income attributable to Mariner Energy, Inc.(2)

$
(648,920
)

$
64,691


$
123,390


$
72,126Earnings per share:(3)Net (loss) income per share  basic

$
(7.41
)

$
0.74


$
1.40


$
0.83Net (loss) income per share  diluted

$
(7.41
)

$
0.73


$
1.39


$
0.82Weighted average shares outstanding  basic


87,622,740



87,595,792



87,983,902



87,293,730Weighted average shares outstanding  diluted


87,622,740



88,183,715



88,828,904



88,012,901  113




---



##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 For the
    Years Ended December 31, 2009, 2008 and 2007
    (1)
    
    There are no operating results for the Edge subsidiaries
    acquired by the Company on December 31, 2009. Fourth
    quarter amounts include a bargain purchase gain of
    $107.3 million related to the acquisition of the Edge
    subsidiaries and a full cost ceiling test impairment of
    $49.6 million. First quarter amounts include a full cost
    ceiling test impairment of $704.7 million.(2)
    
    Fourth quarter amounts include $575.6 million in full cost
    ceiling test impairment, $295.6 million in goodwill
    impairment, $15.3 million in other property impairment,
    $21.6 million in retrospective contingent OIL insurance
    premium, and $46.5 million release of suspended revenue
    associated with the disputed MMS Royalty Relief liability.(3)
    
    The sum of quarterly net income per share may not agree with
    total year net income per share, as each quarterly computation
    is based on the weighted average shares outstanding.  Note 13.
    Supplemental
    Guarantor Information  3 4 1 2
     114




---



##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 For the
    Years Ended December 31, 2009, 2008 and 2007
  MARINER
    ENERGY, INC. AND SUBSIDIARIES
    CONSOLIDATING BALANCE SHEET
    December 31, 2009
    (In thousands except share data)
  Subsidiary





ConsolidatedParent


Subsidiary


Non-





MarinerCompany


Guarantors


Guarantors


Eliminations


Energy, Inc.Current Assets:Cash and cash equivalents

$
8,365


$
3


$
551


$



$
8,919Receivables, net of allowances


94,958



53,767











148,725Insurance receivables


74



8,378











8,452Derivative financial instruments


2,239















2,239Intangible assets


22,615















22,615Prepaid expenses and other


10,450



1,217











11,667Deferred income tax


9,704















9,704Total current assets


148,405



63,365



551







212,321Property and Equipment:Proved oil and gas properties, full cost method


2,472,963



2,644,310











5,117,273Unproved properties, not subject to amortization


246,037



46,134



66







292,237Total oil and gas properties


2,719,000



2,690,444



66







5,409,510Other property and equipment


19,926



35,358



411







55,695Accumulated depreciation, depletion and amortization:Proved oil and gas properties


(1,499,787
)


(1,384,624
)










(2,884,411
)Other property and equipment


(6,145
)


(2,090
)










(8,235
)Accumulated depreciation, depletion and amortization


(1,505,932
)


(1,386,714
)










(2,892,646
)Total property and equipment, net


1,232,994



1,339,088



477







2,572,559Investment in Subsidiaries


715,772











(715,772
)


Intercompany Receivables


222,273











(222,273
)


Intercompany Note Receivable


7,175











(7,175
)


Insurance Receivables


















Derivative Financial Instruments


902















902Deferred Income Tax


35,583



(23,092
)










12,491Other Assets, net of amortization


68,631



301











68,932TOTAL ASSETS

$
2,431,735


$
1,379,662


$
1,028


$
(945,220
)

$
2,867,205Current Liabilities:Accounts payable

$
3,569


$



$
10


$



$
3,579Accrued liabilities


107,537



29,669











137,206Accrued capital costs


71,420



69,521











140,941Deferred income tax


















Abandonment liability


10,632



44,283











54,915Accrued interest


8,262















8,262Derivative financial instruments


27,708















27,708Total current liabilities


229,128



143,473



10







372,611Long-Term Liabilities:Abandonment liability


71,320



291,652











362,972Deferred income tax


















Intercompany payables






222,273







(222,273
)


Derivative Financial Instruments


15,017















15,017Long-term debt


1,194,850















1,194,850Other long-term liabilities


38,458



342











38,800Intercompany note payable






7,175







(7,175
)


Total long-term liabilities


1,319,645



521,442







(229,448
)


1,611,639Commitments and Contingencies (see Note 8)Stockholders Equity:Preferred stock, $.0001 par value; 20,000,000 shares
    authorized, no shares issued and outstanding at
    December 31, 2009


















Common stock, $.0001 par value; 180,000,000 shares
    authorized, 101,806,825 shares issued and outstanding at
    December 31, 2009


10



5







(5
)


10Additional
    paid-in-capital


1,257,526



1,098,156



1,538



(1,099,694
)


1,257,526Partner capital






33,019







(33,019
)


Accumulated other comprehensive loss


(25,948
)






(7
)






(25,955
)Accumulated retained deficit


(348,626
)


(416,433
)


(513
)


416,946



(348,626
)Total stockholders equity


882,962



714,747



1,018



(715,772
)


882,955TOTAL LIABILITIES AND STOCKHOLDERS EQUITY

$
2,431,735


$
1,379,662


$
1,028


$
(945,220
)

$
2,867,205  115




---



##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 For the
    Years Ended December 31, 2009, 2008 and 2007
  MARINER
    ENERGY, INC. AND SUBSIDIARIES
    CONSOLIDATING BALANCE SHEET
    December 31, 2008
    (In thousands except share data)
  ConsolidatedParent


Subsidiary





MarinerCompany


Guarantors


Eliminations


Energy, Inc.Current Assets:Cash and cash equivalents

$
2,851


$
400


$



$
3,251Receivables, net of allowances


157,362



62,558







219,920Insurance receivables


5,886



7,237







13,123Derivative financial instruments


121,929











121,929Intangible assets


2,334



19







2,353Prepaid expenses and other


12,923



1,454







14,377Total current assets


303,285



71,668







374,953Property and Equipment:Proved oil and gas properties, full cost method


2,181,238



2,266,908







4,448,146Unproved properties, not subject to amortization


185,012



16,109







201,121Total oil and gas properties


2,366,250



2,283,017







4,649,267Other property and equipment


33,351



19,764







53,115Accumulated depreciation, depletion and amortization:Proved oil and gas properties


(911,462
)


(855,566
)






(1,767,028
)Other property and equipment


(4,425
)


(1,052
)






(5,477
)Accumulated depreciation, depletion and amortization


(915,887
)


(856,618
)






(1,772,505
)Total property and equipment, net


1,483,714



1,446,163







2,929,877Investment in Subsidiaries


704,971







(704,971
)


Intercompany Receivables


123,142



113,064



(236,206
)


Intercompany Note Receivable


176,200







(176,200
)


Insurance Receivables


3,924



18,208







22,132Other Assets, net of amortization


64,726



1,105







65,831TOTAL ASSETS

$
2,859,962


$
1,650,208


$
(1,117,377
)

$
3,392,793Current Liabilities:Accounts payable

$
3,837


$



$



$
3,837Accrued liabilities


72,743



35,072







107,815Accrued capital costs


144,710



51,123







195,833Deferred income tax


23,148











23,148Abandonment liability


1,554



80,810







82,364Accrued interest


12,567











12,567Total current liabilities


258,559



167,005







425,564Long-Term Liabilities:Abandonment liability


56,920



268,960







325,880Deferred income tax


110,431



209,335







319,766Intercompany payables


113,064



123,142



(236,206
)


Long-term debt


1,170,000











1,170,000Other long-term liabilities


30,668



595







31,263Intercompany Note Payable






176,200



(176,200
)


Total long-term liabilities


1,481,083



778,232



(412,406
)


1,846,909Commitments and Contingencies (see Note 8)Stockholders Equity:Preferred stock, $.0001 par value; 20,000,000 shares
    authorized, no shares issued and outstanding at
    December 31, 2008














Common stock, $.0001 par value; 180,000,000 shares
    authorized, 88,846,073 shares issued and outstanding at
    December 31, 2008


9



5



(5
)


9Additional
    paid-in-capital


1,071,347



886,143



(886,143
)


1,071,347Partner capital






30,646



(30,646
)


Accumulated other comprehensive income


78,181











78,181Accumulated retained deficit


(29,217
)


(211,823
)


211,823



(29,217
)Total stockholders equity


1,120,320



704,971



(704,971
)


1,120,320TOTAL LIABILITIES AND STOCKHOLDERS EQUITY

$
2,859,962


$
1,650,208


$
(1,117,377
)

$
3,392,793  116




---



##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 For the
    Years Ended December 31, 2009, 2008 and 2007
  MARINER
    ENERGY, INC. AND SUBSIDIARIES
    CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
    Year Ended December 31, 2009
    (In thousands)
  Subsidiary





ConsolidatedParent


Subsidiary


Non-





MarinerCompany


Guarantors


Guarantors


Eliminations


Energy, Inc.Revenues:Natural gas

$
401,520


$
150,739


$



$



$
552,259Oil


221,825



93,817











315,642Natural gas liquids


37,440



11,481











48,921Other revenues


8,339



17,780











26,119Total revenues


669,124



273,817











942,941Costs and Expenses:Operating expenses


154,913



127,440











282,353General and administrative expense


78,158



1,289



513







79,960Depreciation, depletion and amortization


231,095



168,305











399,400Full cost ceiling test impairment


363,946



390,379











754,325Other miscellaneous expense


6,530



1,776











8,306Total costs and expenses


834,642



689,189



513







1,524,344OPERATING LOSS


(165,518
)


(415,372
)


(513
)






(581,403
)Loss of Affiliates


(205,123
)










205,123



Other Income/(Expense):Interest income


3,981











(3,482
)


499Interest expense, net of amounts capitalized


(70,001
)


(3,615
)






3,482



(70,134
)Gain on acquisition






107,259











107,259Loss Before Taxes


(436,661
)


(311,728
)


(513
)


205,123



(543,779
)Benefit for Income Taxes


117,252



107,118











224,370NET LOSS

$
(319,409
)

$
(204,610
)

$
(513
)

$
205,123


$
(319,409
)  117




---



##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 For the
    Years Ended December 31, 2009, 2008 and 2007
  MARINER
    ENERGY, INC. AND SUBSIDIARIES
    CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
    Year Ended December 31, 2008
    (In thousands)
  ConsolidatedParent


Subsidiary





MarinerCompany


Guarantors


Eliminations


Energy, Inc.Revenues:Natural gas

$
358,585


$
383,785


$



$
742,370Oil


239,842



180,036







419,878Natural gas liquids


56,307



29,408







85,715Other revenues


41,851



10,693







52,544Total revenues


696,585



603,922







1,300,507Costs and Expenses:Operating expenses


137,917



126,915







264,832General and administrative


58,617



1,996







60,613Depreciation, depletion and amortization


251,783



215,482







467,265Full cost ceiling test impairment


266,326



309,281







575,607Goodwill impairment






295,598







295,598Other property impairment






15,252







15,252Other miscellaneous expense


2,538



514







3,052Total costs and expenses


717,181



965,038







1,682,219OPERATING LOSS


(20,596
)


(361,116
)






(381,712
)Earnings of Affiliates


(334,223
)






334,223



Other Income/(Expenses):Interest income


10,239



84



(8,961
)


1,362Interest expense, net of amounts capitalized


(56,206
)


(9,153
)


8,961



(56,398
)Loss Before Taxes


(400,786
)


(370,185
)


334,223



(436,748
)Benefit for Income Taxes


12,073



36,150







48,223NET LOSS


(388,713
)


(334,035
)


334,223



(388,525
)Less: Net income attributable to noncontrolling interest






(188
)






(188
)NET LOSS ATTRIBUTABLE TO MARINER ENERGY, INC

$
(388,713
)

$
(334,223
)

$
334,223


$
(388,713
)  118




---



##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 For the
    Years Ended December 31, 2009, 2008 and 2007
  MARINER
    ENERGY, INC. AND SUBSIDIARIES
    CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
    Year Ended December 31, 2007
    (In thousands)
  ConsolidatedParent


Subsidiary





MarinerCompany


Guarantors


Eliminations


Energy, Inc.Revenues:Natural gas

$
266,418


$
268,119


$



$
534,537Oil


146,909



137,496







284,405Natural gas liquids


30,513



23,679







54,192Other revenues


1,491



140







1,631Total revenues


445,331



429,434







874,765Costs and Expenses:Operating expenses


59,232



106,377







165,609General and administrative


43,004



8,060







51,064Depreciation, depletion and amortization


175,147



209,174







384,321Other miscellaneous expense


2,010



3,051







5,061Total costs and expenses


279,393



326,662







606,055OPERATING INCOME


165,938



102,772







268,710Earnings of Affiliates


63,440







(63,440
)


Other Income/(Expenses):Interest income


15,611



15



(14,223
)


1,403Interest expense, net of amounts capitalized


(54,302
)


(14,586
)


14,223



(54,665
)Other income






5,811







5,811Income Before Taxes


190,687



94,012



(63,440
)


221,259Provision for Income Taxes


(46,753
)


(30,571
)






(77,324
)NET INCOME


143,934



63,441



(63,440
)


143,935Less: Net income attributable to noncontrolling interest






(1
)






(1
)NET INCOME ATTRIBUTABLE TO MARINER ENERGY, INC

$
143,934


$
63,440


$
(63,440
)

$
143,934  119




---



##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 For the
    Years Ended December 31, 2009, 2008 and 2007
  MARINER
    ENERGY, INC. AND SUBSIDIARIES
    CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWSYear Ended December 31, 2009
    (In thousands)
  Subsidiary





ConsolidatedParent


Subsidiary


Non-





MarinerCompany


Guarantors


Guarantors


Eliminations


Energy, Inc.Net cash provided by operating activities

$
467,342


$
110,828


$
(503
)

$



$
577,667Cash flow from investing activities:Acquisitions and additions to oil and gas properties


(375,653
)


(155,230
)


(66
)






(530,949
)Acquisitions of subsidiaries of Edge Petroleum Corporation


(213,553
)














(213,553
)Additions to other property and equipment


(2,195
)






(411
)






(2,606
)Repayments of notes from affiliates


169,025











(169,025
)


Other investing activities


















Net cash used in investing activities


(422,376
)


(155,230
)


(477
)


(169,025
)


(747,108
)Cash flow from financing activities:Credit facility borrowings


710,221















710,221Credit facility repayments


(975,221
)














(975,221
)Repayments of notes to affiliates






(169,025
)






169,025



Other financing activities


225,548



213,030



1,531







440,109Net cash (used in) provided by financing activities


(39,452
)


44,005



1,531



169,025



175,109Increase (Decrease) in Cash and Cash Equivalents


5,514



(397
)


551







5,668Cash and Cash Equivalents at Beginning of Period


2,851



400











3,251Cash and Cash Equivalents at End of Period

$
8,365


$
3


$
551


$



$
8,919  120




---



##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 For the
    Years Ended December 31, 2009, 2008 and 2007
  MARINER
    ENERGY, INC. AND SUBSIDIARIES
    CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
    Year Ended December 31, 2008
    (In thousands)
  ConsolidatedParent


Subsidiary


MarinerCompany


Guarantors


Energy, Inc.Net cash provided by operating activities

$
430,526


$
431,491


$
862,017Cash flow from investing activities:Acquisitions and additions to oil and gas properties


(793,948
)


(426,119
)


(1,220,067
)Additions to other property and equipment


(15,099
)


(34,618
)


(49,717
)Other investing activities






5,000



5,000Net cash used in investing activities


(809,047
)


(455,737
)


(1,264,784
)Cash flow from financing activities:Credit facility borrowings


1,268,000







1,268,000Credit facility repayments


(877,000
)






(877,000
)Other financing activities


(28,217
)


24,646



(3,571
)Net cash provided by financing activities


362,783



24,646



387,429(Decrease) Increase in Cash and Cash Equivalents


(15,738
)


400



(15,338
)Cash and Cash Equivalents at Beginning of Period


18,589







18,589Cash and Cash Equivalents at End of Period

$
2,851


$
400


$
3,251  121




---



##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 For the
    Years Ended December 31, 2009, 2008 and 2007
  MARINER
    ENERGY, INC. AND SUBSIDIARIES
    CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
    Year Ended December 31, 2007
    (In thousands)
  ConsolidatedParent


Subsidiary


MarinerCompany


Guarantors


Energy, Inc.Net cash provided by operating activities

$
282,664


$
253,450


$
536,114Cash flow from investing activities:Acquisitions and additions to property and equipment


(527,926
)


(146,786
)


(674,712
)Property conveyances


2,988



1,114



4,102Other investing activities


26,830







26,830Net cash used in investing activities


(498,108
)


(145,672
)


(643,780
)Cash flow from financing activities:Credit facility borrowings


564,000







564,000Credit facility repayments


(739,000
)






(739,000
)Proceeds from note offering


300,000







300,000Other financing activities


99,454



(107,778
)


(8,324
)Net cash provided by (used in) financing activities


224,454



(107,778
)


116,676Increase in Cash and Cash Equivalents


9,010







9,010Cash and Cash Equivalents at Beginning of Period


9,579







9,579Cash and Cash Equivalents at End of Period

$
18,589


$



$
18,589   Note 14.
    Subsequent
    Events   122




---



##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 For the
    Years Ended December 31, 2009, 2008 and 2007
   Note 15.
    Oil and
    Gas Producing Activities and Capitalized Costs
    (Unaudited)    Year Ended December 31,2009


2008


2007(In thousands)Oil and gas sales

$
916,822


$
1,247,963


$
873,134Lease operating costs


(249,449
)


(231,644
)


(152,627
)Severance and ad valorem taxes


(14,410
)


(18,191
)


(13,101
)Transportation


(18,494
)


(14,996
)


(8,794
)Depreciation, depletion and amortization


(396,641
)


(463,989
)


(383,154
)Full cost ceiling test impairment


(754,325
)


(575,607
)


Income tax benefit (expense)


180,774



20,214



(110,095
)Results of operations

$
(335,723
)

$
(36,250
)

$
205,363     At December 31,2009


2008


2007(In thousands)Unevaluated properties, not subject to amortization

$
292,237


$
201,121


$
40,455Properties subject to amortization


5,117,273



4,448,146



3,118,273Capitalized costs


5,409,510



4,649,267



3,158,728Accumulated depreciation, depletion and amortization


(2,884,411
)


(1,767,027
)


(751,126
)Net capitalized costs

$
2,525,099


$
2,882,240


$
2,407,602     Year Ended December 31,2009


2008


2007(In thousands)Property acquisition costs(1):Proved properties(2)

$
199,966


$
302,629


$
122,895Unproved properties(2)


69,801



173,531



48,891Exploration costs


170,636



231,433



146,450Development costs


246,669



533,918



398,130Asset retirement obligation(3)


70,871



259,402



61,861Capitalized internal costs(4)


35,856



29,465



14,428Total costs incurred(5)

$
793,799


$
1,530,378


$
792,655     (1)
    
    Property acquisition costs include approximately
    $6.6 million of hurricane expenditures net of insurance
    recoveries. 123




---



##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 For the
    Years Ended December 31, 2009, 2008 and 2007
   (2)
    
    Property acquisition costs attributable to the Companys
    acquisition of the Edge subsidiaries on December 31, 2009
    include $36.6 million and $200.8 million for unproved
    properties and proved properties, respectively.(3)
    
    Includes asset retirement cost in conjunction with the
    acquisition of the Edge subsidiaries and operations and the MGOM
    acquisition of approximately $5.5 million and
    $44.4 million, for the year ended December 31, 2009
    and 2008, respectively.(4)
    
    Costs included capitalized general and administrative expense of
    $21.2 million, $19.8 million and $14.0 million in
    2009, 2008 and 2007, respectively and capitalized interest
    expense of $14.7 million, $9.7 million and
    $0.5 million in 2009, 2008 and 2007, respectively.(5)
    
    Total costs are inclusive of non cash items such as capital
    expenditures and asset retirement obligation accruals.      Period Incurred


Total atYear Ended December 31,


December 31,2009


2008


2007


Prior


2009(In thousands)Unproved leasehold acquisition and geological and geophysical
    costs

$
46,532


$
128,908


$
15,618


$
23,375


$
214,433Unevaluated exploration and development costs


32,619



22,880



990



148



56,637Capitalized interest


11,965



8,878



132



192



21,167Total

$
91,116


$
160,666


$
16,740


$
23,715


$
292,237     Note 16.
    Supplemental
    Oil and Gas Reserve and Standardized Measure Information
    (Unaudited)  12-month first-day-of-the-month 12-month
 124




---



##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 For the
    Years Ended December 31, 2009, 2008 and 2007
     125




---



##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 For the
    Years Ended December 31, 2009, 2008 and 2007
  ESTIMATED
    QUANTITIES OF PROVED RESERVES
  Natural GasOil & NGLs


Natural Gas


Equivalent(Mbbl)


(MMcf)


(MMcfe)December 31, 2006


48,136



426,687



715,503Revisions of previous estimates


5,690



2,506



36,643Extensions, discoveries and other additions


4,671



61,548



89,576Purchases of reserves in place


11,763



25,832



96,407Sales of reserves in place


(283
)


(341
)


(2,041
)Production


(5,414
)


(67,793
)


(100,273
)December 31, 2007


64,563



448,439



835,815Revisions of previous estimates


(2,404
)


(29,839
)


(44,264
)Extensions, discoveries and other additions


9,522



137,722



194,855Purchases of reserves in place


4,102



81,500



106,112Sales of reserves in place


(40
)


(18
)


(258
)Production


(6,439
)


(79,756
)


(118,389
)December 31, 2008


69,304



558,048



973,871Revisions of previous estimates


3,081



(46,229
)


(27,745
)Extensions, discoveries and other additions


14,538



79,474



166,701Purchases of reserves in place


4,977



70,943



100,803Sales of reserves in place










Production


(5,950
)


(90,801
)


(126,498
)December 31, 2009


85,950



571,435



1,087,132   ESTIMATED
    QUANTITIES OF PROVED DEVELOPED RESERVES
  Natural GasOil & NGLs


Natural Gas


Equivalent(Mbbl)


(MMcf)


(MMcfe)December 31, 2006


26,807



247,821



408,663December 31, 2007


39,634



326,069



563,874December 31, 2008


42,802



420,866



677,679December 31, 2009


51,587



406,845



716,370   ESTIMATED
    QUANTITIES OF PROVED UNDEVELOPED RESERVES
  Natural GasOil & NGLs


Natural Gas


Equivalent(Mbbl)


(MMcf)


(MMcfe)December 31, 2006


21,329



178,866



306,843December 31, 2007


24,929



122,370



271,942December 31, 2008


26,502



137,182



296,191December 31, 2009


34,363



164,590



370,762  126




---



##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 For the
    Years Ended December 31, 2009, 2008 and 2007
  12-month first-day-of-the-month 12-month
  STANDARDIZED
    MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS
  Year Ended December 31,2009


2008


2007(In thousands)Future cash inflows

$
6,135,527


$
5,609,181


$
8,330,819Future production costs


(2,200,130
)


(1,823,535
)


(1,970,944
)Future development costs


(1,260,497
)


(1,167,113
)


(955,278
)Future income taxes


(152,885
)


(375,593
)


(1,467,999
)Future net cash flows


2,522,015



2,242,940



3,936,598Discount of future net cash flows at 10% per annum


(1,053,630
)


(759,933
)


(1,704,689
)Standardized measure of discounted future net cash flows

$
1,468,385


$
1,483,007


$
2,231,909   12-month
 127




---



##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
 For the
    Years Ended December 31, 2009, 2008 and 2007
    Year Ended December 31,2009


2008


2007(In thousands)Standardized Measure  January 1,

$
1,483,007


$
2,231,909


$
1,239,861Sales and transfers of oil and gas produced, net of production
    costs


(634,469
)


(983,131
)


(698,652
)Net changes in prices and production costs


10,984



(1,203,008
)


470,932Extensions and discoveries, net of future development and
    production costs


206,860



245,718



202,272Purchases of reserves in place


153,168



157,125



353,441Development costs during period and net change in development
    costs


306,834



(89,099
)


812,655Revision of previous quantity estimates


(66,181
)


(74,894
)


175,039Sales of reserves in place






(1,956
)


(1,383
)Net change in income taxes


(150,654
)


647,837



(510,611
)Accretion of discount before income taxes


166,747



306,421



123,986Changes in production rates (timing) and other


(7,911
)


246,085



64,369Standardized Measure  December 31,

$
1,468,385


$
1,483,007


$
2,231,909  128




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##### Table of Contents



Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosures.    Item 9A.
    Controls
    and Procedures.  Evaluation
    of Disclosure Controls and Procedures
  Rule 13a-15(e)
  Managements
    Report on Internal Control over Financial Reporting
  Form 10-K.
  Changes
    in Internal Controls over Financial Reporting.
  Form 10-K
  Item 9B.
    Other
    Information.   PART III Item 10.
    Directors,
    Executive Officers and Corporate Governance.  Form 10-K, Form 10-K.
  Item 11.
    Executive
    Compensation.  Form 10-K.
 129




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##### Table of Contents



Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters.  Form 10-K.
  Item 13.
    Certain
    Relationships and Related Transactions, and Director
    Independence.  Form 10-K.
  Item 14.
    Principal
    Accounting Fees and Services.  Form 10-K.
 PART IV  Item 15.
    Exhibits,
    Financial Statement Schedules.  Financial Statements:
  Form 10-K.
  Financial Statement Schedules:
    Exhibits:
  Form 10-K.
 130




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##### Table of Contents



SIGNATURES      By:
    /s/  Scott
    D. Josey   
    Signature

Title/s/  Scott
    D. JoseyScott
    D. Josey

Chairman of the Board, Chief Executive Officer and President
    (Principal Executive Officer)/s/  Jesus
    G. MelendrezJesus
    G. Melendrez

Senior Vice President, Chief Commercial Officer,
    Acting Chief Financial Officer and Treasurer
    (Principal Financial Officer)/s/  R.
    Cris ShermanR.
    Cris Sherman

Vice President and Chief Accounting Officer
    (Principal Accounting Officer)/s/  Bernard
    AronsonBernard
    Aronson

Director/s/  Alan
    R. Crain, Jr.Alan
    R. Crain, Jr.

Director/s/  Jonathan
    GinnsJonathan
    Ginns

Director/s/  John
    F. GreeneJohn
    F. Greene

Director/s/  H.
    Clayton PetersonH.
    Clayton Peterson

Director/s/  Laura
    A. SuggLaura
    A. Sugg

Director  131




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##### Table of Contents



INDEX TO
    EXHIBITS
  Number

Description2
.1*

Purchase and Sale Agreement, dated as of December 9, 2009,
    by and between Edge Petroleum Corporation, Edge Petroleum
    Exploration Company, Miller Exploration Company, Edge Petroleum
    Operating Company, Inc., Edge Petroleum Production Company,
    Miller Oil Corporation, and Mariner Energy, Inc. (incorporated
    by reference to Exhibit 2.1 to Mariners
    Form 8-K
    filed on January 5, 2010).2
.2*

Membership Interest Purchase Agreement by and between Hydro Gulf
    of Mexico, Inc. and Mariner Energy, Inc., executed
    December 23, 2007 (incorporated by reference to
    Exhibit 2.1 to Mariners
    Form 8-K
    filed on February 5, 2008).3
.1*

Second Amended and Restated Certificate of Incorporation of
    Mariner Energy, Inc., as amended (incorporated by reference to
    Exhibit 3.1 to Mariners Registration Statement on
    Form S-8
    (File
    No. 333-132800)
    filed on March 29, 2006).3
.2*

Certificate of Designations of Series A Junior
    Participating Preferred Stock of Mariner Energy, Inc.
    (incorporated by reference to Exhibit 3.1 to Mariners
    Form 8-K
    filed on October 14, 2008).3
.3*

Fourth Amended and Restated Bylaws of Mariner Energy, Inc.
    (incorporated by reference to Exhibit 3.2 to Mariners
    Registration Statement on
    Form S-4
    (File
    No. 333-129096)
    filed on October 18, 2005).4
.1*

Indenture, dated as of June 10, 2009, among Mariner Energy,
    Inc., the guarantors party thereto and Wells Fargo Bank, N.A.,
    as trustee (incorporated by reference to Exhibit 4.1 to
    Mariners
    Form 8-K
    filed on June 16, 2009).4
.2*

First Supplemental Indenture, dated as of June 10, 2009,
    among Mariner Energy, Inc., the guarantors party thereto and
    Wells Fargo Bank, N.A., as trustee (incorporated by reference to
    Exhibit 4.2 to Mariners
    Form 8-K
    filed on June 16, 2009).4
.3*

Indenture, dated as of April 30, 2007, among Mariner
    Energy, Inc., the guarantors party thereto and Wells Fargo Bank,
    N.A., as trustee (incorporated by reference to Exhibit 4.1
    to Mariners
    Form 8-K
    filed on May 1, 2007).4
.4*

Indenture, dated as of April 24, 2006, among Mariner
    Energy, Inc., the guarantors party thereto and Wells Fargo Bank,
    N.A., as trustee (incorporated by reference to Exhibit 4.1
    to Mariners
    Form 8-K
    filed on April 25, 2006).4
.5*

Exchange and Registration Rights Agreement, dated as of
    April 24, 2006, among Mariner Energy, Inc., the guarantors
    party thereto and the initial purchasers party thereto
    (incorporated by reference to Exhibit 4.2 to Mariners
    Form 8-K
    filed on April 25, 2006).4
.6*

Rights Agreement, dated as of October 12, 2008, between
    Mariner Energy, Inc. and Continental Stock Transfer &
    Trust Company, as Rights Agent (incorporated by reference
    to Exhibit 4.1 to Mariners
    Form 8-K
    filed on October 14, 2008).4
.7*

Amended and Restated Credit Agreement, dated as of March 2,
    2006, among Mariner Energy, Inc. and Mariner Energy Resources,
    Inc., as Borrowers, the Lenders party thereto from time to time,
    as Lenders, and Union Bank of California, N.A., as
    Administrative Agent and as Issuing Lender (incorporated by
    reference to Exhibit 4.1 to Mariners
    Form 8-K
    filed on March 3, 2006).4
.8*

Amendment No. 1 and Consent, dated as of April 7,
    2006, among Mariner Energy, Inc. and Mariner Energy Resources,
    Inc., as Borrowers, the Lenders party thereto, and Union Bank of
    California, N.A., as Administrative Agent for such Lenders and
    as Issuing Lender for such Lenders (incorporated by reference to
    Exhibit 4.1 to Mariners
    Form 8-K
    filed on April 13, 2006).4
.9*

Amendment No. 2, dated as of October 13, 2006, among
    Mariner Energy, Inc. and Mariner Energy Resources, Inc., as
    Borrowers, the Lenders party thereto, and Union Bank of
    California, N.A., as Administrative Agent for such Lenders and
    as Issuing Lender for such Lenders (incorporated by reference to
    Exhibit 4.1 to Mariners
    Form 8-K
    filed on October 18, 2006).4
.10*

Amendment No. 3 and Consent, dated as of April 23,
    2007, among Mariner Energy, Inc. and Mariner Energy Resources,
    Inc., as Borrowers, the Lenders party thereto, and Union Bank of
    California, N.A., as Administrative Agent for such Lenders and
    as Issuing Lender for such Lenders (incorporated by reference to
    Exhibit 4.1 to Mariners
    Form 8-K
    filed on April 24, 2007).4
.11*

Amendment No. 4, dated as of August 24, 2007, among
    Mariner Energy, Inc. and Mariner Energy Resources, Inc., as
    Borrowers, the Lenders party thereto, and Union Bank of
    California, N.A., as Administrative Agent for such Lenders and
    as Issuing Lender for such Lenders (incorporated by reference to
    Exhibit 4.1 to Mariners
    Form 8-K
    filed on August 27, 2007).




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##### Table of Contents



Number

Description4
.12*

Amendment No. 5 and Agreement, dated as of January 31,
    2008, among Mariner Energy, Inc. and Mariner Energy Resources,
    Inc., as Borrowers, the Lenders party thereto, and Union Bank of
    California, N.A., as Administrative Agent for such Lenders and
    as Issuing Lender for such Lenders (incorporated by reference to
    Exhibit 4.1 to Mariners
    Form 8-K
    filed on February 5, 2008).4
.13*

Master Assignment, Agreement and Amendment No. 6, dated as
    of June 2, 2008, among Mariner Energy, Inc. and Mariner
    Energy Resources, Inc., as Borrowers, the Lenders party thereto,
    and Union Bank of California, N.A., as Administrative Agent for
    such Lenders and as Issuing Lender for such Lenders
    (incorporated by reference to Exhibit 4.1 to Mariners
    Form 8-K
    filed on June 3, 2008).4
.14*

Amendment No. 7, dated as of December 12, 2008, among
    Mariner Energy, Inc. and Mariner Energy Resources, Inc., as
    Borrowers, the Lenders party thereto, and Union Bank of
    California, N.A., as Administrative Agent for such Lenders and
    as Issuing Lender for such Lenders (incorporated by reference to
    Exhibit 4.1 to Mariners
    Form 8-K
    filed on December 15, 2008).4
.15*

Amendment No. 8 and Consent, dated as of March 24,
    2009, among Mariner Energy, Inc. and Mariner Energy Resources,
    Inc., as Borrowers, the Lenders party thereto, and Union Bank of
    California, N.A., as Administrative Agent for such Lenders and
    as Issuing Lender for such Lenders (incorporated by reference to
    Exhibit 4.1 to Mariners
    Form 8-K
    filed on March 27, 2009).4
.16*

Amendment No. 9, dated as of June 2, 2009, among
    Mariner Energy, Inc. and Mariner Energy Resources, Inc., as
    Borrowers, the Lenders party thereto, and Union Bank of
    California, N.A., as Administrative Agent for such Lenders and
    as Issuing Lender for such Lenders (incorporated by reference to
    Exhibit 4.1 to Mariners
    Form 8-K
    filed on June 2, 2009).4
.17*

Amendment No. 10, dated as of August 25, 2009, among
    Mariner Energy, Inc. and Mariner Energy Resources, Inc., as
    Borrowers, the Lenders party thereto, and Union Bank of
    California, N.A., as Administrative Agent for such Lenders and
    as Issuing Lender for such Lenders (incorporated by reference to
    Exhibit 4.1 to Mariners
    Form 8-K
    filed on August 27, 2009).10
.1*

Underwriting Agreement, dated June 4, 2009, among Credit
    Suisse Securities (USA) LLC, J.P. Morgan Securities Inc.,
    and Merrill Lynch, Pierce, Fenner & Smith
    Incorporated, as Representatives of the several Underwriters
    named in Schedule A thereto, and Mariner Energy, Inc.
    (incorporated by reference to Exhibit 1.1 to Mariners
    Form 8-K
    filed on June 9, 2009).10
.2*

Underwriting Agreement, dated June 4, 2009, among Credit
    Suisse Securities (USA) LLC, Banc of America Securities LLC,
    J.P. Morgan Securities Inc., Wachovia Capital Markets, LLC
    and Citigroup Global Markets Inc., as Representatives of the
    several Underwriters named in Schedule A thereto, and
    Mariner Energy, Inc., Mariner Energy Resources, Inc., Mariner
    Gulf of Mexico LLC, MC Beltway 8 LLC and Mariner LP LLC
    (incorporated by reference to Exhibit 1.2 to Mariners
    Form 8-K
    filed on June 9, 2009).10
.3*

Underwriting Agreement, dated April 25, 2007, among
    J.P. Morgan Securities Inc., as Representative of the
    several Underwriters listed in Schedule 1 thereto, Mariner
    Energy, Inc., Mariner Energy Resources, Inc., Mariner LP LLC,
    and Mariner Energy Texas LP (incorporated by reference to
    Exhibit 1.1 to Mariners
    Form 8-K
    filed on April 26, 2007).10
.4*

Purchase Agreement, dated as of April 19, 2006, among
    Mariner Energy, Inc., Mariner LP LLC, Mariner Energy Resources,
    Inc., Mariner Energy Texas LP and the initial purchasers party
    thereto (incorporated by reference to Exhibit 10.1 to
    Mariners
    Form 8-K
    filed on April 25, 2006).10
.5*

Form of Indemnification Agreement between Mariner Energy, Inc.
    and each of its directors and officers (incorporated by
    reference to Exhibit 10.2 to Mariners Registration
    Statement on
    Form S-4
    (File
    No. 333-137441)
    filed on September 19, 2006).10
.6*

Mariner Energy, Inc. Third Amended and Restated Stock Incentive
    Plan, effective as of May 11, 2009 (incorporated by
    reference to Exhibit 10.1 to Mariners
    Form 8-K
    filed on May 12, 2009).10
.7*

Form of Non-Qualified Stock Option Agreement, Mariner Energy,
    Inc. Amended and Restated Stock Incentive Plan for employees
    without employment agreements (incorporated by reference to
    Exhibit 10.5 to Mariners Registration Statement on
    Form S-4
    (File
    No. 333-137441)
    filed on September 19, 2006).10
.8*+

Form of Non-Qualified Stock Option Agreement, Mariner Energy,
    Inc. Amended and Restated Stock Incentive Plan for employees
    with employment agreements (incorporated by reference to
    Exhibit 10.6 to Mariners Registration Statement on
    Form S-4
    (File
    No. 333-137441)
    filed on September 19, 2006).




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##### Table of Contents



Number

Description10
.9*+

Form of Restricted Stock Agreement (directors) under Mariner
    Energy, Inc. Second Amended and Restated Stock Incentive Plan
    (incorporated by reference to Exhibit 10.6 to
    Mariners
    Form 10-K
    filed on April 2, 2007).10
.10*+

Form of Restricted Stock Agreement (employee with employment
    agreement) under Mariner Energy, Inc. Second Amended and
    Restated Stock Incentive Plan (incorporated by reference to
    Exhibit 10.7 to Mariners
    Form 10-K
    filed on April 2, 2007).10
.11*

Form of Restricted Stock Agreement (employee without employment
    agreement) under Mariner Energy, Inc. Second Amended and
    Restated Stock Incentive Plan (incorporated by reference to
    Exhibit 10.8 to Mariners
    Form 10-K
    filed on April 2, 2007).10
.12*+

Form of Restricted Stock Agreement for grants made after
    August 24, 2008 as part of 2008 Long-Term Performance-Based
    Restricted Stock Program under Mariner Energy, Inc. Second
    Amended and Restated Stock Incentive Plan (incorporated by
    reference to Exhibit 10.3 to Mariners
    Form 10-Q
    filed on November 7, 2008).10
.13*+

Form of Restricted Stock Agreement for grants made before
    August 25, 2008 as part of 2008 Long-Term Performance-Based
    Restricted Stock Program under Mariner Energy, Inc. Second
    Amended and Restated Stock Incentive Plan (incorporated by
    reference to Exhibit 10.2 to Mariners
    Form 8-K
    filed on June 19, 2008).10
.14*+

Amendment, dated as of August 25, 2008, to outstanding
    Restricted Stock Agreements covering grants made before
    August 25, 2008 as part of 2008 Long-Term Performance-Based
    Restricted Stock Program under Mariner Energy, Inc. Second
    Amended and Restated Stock Incentive Plan (incorporated by
    reference to Exhibit 10.5 to Mariners
    Form 10-Q
    filed on November 7, 2008).10
.15*

Form of Nonstatutory Stock Option Agreement for certain
    employees of Mariner Energy, Inc. or Mariner Energy Resources,
    Inc. who formerly held unvested options issued by Forest Oil
    Corporation (incorporated by reference to Exhibit 10.14 to
    Mariners Registration Statement on
    Form S-4
    (File
    No. 333-137441)
    filed on September 19, 2006).10
.16*+

Compensation of Non-Employee Directors of Mariner Energy, Inc.
    (incorporated by reference to Exhibit 10.3 to
    Mariners
    Form 10-Q
    filed on November 14, 2007).10
.17*+

Employment Agreement by and between Mariner Energy, Inc. and
    Scott D. Josey, dated February 7, 2005 (incorporated by
    reference to Exhibit 10.15 to Mariners Registration
    Statement on
    Form S-4
    (File
    No. 333-137441)
    filed on September 19, 2006).10
.18*+

Employment Agreement by and between Mariner Energy, Inc. and
    Dalton F. Polasek, dated February 7, 2005 (incorporated by
    reference to Exhibit 10.16 to Mariners Registration
    Statement on
    Form S-4
    (File
    No. 333-137441)
    filed on September 19, 2006).10
.19*+

Employment Agreement, by and between Mariner Energy, Inc. and
    John H. Karnes, dated as of October 16, 2006 (incorporated
    by reference to Exhibit 10.1 to Mariners current
    report on
    Form 8-K
    filed on October 18, 2006).10
.20*+

Employment Agreement by and between Mariner Energy, Inc. and
    Michiel C. van den Bold, dated February 7, 2005
    (incorporated by reference to Exhibit 10.17 to
    Mariners Registration Statement on
    Form S-4
    (File
    No. 333-137441)
    filed on September 19, 2006).10
.21*+

Amendment to Employment Agreement by and between Mariner Energy,
    Inc. and Michiel C. van den Bold, dated as of June 8, 2006
    (incorporated by reference to Exhibit 10.18 to
    Mariners Registration Statement on
    Form S-4
    (File
    No. 333-137441)
    filed on September 19, 2006).10
.22*+

Second Amended and Restated Employment Agreement by and between
    Mariner Energy, Inc., Mariner Energy Resources, Inc. and Judd
    Hansen, dated June 8, 2006 (incorporated by reference to
    Exhibit 10.19 to Mariners Registration Statement on
    Form S-4
    (File
    No. 333-137441)
    filed on September 19, 2006).10
.23+

Employment Agreement by and between Mariner Energy, Inc. and
    Jesus Melendrez, dated as of February 7, 2005.10
.24+

Amendment to Employment Agreement by and between Mariner Energy,
    Inc. and Jesus Melendrez, dated as of June 8, 2006.12


Statement regarding Computation of Ratio of Earnings to Fixed
    Charges.21


List of subsidiaries of Mariner Energy, Inc.23
.1

Consent of Deloitte & Touche LLP.23
.2

Consent of Ryder Scott Company, L.P.




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##### Table of Contents



Number

Description31
.1

Certification of Chief Executive Officer pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.31
.2

Certification of Chief Financial Officer pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.32
.1

Certification of Chief Executive Officer pursuant to
    18 U.S.C. Section 1350, as adopted pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.32
.2

Certification of Chief Financial Officer pursuant to
    18 U.S.C. Section 1350, as adopted pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.99
.1

Report of Ryder Scott Company, L.P. dated February 1, 2010.     *
    
    Incorporated by reference as indicated.+
    
    Management contract, plan or arrangement.  33-8238,