##### 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, 2007ORo

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

New York Stock Exchange   Securities
    registered pursuant to section 12(g) of the Act:
  None
  þ o
  o þ
  þ 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


25Item 1B.


Unresolved Staff Comments


34Item 2.


Properties


34Item 3.


Legal Proceedings


34Item 4.


Submission of Matters to a Vote of Security
    Holders


36PART IIItem 5.


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


38Item 6.


Selected Financial Data


41Item 7.


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


42Item 7A.


Quantitative and Qualitative Disclosures About
    Market Risk


60Item 8.


Financial Statements and Supplementary Data


63Item 9.


Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosures


108Item 9A.


Controls and Procedures


108Item 9B.


Other Information


108PART IIIItem 10.


Directors, Executive Officers and Corporate
    Governance


108Item 11.


Executive Compensation


108Item 12.


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


108Item 13.


Certain Relationships and Related Transactions,
    and Director Independence


109Item 14.


Principal Accounting Fees and Services


109PART IVItem 15.


Exhibits, Financial Statement Schedules


109Statement Regarding Computation of Ratio of Earnings to Fixed ChargesList of SubsidiariesConsent of Deloitte & Touche LLP.Consent of Ryder Scott Company, L.P.Certification of CEO Pursuant to Section 302Certification of CFO Pursuant to Section 302Certification of CEO Pursuant to Section 906Certification of CFO Pursuant to Section 906    CAUTIONARY
    STATEMENT REGARDING FORWARD-LOOKING INFORMATION
   1




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
    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; and
    risks related to significant acquisitions or other strategic
    transactions, such as failure to realize expected benefits or
    objectives for future operations. 2




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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
    
    West Texas, where we are an active driller in the prolific
    Spraberry field in the Permian Basin at depths between 6,000 and
    10,000 feet. Our increasing West Texas 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 deepwater Gulf of Mexico operations. We are
    aggressively expanding our presence in the region, targeting a
    combination of infill drilling activities in established
    producing trends, including the Spraberry, Dean, Wolfcamp and
    Devonian/Fusselman trends, as well as exploration activities in
    emerging plays such as the Wolfberry and newer Wolfcamp trends.
    Deepwater Gulf of Mexico, where we have actively conducted
    exploration and development projects since 1996 in water depths
    ranging from 1,300 feet up to 7,000 feet. Employing
    our experienced geoscientists, rich seismic database, and
    extensive subsea tieback expertise, we have participated in more
    than 75 deepwater wells. Our deepwater exploration operation
    targets larger potential reserve accumulations than are
    generally accessible onshore or on the Gulf of Mexico shelf.
    Shelf of the Gulf of Mexico, where we drill or participate in
    conventional shelf wells and deep shelf wells extending to 1,300
    foot water depths. We significantly increased our shelf
    operations and effectively doubled our size with our 2006
    acquisition of the Gulf of Mexico operations of Forest Oil
    Corporation (Forest). See
    Note 3.  Acquisitions and
    Dispositions in the Notes to the Consolidated Financial
    Statements in Part II, Item 8 of this Annual Report on
    Form 10-K
    for more information regarding this transaction. We currently
    pursue a two-pronged strategy on the shelf, combining
    opportunistic acquisitions of legacy producing fields believed
    to hold exploitation potential and active exploration 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 West Texas operations, as
    well as for expansion into new operating areas.   3




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1-800-SEC-0330
  Recent
    Developments
  West Texas Acquisition.
  
    an approximate 56% working interest in approximately
    32,000 gross acres in Reagan, Midland, Dawson, Glasscock,
    Martin and Upton Counties;
    interests in 348 (195 net) producing wells producing
    approximately 7.5 MMcfe per day net to the interests
    acquired; and
    Ryder Scott Company, L.P. estimated net proved oil and gas
    reserves attributable to the acquisition of approximately
    95.5 Bcfe (75% oil and NGLs).    Gulf of Mexico Shelf Acquisition.
  
    Mariner internally estimated proved oil and gas reserves of
    52.4 Bcfe, 95% of which are developed;
    interests in 36 (16 net) producing wells producing approximately
    53 MMcfe per day net to the subsidiarys interest, 76%
    of which we intend to operate;
    gas gathering systems comprised of 31 miles of
    10-inch,
    12-inch and
    16-inch
    pipelines; and
    approximately 106,000 net acres of developed leasehold and
    256,000 net acres of undeveloped leasehold.    Amendment of Bank Credit Facility. Form 10-K
  MMS Lease Sale 205.
 4




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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
    deepwater Gulf of Mexico 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 and have made several significant discoveries in
    the deepwater and shelf. Our reputation for generating
    high-quality exploration prospects also can create potentially
    valuable partnering opportunities, which can enable us to
    participate in exploration projects developed by other operators.
    Development:  Our development efforts are
    intended to complement our higher-risk exploration projects
    through a variety of moderate-risk activities targeted at
    maximizing recovery and production from known reservoirs as well
    as finding overlooked oil and gas accumulations in and around
    existing fields. Our geoscientists and engineers have a solid
    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. Our development and
    exploitation program strives to enhance the rate of returns of
    our projects, allow us to establish critical operating mass from
    which to expand in our focus areas, and generate a rich
    portfolio of relatively lower-risk engineering/exploitation
    projects that counterbalance our higher-risk exploration
    activities.
    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. We
    primarily focus our acquisition efforts on stable, onshore
    basins such as West Texas, which can counterbalance our growing
    deepwater exploration operations, but we also respond in an
    opportunistic fashion to attractive acquisition opportunities in
    the Gulf of Mexico. 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.
 5




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Large prospect inventory.
  Exploration expertise.
  Operational control and substantial working
    interests.
  Extensive seismic library. 3-D 3-D
  Subsea tieback expertise.
 6




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Properties
    Approximate





Estimated


EstimatedWorking


2007 Net


Proved


Proved ReservesField

Operator(1)


Interest%


Production


Reserves


% Oil /% Gas(2)(Bcfe)


(Bcfe)West Texas:Spraberry


Mariner



72
%


10.8



384.9



71%
/29%Gulf Of Mexico Deepwater:Atwater Valley 426 (Bass Lite)


Mariner



42
%


**



48.8



1%
/99%Green Canyon 646 (Daniel Boone)


W&T Offshore



40
%






17.4



67%
/33%East Breaks 558/602 (Northwest Nansen)


Anadarko



33-50
%


**



12.2



59%
/41%Mississippi Canyon 296 (Rigel)


Dominion



23
%


5.0



9.7



*
/99.9%Ewing Bank 921 (North Black Widow)


ENI



35
%


2.5



8.5



91%
/9%Gulf Of Mexico Shelf:West Cameron 110


Mariner



100
%


7.2



38.7



4%
/96%Vermilion 14/26/35


Mariner



100
%


1.9



33.7



8%
/92%South Pass 24


Mariner



97
%


2.0



26.2



66%
/34%High Island 116


Mariner



100
%


1.8



23.3



3%
/97%Vermilion 261


Mariner



79
%


***



16.3



76%
/24%     (1)
    
    See narrative for full name of operator(2)
    
    NGLs are included in Oil*
    
    Less than 1%**
    
    Began production in February 2008***
    
    Shut-in for drilling operations until August 2007. See narrative
    below for further detail. 7




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##### Table of Contents



West
    Texas Operations
       8




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Gulf
    of Mexico Deepwater Operations
      56-mile
         9




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Gulf
    of Mexico Shelf Operations
        14/26/35,
       10




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##### Table of Contents



Volumes


Revenue(In thousands)West Texas:Natural Gas (Bcf)


3.7


$
25,153Oil (Mbbls)


861.2



61,528NGLs (Mbbls)


387.3



17,871Total Natural Gas Equivalent (Bcfe)


11.2



104,552Gulf of Mexico Deepwater:Natural Gas (Bcf)


14.7



104,840Oil (Mbbls)


1,301.9



90,631NGLs (Mbbls)


126.2



5,538Total Natural Gas Equivalent (Bcfe)


23.3



201,009Gulf of Mexico Shelf:Natural Gas (Bcf)


49.4



346,078Oil (Mbbls)


2,050.3



145,634NGLs (Mbbls)


686.3



30,783Total Natural Gas Equivalent (Bcfe)


65.8



522,495Total Production:Natural Gas (Bcf)


67.8



476,071Oil (Mbbls)


4,213.4



297,793NGLs (Mbbls)


1,199.8



54,192Total Natural Gas Equivalent (Bcfe)


100.3


$
828,056  11




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Estimated
    Proved Reserves
    Year Ended December, 312007


2006


2005Estimated proved oil and natural gas reserves:Natural gas reserves (Bcf)


448.4



426.7



207.7Oil (MMbbls)


41.9



32.0



21.7Natural gas liquids (MMbbls)(1)


22.6



16.1



Total proved oil and natural gas reserves (Bcfe)


835.8



715.5



337.6Total proved developed reserves (Bcfe)


563.9



408.7



167.4PV10 value ($ in millions):Proved developed reserves

$
2,389.1


$
1,198.9


$
849.6Proved undeveloped reserves


675.1



362.6



432.2Total PV10 value

$
3,064.2


$
1,561.5


$
1,281.8Standardized measure of discounted future net cash flows

$
2,231.9


$
1,239.8


$
906.6Prices used in calculating end of period proved reserve
    measures (excluding effects of hedging):Natural gas ($/MMBtu)

$
6.79


$
5.62


$
10.05Oil ($/bbl)

$
96.01


$
61.06


$
61.04     (1)
    
    In 2005, Natural gas liquids were included as an immaterial
    component of the natural gas reserves in the reserve report
    prepared by Ryder Scott Company, L.P.    Estimated ProvedReserve QuantitiesNaturalGas


Oil


NGLs


Total


PV10 Value(1)


StandardizedGeographic Area

(Bcf)


(MMbbls)


(MMbbls)


(Bcfe)


Developed


Undeveloped


Total


Measure(In millions of dollars)


(In millions)West Texas


116.2



25.2



20.3



388.7


$
737.3


$
284.2


$
1,021.5Gulf of Mexico Deepwater


86.2



5.9



0.1



122.9



575.2



98.9



674.1Gulf of Mexico Shelf


246.0



10.8



2.2



324.2



1,076.6



292.0



1,368.6Total


448.4



41.9



22.6



835.8


$
2,389.1


$
675.1


$
3,064.2


$
2,231.9Proved Developed Reserves


326.1



25.1



14.5



563.9     (1)
    
    PV10 Value (PV10) is a Non-GAAP measure that differs
    from the corollary GAAP measure standardized measure of
    discounted future net cash flows 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 12




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estimated future cash flows attributable to our reserves.
    Because many factors that are unique to each individual company
    impact 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 15. 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:

2007


2006


2005(In millions)Present value of estimated future net revenues (PV10)

$
3,064.2


$
1,561.5


$
1,281.8Future income taxes, discounted at 10%


(832.3
)


(321.7
)


(375.2
)Standardized measure of discounted future net cash flows

$
2,231.9


$
1,239.8


$
906.6     Productive
    Wells
    Year Ended December 31,2007


2006Gross


Net


Gross


NetOil


939.0



684.0



864.0



436.0Natural Gas


223.0



130.0



257.0



143.0Total


1,162.0



814.0



1,121.0



579.0  13




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##### Table of Contents



Acreage
    Year Ended December 31, 2007Developed Acres


Undeveloped AcresGross


Net


Gross


NetWest Texas


68,134



54,589



12,700



9,788Gulf of Mexico Deepwater


91,800



37,547



270,720



186,768Gulf of Mexico Shelf


758,529



371,079



219,952



157,938Other Onshore


1,311



344



280



116Total


919,774



463,559



503,652



354,610     Undeveloped AcreageSubject to Expiration in the Year Ended December 31,2008


2009


2010Gross


Net


Gross


Net


Gross


NetGulf of Mexico Deepwater


56,049



34,449



11,520



8,352



17,280



1,728Gulf of Mexico Shelf


55,320



44,250



27,406



14,844



22,280



13,064Total


111,369



78,699



38,926



23,196



39,560



14,792   Drilling
    Activity
    Year Ended December 31,2007


2006


2005Gross


Net


Gross


Net


Gross


NetExploratory wells:Productive


11.00



5.96



14.00



5.83



3.00



1.13Dry


8.00



4.91



8.00



3.65



7.00



2.44Total


19.00



10.87



22.00



9.48



10.00



3.57Development wells:Productive


121.00



60.43



168.00



86.23



93.00



54.20Dry






















Total


121.00



60.43



168.00



86.23



93.00



54.20Total wells:Productive


132.00



66.39



182.00



92.06



96.00



55.33Dry


8.00



4.91



8.00



3.65



7.00



2.44Total


140.00



71.30



190.00



95.71



103.00



57.77  14




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##### Table of Contents



Marketing
    and Customers
    Percentage of TotalRevenues forYear EndedDecember 31,Customer

2007


2006


2005BP Energy


9%



14%




*Bridgeline Gas Distributing Company(1)










15
%ChevronTexaco and affiliates(1)


23%



23%



24
%Louis Dreyfus Energy


9%



10%



7
%Plains Marketing LP


7%



11%



10
%Shell


10%



8%




*     (1)
    
    Bridgeline Gas Distributing Company is an affiliate of
    ChevronTexaco*
    
    Less than 1%  Title to
    Properties
      Competition
  3-D
 15




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Royalty
    Relief
    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             Regulation
   16




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Transportation
    and Sale of Natural Gas
        Regulation
    of Production
   17




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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.      Spills and Releases.
 18




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clean-up
  The Oil Pollution Act (OPA). clean-up.
    Water Discharges.
 19




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##### Table of Contents



Air Emissions.
  Massachusetts, et al. v. EPA
  Waste Handling.
  Endangered Species Act.
  Safety.
 20




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##### Table of Contents



Employees
    Insurance
    Matters
    60-day
    Glossary
    of Oil and Natural Gas Terms
  Rule 4-10(a)(2-4) Regulation S-X. http://www.sec.gov/about/forms/forms-x.pdf.
  3-D
    seismic data. 3-D
  Appraisal well.
  Bbl.
  Bcf.
 21




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##### Table of Contents



Bcfe.
  Block.
  Boe.
  Btu or British Thermal Unit.
  Completion.
  Condensate.
  Conventional shelf well.
  Deep shelf well.
  Deepwater.
  Developed acreage.
  Development costs. Rule 4-10(a)(2-4) http://www.sec.gov/about/forms/forms-x.pdf.
  Development well.
  Differential. and/or
  Dry hole.
  Dry hole costs.
  Exploitation.
  Exploration costs. Rule 4-10(a)(2-4) Regulation S-X. http://www.sec.gov/about/forms/forms-x.pdf.
  Exploratory well.
  Farm-in or farm-out.
 22




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Field. and/or
  Gas.
  Gross acres or gross wells.
  Lease operating expenses.
  Mbbls.
  Mcf.
  Mcfe.
  MMBls.
  MMBtu.
  MMcf.
  MMcfe.
  MMS.
  Net acres or net wells.
  Net revenue interest.
  Operator. and/or and/or
  Payout.
  Plugging and abandonment.
  PV10 or present value of estimated future net
    revenues.
 23




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Productive well.
  Prospect.
  Proved developed non-producing
    reserves.
  Proved developed producing reserves.
  Proved developed reserves. Rule 4-10(a)(2-4) Regulation S-X. http://www.sec.gov/about/forms/forms-x.pdf.
  Proved reserves. Rule 4-10(a)(2-4) Regulation S-X. http://www.sec.gov/about/forms/forms-x.pdf.
  Proved undeveloped reserves. Rule 4-10(a)(2-4) Regulation S-X. http://www.sec.gov/about/forms/forms-x.pdf.
  Recompletion.
  Reservoir. and/or
  Shelf.
  Subsea tieback.
  Subsea trees.
  Standardized measure of discounted future net cash
    flows.
  Undeveloped acreage.
  Working interest.
 24




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##### Table of Contents



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.
    
    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.    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.
   25




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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.
      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.
    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.
   26




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##### Table of Contents



Approximately
    55% of our total estimated proved reserves are either developed
    non-producing or undeveloped and those reserves may not
    ultimately be produced or developed.
    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;
    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
 27




---



##### Table of Contents



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.  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.
     28




---



##### Table of Contents



Form 10-K
  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.
    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.
    Market
    conditions or transportation impediments may hinder our access
    to oil and natural gas markets or delay our
    production.
   29




---



##### 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.
    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.
   30




---



##### Table of Contents



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 protect us against our business and operating
    risks.
   31




---



##### Table of Contents



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.    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.
   32




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##### Table of Contents



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.
      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; 33




---



##### Table of Contents




    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.        Item 1B.
    Unresolved
    Staff Comments.    Item 2.
    Properties.      Item 3.
    Legal
    Proceedings.   34




---



##### Table of Contents




    In April 2005, the Interior Board of Land Appeals denied
    Mariners administrative appeal of the MMS April 2001
    order asserting royalties were due for production during
    calendar year 2000 because price thresholds had been exceeded.
    In October 2005, Mariner filed suit in the U.S. District
    Court for the Southern District of Texas seeking judicial review
    of the dismissal. Upon motion of the MMS, the Companys
    lawsuit was dismissed on procedural grounds. In August 2006, the
    Company filed an appeal of such dismissal. In August 2007, the
    United States Court of Appeals for the Fifth Circuit affirmed
    the dismissal on procedural grounds. The Fifth Circuits
    dismissal is now final and unappealable. However, the Company
    believes the royalties asserted in the MMS April 2001
    order are covered by its May 2006 order noted below, which the
    Company is appealing.
    In May 2006, the MMS issued an order asserting price thresholds
    were exceeded in calendar years 2000, 2001, 2003 and 2004 and,
    accordingly, that royalties were due under such leases on oil
    and gas produced in those years. Mariner has filed and is
    pursuing an administrative appeal of that order. The MMS has not
    yet made demand for non-payment of royalties alleged to be due
    for calendar years subsequent to 2004 on the basis of price
    thresholds being exceeded.  No. 06-0439,
  and/or
 35




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##### Table of Contents



Item 4.
    Submission
    of Matters to a Vote of Security Holders.    Executive
    Officers of the Registrant
    Name

Age

Position with CompanyScott D. Josey


50


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


56


Chief Operating OfficerJohn H. Karnes


46


Senior Vice President, Chief Financial Officer and TreasurerJesus G. Melendrez


49


Senior Vice President  Corporate DevelopmentMike C. van den Bold


45


Senior Vice President and Chief Exploration OfficerTeresa G. Bushman


58


Senior Vice President, General Counsel and SecretaryJudd A. Hansen


52


Senior Vice President  Shelf and OnshoreCory L. Loegering


52


Senior Vice President  DeepwaterRichard A. Molohon


53


Vice President  Reservoir Engineering   Scott D. Josey
  Dalton F. Polasek
  John H. Karnes
 36




---



##### Table of Contents



Jesus G. Melendrez
  Mike C. van den Bold
  Teresa G. Bushman
  Judd A. Hansen
  Cory L. Loegering
  Richard A. Molohon
 37




---



##### Table of Contents



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


Period Ended

High


Low2006


March 3, 2006 through March 31, 2006

$
21.00


$
18.05June 30, 2006


20.65



14.81September 30, 2006


19.68



15.94December 31, 2006


21.36



17.682007


March 31, 2007

$
20.33


$
16.95June 30, 2007


25.65



19.30September 30, 2007


25.26



18.87December 31, 2007


25.00



20.672008


January 1, 2008 through February 20, 2008

$
26.62


$
23.69     Form 10-K
 38




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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

12/31/07Mariner Energy, Inc.

$
100.00


$
96.69


$
112.88S&P 500 Index

$
100.00


$
110.18


$
114.07Peer Group(2)

$
100.00


$
98.03


$
107.97   (1)
    Total return assuming reinvestment of dividends. Assumes $100
    invested on March 3, 2006 in each of our common stock,
    S&P 500 Index, and a peer group of companies. Initial data
    is taken from March 3, 2006, which corresponds to when we
    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, Bois dArc Energy, Inc., Callon Petroleum Co.,
    Energy Partners, Ltd., Plains Exploration & Production
    Company, Stone Energy Corporation, and W&T Offshore, Inc.  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.
 39




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##### 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, 2007 to October 31, 2007(1)


4,999


$
22.42







November 1, 2007 to November 30, 2007(1)


378


$
22.26







December 1, 2007 to December 31, 2007(1)


495


$
22.19







Total


5,872


$
22.29







     (1)
    
    These shares were withheld upon the vesting of employee
    restricted stock grants in connection with payment of required
    withholding taxes. 40




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##### Table of Contents



Item 6.
    Selected
    Financial
    Data.    Form 10-K,
  Post-2004 Merger


Pre-2004 MergerPeriod from


Period fromMarch 3,


January 1,through


through


Year EndedYear Ended December 31,


December 31,


March 2,


December 31,2007


2006


2005


2004


2004


2003(In thousands, except per share data)Statement of Operations Data:Total revenues(1)

$
874,725


$
659,505


$
199,710


$
174,423


$
39,84


$
142,543Operating expenses(2)


174,482



105,739



32,218



23,322



5,191



30,971Depreciation, depletion and amortization


384,321



292,180



59,469



54,281



10,630



48,339Derivative settlement






















3,222General and administrative expense


41,126



33,372



36,766



7,641



1,131



8,098Operating income


268,710



227,470



69,168



88,222



22,812



51,913Interest expense, net of amounts capitalized


54,665



39,649



8,172



6,045



(5
)


6,981Provision for income taxes


77,324



67,344



21,294



28,783



8,072



9,387Cumulative effect of changes in accounting method






















1,943Net income


143,934



121,462



40,481



53,619



14,826



38,244Earnings per common share:Basic:Income before cumulative effect of changes in accounting method
    per common share

$
1.68


$
1.59


$
1.24


$
1.80


$
0.50


$
1.22Cumulative effect of changes in accounting method






















.07Net income per common share  basic

$
1.68


$
1.59


$
1.24


$
1.80


$
0.50


$
1.29Diluted:Income before cumulative effect of changes in accounting method
    per common share

$
1.67


$
1.58


$
1.20


$
1.80


$
0.50


$
1.22Cumulative effect of changes in accounting method






















.07Net income per common share  diluted

$
1.67


$
1.58


$
1.20


$
1.80


$
0.50


$
1.29    (1)
    
    Includes effects of hedging.(2)
    
    Operating expenses include Lease operating expense, Severance
    and ad valorem taxes and Transportation expenses 41




---



##### Table of Contents



Pre-2004Post-2004 Merger


MergerDecember 31,


December 31,2007


2006


2005


2004


2003(In thousands)Balance Sheet Data:(1)Current Assets

$
248,980


$
306,018


$
141,432


$
65,746


$
103,081Current Liabilities


315,189



239,727



204,006



101,412



66,590Working capital / (deficit)

$
(66,209
)

$
66,291


$
(62,574
)

$
(35,666
)

$
36,491Property and equipment, net, full-cost method


2,420,194



2,012,062



515,943



303,773



207,872Total assets


3,083,635



2,680,153



665,536



376,019



312,104Long-term debt, less current maturities


779,000



654,000



156,000



115,000



Stockholders equity


1,391,018



1,302,591



213,336



133,907



218,157     (1)
    
    Balance sheet data as of December 31, 2004 reflects
    purchase accounting adjustments to oil and gas properties, total
    assets and stockholders equity resulting from the
    acquisition of our former indirect parent on March 2, 2004.  Post-2004 Merger


Pre-2004 MergerPeriod from


Period fromMarch 3,


January 1,through


through


Year EndedYear Ended December 31,


December 31,


March 2,


December 31,2007


2006


2005


2004


2004


2003(In thousands, except per share data)Cash Flow Data:Net cash provided by operating activities

$
536,113


$
277,161


$
165,444


$
135,243


$
20,295


$
88,909Net cash (used) provided by investing activities

$
(643,779
)

$
(561,390
)

$
(247,799
)

$
(132,977
)

$
(15,341
)

$
52,921Net cash (used) provided by financing activities

$
116,676


$
289,252


$
84,370


$
(64,853
)

$



$
(100,000
)   Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations.  Business
    Overview
    West Texas Acquisition.
  Forest Merger.
 42




---



##### Table of Contents



Private Placement. non-U.S. persons Form 10-K.
   43




---



##### Table of Contents



Results
    of Operations
  Year
    Ended December 31, 2007 compared to Year Ended
    December 31, 2006
  Operating
    and Financial Results for the Year Ended December 31,
    2007
    Compared to the Year Ended December 31, 2006
  Year Ended December 31,


Increase2007


2006


(Decrease)


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


67,793



56,064



11,729



21
%Oil (Mbbls)


4,214



3,237



977



30
%Natural gas liquids (Mbbls)


1,200



838



362



43
%Total natural gas equivalent (MMcfe)


100,273



80,512



19,761



25
%Average daily production (MMcfe per day)


275



221



54



25
%Hedging Activities:Natural Gas revenue gain

$
58,465


$
32,881


$
25,584



78
%Oil revenue gain (loss)


(13,388
)


90



(13,478
)


> (100
)%Total hedging revenue gain (loss)

$
45,077


$
32,971


$
12,106



37
%Average Sales Prices:Natural gas (per Mcf) realized(1)

$
7.88


$
7.37


$
0.51



7
%Natural gas (per Mcf) unhedged


7.02



6.78



0.24



4
%Oil (per Bbl) realized(1)


67.50



62.63



4.87



8
%Oil (per Bbl) unhedged


70.68



59.68



11.00



18
%Natural gas liquids (per Bbl) realized(1)


45.16



48.37



(3.21
)


(7
)%Natural gas liquids (per Bbl) unhedged


45.16



48.37



(3.21
)


(7
)%Total natural gas equivalent ($/Mcfe) realized(1)


8.71



8.15



0.56



7
%Total natural gas equivalent ($/Mcfe) unhedged


8.26



7.74



0.52



7
%Summary of Financial Information:Natural gas revenue

$
534,537


$
412,967


$
121,570



29
%Oil revenue


284,405



202,744



81,661



40
%Natural gas liquids revenue


54,192



40,507



13,685



34
%Lease operating expense


152,593



91,592



61,001



67
%Severance and ad valorem taxes


13,101



9,070



4,031



44
%Transportation expense


8,788



5,077



3,711



73
%Depreciation, depletion and amortization


384,321



292,180



92,141



32
%General and administrative expense


41,126



33,372



7,754



23
%Net interest expense


53,262



38,664



14,598



38
%Income before taxes and minority interest


221,259



188,806



32,453



17
%Provision for income taxes


77,324



67,344



9,980



15
%Net income


143,934



121,462



22,472



19
%     (1)
    
    Average realized prices include the effects of hedges. 44




---



##### Table of Contents



Net Production
    Natural gas, oil and NGL revenues
      Lease operating expense
  Severance and ad valorem taxes
  Transportation expense
  Depreciation, depletion and amortization
    (DD&A) expense
 45




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##### Table of Contents



General and administrative (G&A) expense
      Net interest expense
  Income before taxes and minority interest
  Provision for income taxes
 46




---



##### Table of Contents



Year
    Ended December 31, 2006 compared to Year Ended
    December 31, 2005
  Operating and Financial Results for the Year Ended
    December 31, 2006
 Compared to the Year Ended December 31, 2005
  Year Ended December 31,


Increase2006


2005(1)


(Decrease)


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


56,064



18,354



37,710



205
%Oil (Mbbls)


3,237



1,791



1,446



81
%Natural gas liquids (Mbbls)


838







838




%Total natural gas equivalent (MMcfe)


80,512



29,100



51,412



177
%Average daily production (MMcfe per day)


221



80



141



177
%Hedging Activities:Natural Gas revenue gain (loss)

$
32,881


$
(30,613
)

$
63,494



207
%Oil revenue gain (loss)


90



(18,671
)


18,761



100
%Total hedging revenue gain (loss)

$
32,971


$
(49,284
)

$
82,255



167
%Average Sales Prices:Natural gas (per Mcf) realized(2)

$
7.37


$
6.66


$
0.71



11
%Natural gas (per Mcf) unhedged


6.78



8.33



(1.55
)


(19
)%Oil (per Bbl) realized(2)


62.63



41.23



21.40



52
%Oil (per Bbl) unhedged


59.68



51.66



8.02



16
%Natural gas liquids (per Bbl) realized(2)


48.37







48.37




%Natural gas liquids (per Bbl) unhedged


48.37







48.37




%Total natural gas equivalent ($/Mcfe) realized(2)


8.15



6.74



1.41



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


7.74



8.43



(0.69
)


(8
)%Summary of Financial Information:Natural gas revenue

$
412,967


$
122,291


$
290,676



238
%Oil revenue


202,744



73,831



128,913



175
%Natural gas liquids revenue


40,507







40,507




%Lease operating expense


91,592



24,882



66,710



268
%Severance and ad valorem taxes


9,070



5,000



4,070



81
%Transportation expense


5,077



2,336



2,741



117
%Depreciation, depletion and amortization


292,180



59,469



232,711



391
%General and administrative expense


33,372



36,766



(3,394
)


(9
)%Net interest expense


38,664



7,393



31,271



423
%Income before taxes and minority interest


188,806



61,775



127,031



206
%Provision for income taxes


67,344



21,294



46,050



216
%Net income


121,462



40,481



80,981



200
%     (1)
    
    In 2005, an immaterial amount of NGLs representing approximately
    4% of our net production was combined with natural gas.(2)
    
    Average realized prices include the effects of hedges.  Net Production
   47




---



##### Table of Contents



Natural gas, oil and NGL revenues
      Lease operating expense per-unit
  Severance and ad valorem taxes
  Transportation expense
  Depreciation, depletion and amortization expense
  General and administrative expense
 48




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##### Table of Contents



Net interest expense 1 2
  Income before taxes and minority interest
  Provision for income taxes
  Liquidity
    and Capital Resources
  Financial
    Condition
  Years Ended December 31,2007


2006(In thousands, except ratios)Current ratio(1)


0.8 to 1



1.3 to 1Working capital(2)


(66,209
)


66,291Total debt


779,000



654,000Operating cash flow(3)


622,610



490,378Interest expense, net of capitalization


54,665



39,649Fixed-charge coverage ratio(4)


4.96



5.66Total cash and marketable securities less debt


(760,411
)


(644,421
)Stockholders equity


1,391,018



1,302,591Total liabilities to equity


1.22 to 1



1.06 to 1     (1)
    
    Current ratio is current assets divided by current liabilities.(2)
    
    Working capital is the difference between current assets and
    current liabilities.(3)
    
    Operating cash flow is net income before allowance for doubtful
    accounts, deferred income tax, DD&A, amortization of
    deferred financing costs, ineffectiveness of derivative
    instruments and share-based compensation expense. See the
    following Reconciliation of Non-GAAP Measure:
    Operating Cash Flow.(4)
    
    Fixed-charge coverage ratio is net earnings before taxes,
    minority interest and fixed charges divided by fixed charges
    (interest expense, net of capitalization plus amortization of
    discounts.) 49




---



##### Table of Contents



Reconciliation
    of Non-GAAP Measure: Operating Cash Flow
    Years Ended December 31,2007


2006(In thousands)Cash flow from operating activities (GAAP)

$
536,113


$
277,161Changes in operating assets and liabilities


86,497



213,217Operating cash flow (Non-GAAP)

$
622,610


$
490,378   2007
    Cash Flows
    Years Ended December 31,2007

2006

2005(In millions)Cash payments for interest

$
49.1


$
28.8


$
6.1Cash payments for income taxes

$
0.6


$



$
          50




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##### Table of Contents



2007 Uses of Capital.
  
    funding capital expenditures (excluding hurricane repairs and
    acquisitions) of approximately $639.4 million;
    funding hurricane repairs and hurricane-related abandonment
    expenditures of approximately $37.8 million;
    paying interest of approximately $49.1 million;
    paying the purchase price for West Texas assets of approximately
    $122.5 million; and
    paying routine operating and administrative expenses.  2007 Capital Expenditures.
  Year Ended December 31,2007


2006(1)(In thousands)Capital expenditures:Leasehold acquisitions

$
24,189


$
22,405Oil and natural gas exploration


182,645



165,705Oil and natural gas development


448,577



359,754Proceeds from property conveyances(2)


(4,116
)


(33,829
)Acquisitions


122,895



70,928Other items (primarily gathering system, capitalized overhead
    and interest)


15,952



14,988Total capital expenditures, net of proceeds from property
    conveyances

$
790,142


$
599,951     (1)
    
    The Forest Energy Resources, Inc. merger is excluded.(2)
    
    Proceeds from sale of Cottonwood project in 2006 (Garden Banks
    244) of $31.8 million are recorded as restricted cash
    (Refer to Restricted Cash under
    Note 1.  Summary of Significant Accounting
    Policies in the Notes to the Consolidated Financial
    Statements in Part II, Item 8 of this Annual Report on
    Form 10-K).  2007 Hurricane Expenditures.
  2007 Sources of Capital.
  
    cash flow from operations;
    borrowings under our revolving bank credit facility; and
    proceeds from our issuance of $300 million aggregate
    principal amount of 8% Notes. 51




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##### Table of Contents



Bank Credit Facility
        
    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
    71/2% Senior
    Notes due 2013 issued in March 2006
    $300 million principal amount of 8% Senior Notes due
    2017 issued in April 2007   52




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##### Table of Contents



1 2 1 2
  1 2
  71/2% Notes

8% NotesApril 15, 2010 at 103.750%

May 15, 2012 at 104.000%April 15, 2011 at 101.875%

May 15, 2013 at 102.667%April 15, 2012 and thereafter at 100.000%

May 15, 2014 at 101.333%May 15, 2015 and thereafter at 100.000%   1 2 1 2
      
    make investments;
    incur additional indebtedness or issue preferred stock;
    create certain liens;
    sell assets;
    enter into agreements that restrict dividends or other payments
    from its subsidiaries to itself;
    consolidate, merge or transfer all or substantially all of its
    assets;
    engage in transactions with affiliates;
    pay dividends or make other distributions on capital stock or
    subordinated indebtedness; and
    create unrestricted subsidiaries. 53




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##### Table of Contents



1 2
  Future Uses of Capital.
  
    funding future capital expenditures;
    funding hurricane repairs and hurricane-related abandonment
    operations;
    financing any future acquisitions that Mariner may identify;
    paying routine operating and administrative expenses; and
    paying other commitments comprised largely of cash settlement of
    hedging obligations and debt service.  2008 Capital Expenditures.
  Obligations
    and Commitments
  Consolidated Contractual Obligations
  Payments due by Period2008


2009


2010


2011-2012


Thereafter


Total(In millions)Debt obligations(1)

$



$



$
179.0


$



$
600.0


$
779.0Letters of Credit


7.9



















7.9Interest obligations(2)


67.8



59.5



48.7



93.0



111.4



380.4Operating leases


1.9



2.2



2.5



4.9



12.0



23.5Abandonment liabilities


31.0



28.2



38.6



40.7



83.5



222.0MMS royalty liabilities


29.1



















29.1Seismic obligations


14.6



















14.6Capital accrual obligations


159.0



















159.0Other liabilities(3)


90.5



















90.5Total contractual cash commitments

$
401.8


$
89.9


$
268.8


$
138.6


$
806.9


$
1,706.0     (1)
    
    As of December 31, 2007, we had incurred debt obligations
    under our bank credit facility and under our
    71/2% Notes
    and 8% Notes.(2)
    
    Interest obligations represent interest due on the senior
    unsecured notes at 7.5% and 8%. Future interest obligations
    under our bank credit facility are uncertain, due to the
    variable interest rate on fluctuating balances. Based on a 7.27%
    weighted average interest rate on amounts outstanding under our
    bank credit facility as of December 31, 2007,
    $13.6 million, $13.0 million and $2.2 million
    would be due under the bank credit facility by 2008, 2009 and
    2010, respectively.(3)
    
    Other liabilities include accrued LOE of $22.1 million,
    accrued liabilities of $17.0 million, gas balancing of
    $17.0 million, oil and gas payable of $14.4 million,
    accrued compensation of $8.1 million and other liabilities
    for $11.9 million. 54




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##### Table of Contents



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
    Critical
    Accounting Policies and Estimates
  Form 10-K.
 55




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##### Table of Contents



Oil
    and Gas Properties
        Estimated
    Proved Reserves
    Unproved
    Properties
  3-D
 56




---



##### Table of Contents



Goodwill
    Income
    Taxes
        Abandonment
    Liability
     57




---



##### Table of Contents



Hedging
    Program
            Revenue
    Recognition
    over-and-under
 58




---



##### Table of Contents



Share-Based
    Compensation Expense
        Reclassifications
    and Use of Estimates in the Preparation of Consolidated
    Financial Statements
      Principles
    of Consolidation
    Recent
    Accounting Pronouncements
     59




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##### Table of Contents



No. 39-1, (FIN 39-1), FIN 39-1 FIN 39-1
      Item 7A.
    Quantitative
    and Qualitative Disclosures About Market
    Risk.  Commodity
    Prices and Related Hedging Activities
     60




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##### Table of Contents



Year Ended December 31,2007


2006


2005(3)(In thousands)Cash Gain (Loss) on Settlements

$
46,732


$
11,273


$
(53,799
)Gain (Loss) on Hedge Ineffectiveness(1)


(1,655
)


4,175



Non-cash Gain on hedges acquired(2)






17,523



4,515Total

$
45,077


$
32,971


$
(49,284
)
     (1)
    
    Unrealized gain (loss) recognized in natural gas revenue related
    to the ineffective portion of open contracts that are not
    eligible for deferral under SFAS 133 Accounting for
    Derivative Instruments and Hedging Activities, due
    primarily to the basis differentials between the contract price
    and the indexed price at the point of sale.(2)
    
    In 2006, relating to the hedges acquired through the Forest
    transaction.(3)
    
    $4.5 million of the $49.3 million loss relates to the
    hedge liability associated with the 2004 merger.    December 31,Weighted-Average


2007 FairFixed Price Swaps

Quantity


Fixed Price


Value Gain/(Loss)(In thousands)Natural Gas (MMBtus)January 1  December 31, 2008


40,583,847


$
8.46


$
27,672January 1  December 31, 2009


31,642,084


$
8.48



(1,494
)Crude Oil (Bbls)January 1  December 31, 2008


2,263,552


$
78.99



(31,219
)January 1  December 31, 2009


2,172,210


$
76.15



(23,158
)Total









$
(28,199
)   December 31,2007 FairCostless Collars

Quantity


Floor


Cap


Value Gain/(Loss)(In thousands)Natural Gas (MMBtus)January 1  December 31, 2008


12,347,000


$
7.83


$
14.60


$
7,201Crude Oil (Bbls)January 1  December 31, 2008


1,195,495


$
61.66


$
86.81



(11,259
)Total













$
(4,058
)     December 31,Weighted-Average


2006 FairFixed Price Swaps

Quantity


Fixed Price


Value Gain(In thousands)Natural Gas (MMBtus)January 1  December 31, 2007


15,846,323


$
9.67


$
47,855January 1  December 31, 2008


3,059,689


$
9.58



4,344Total









$
52,199   61




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##### Table of Contents



December 31,2006 FairCostless Collars

Quantity


Floor


Cap


Value Gain(In thousands)Natural Gas (MMBtus)January 1  December 31, 2007


14,106,750


$
6.87


$
11.82


$
5,916January 1  December 31, 2008


12,347,000


$
7.83


$
14.60



9,416Crude Oil (Bbls)January 1  December 31, 2007


2,032,689


$
59.84


$
84.21



717January 1  December 31, 2008


1,195,495


$
61.66


$
86.80



3,393Total













$
19,442       Interest
    Rates
   62




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##### Table of Contents



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


64Report of Independent Registered Public
    Accounting Firm


65Consolidated Balance Sheets at December 31,
    2007 and 2006


66Consolidated Statements of Operations for the
    years ended December 31, 2007, 2006 and 2005


67Consolidated Statements of Stockholders
    Equity for the years ended December 31, 2007, 2006 and
    2005


68Consolidated Statements of Cash Flows for the
    years ended December 31, 2007, 2006 and 2005


69Notes to the Consolidated Financial Statements


70  63




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##### Table of Contents



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

/s/  JOHN
    H. KARNESScott D. Josey,
    Chairman of the Board,
    Chief Executive Officer and President

John H. Karnes,
    Senior Vice President,
    Chief Financial Officer and Treasurer     64




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##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM                 DELOITTE &
    TOUCHE LLP
    65




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##### Table of Contents



MARINER
    ENERGY, INC.
  CONSOLIDATED
    BALANCE SHEETS
  December 31,


December 31,2007


2006(In thousands exceptshare data)Current Assets:Cash and cash equivalents

$
18,589


$
9,579Receivables, net of allowances of $2,449 and $726, respectively


157,774



149,692Insurance receivables


26,683



61,001Derivative financial instruments


11,863



54,488Intangible assets


17,209



20,835Prepaid expenses and other


10,630



10,423Deferred tax asset


6,232



Total current assets


248,980



306,018Property and Equipment:Proved oil and gas properties, full-cost method


3,118,273



2,345,041Unproved properties, not subject to amortization


40,455



40,246Total oil and gas properties


3,158,728



2,385,287Other property and equipment


15,545



13,512Accumulated depreciation, depletion and amortization


(754,079
)


(386,737
)Total property and equipment, net


2,420,194



2,012,062Restricted Cash


5,000



31,830Goodwill


295,598



288,504Insurance Receivables


56,924



Derivative Financial Instruments


691



17,153Other Assets, net of amortization


56,248



24,586TOTAL ASSETS

$
3,083,635


$
2,680,153Current Liabilities:Accounts payable

$
1,064


$
1,822Accrued liabilities


96,936



74,880Accrued capital costs


159,010



99,028Deferred income tax






26,857Abandonment liability


30,985



29,660Accrued interest


7,726



7,480Derivative financial instruments


19,468



Total current liabilities


315,189



239,727Long-Term Liabilities:Abandonment liability


191,021



188,310Deferred income tax


343,948



262,888Derivative financial instruments


25,343



Long-term debt, bank credit facility


179,000



354,000Long-term debt, senior unsecured notes


600,000



300,000Minority interest of consolidated subsidiary


1



Other long-term liabilities


38,115



32,637Total long-term liabilities


1,377,428



1,137,835Commitments 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, 2007 and December 31, 2006






Common stock, $.0001 par value; 180,000,000 shares
    authorized, 87,229,312 shares issued and outstanding at
    December 31, 2007; 180,000,000 shares authorized,
    86,375,840 shares issued and outstanding at
    December 31, 2006


9



9Additional
    paid-in-capital


1,054,089



1,043,923Accumulated other comprehensive income/(loss)


(22,576
)


43,097Accumulated retained earnings


359,496



215,562Total stockholders equity


1,391,018



1,302,591TOTAL LIABILITIES AND STOCKHOLDERS EQUITY

$
3,083,635


$
2,680,153   The accompanying Notes to the Consolidated Financial
    Statements
 are an integral part of these financial statements
 66




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##### Table of Contents



MARINER
    ENERGY, INC.
  CONSOLIDATED
    STATEMENTS OF OPERATIONS
  Year Ended December 31,2007


2006


2005(In thousands except share data)Revenues:Natural gas

$
534,537


$
412,967


$
122,291Oil


284,405



202,744



73,831Natural gas liquids


54,192



40,507



Other revenues


1,591



3,287



3,588Total revenues


874,725



659,505



199,710Costs and Expenses:Lease operating expense


152,593



91,592



24,882Severance and ad valorem taxes


13,101



9,070



5,000Transportation expense


8,788



5,077



2,336General and administrative expense


41,126



33,372



36,766Depreciation, depletion and amortization


384,321



292,180



59,469Other miscellaneous expense


6,086



744



244Impairment of production equipment held for use










1,845Total costs and expenses


606,015



432,035



130,542OPERATING INCOME


268,710



227,470



69,168Other Income/(Expenses):Interest income


1,403



985



779Interest expense, net of amounts capitalized


(54,665
)


(39,649
)


(8,172
)Other income/(expense)


5,811







Income Before Taxes and Minority Interest


221,259



188,806



61,775Provision for Income Taxes


(77,324
)


(67,344
)


(21,294
)Minority Interest Expense


(1
)






NET INCOME

$
143,934


$
121,462


$
40,481Earnings per share:Net income per share  basic

$
1.68


$
1.59


$
1.24Net income per share  diluted

$
1.67


$
1.58


$
1.20Weighted average shares outstanding  basic


85,645,199



76,352,666



32,667,582Weighted average shares outstanding  diluted


86,125,811



76,810,466



33,766,577   The accompanying Notes to the Consolidated Financial
    Statements
 are an integral part of these financial statements
 67




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##### Table of Contents



MARINER
    ENERGY, INC.
  CONSOLIDATED
    STATEMENTS OF STOCKHOLDERS EQUITY
  AccumulatedOtherAdditional


Comprehensive


Accumulated


TotalCommon


Stock


Paid-In-


Income/


Retained


StockholdersStock


Amount


Capital


(Loss)


Earnings


Equity(In thousands)Balance at December 31, 2004


29,748


$
1


$
91,917


$
(11,630
)

$
53,619


$
133,907Common shares issued  private equity offering


3,600



2



44,331











44,333Common shares issued  restricted stock


2,267



1



(1
)










Amortization of unearned compensation










25,129











25,129Share-based compensation expense  stock options










594











594Contributed capital  Mariner Energy, LLC and Mariner
    Holdings, Inc.










3,057











3,057Merger adjustments










(4,322
)










(4,322
)Comprehensive income:Net income


















40,481



40,481Change in fair value of derivative hedging
    instruments  net of income taxes of ($33,318)














(61,878
)






(61,878
)Hedge settlements reclassified to income  net of
    income taxes of $17,249














32,035







32,035Total comprehensive income (loss)














(29,843
)


40,481



10,638Balance at December 31, 2005


35,615


$
4


$
160,705


$
(41,473
)

$
94,100


$
213,336Common shares issued  Forest transaction


50,637



5



886,142











886,147Common shares issued  restricted stock


907



















Treasury stock bought and cancelled on same day


(808
)






(14,028
)










(14,028
)Forfeiture of restricted stock


(27
)


















Amortization of unearned compensation










9,248











9,248Share-based compensation expense  stock options










980











980Stock options exercised


52







718











718Merger adjustments










158











158Comprehensive income:Net income


















121,462



121,462Change in fair value of derivative hedging
    instruments  net of income taxes of $35,930














63,139







63,139Hedge settlements reclassified to income  net of
    income taxes of $11,540














21,431







21,431Total comprehensive income














84,570



121,462



206,032Balance at December 31, 2006


86,376


$
9


$
1,043,923


$
43,097


$
215,562


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


906



















Treasury stock bought and cancelled on same day


(72
)






(1,553
)










(1,553
)Forfeiture of restricted stock


(45
)






(907
)










(907
)Amortization of unearned compensation










10,375











10,375Share-based compensation expense  stock options










1,422











1,422Stock options exercised


64







829











829Comprehensive income:Net income


















143,934



143,934Change in fair value of derivative hedging
    instruments  net of income taxes of ($52,385)














(94,935
)






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














29,262







29,262Total comprehensive income














(65,673
)


143,934



78,261Balance at December 31, 2007


87,229


$
9


$
1,054,089


$
(22,576
)

$
359,496


$
1,391,018   The accompanying Notes to the Consolidated Financial
    Statements
 are an integral part of these financial statements
 68




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##### Table of Contents



MARINER
    ENERGY, INC.
 CONSOLIDATED
    STATEMENTS OF CASH FLOWS  Year Ended December 31,2007


2006


2005(In thousands)Cash flow from operating activities:Net income

$
143,934


$
121,462


$
40,481Adjustments to reconcile net income to net cash provided by
    operating activities:Allowance for doubtful accounts


1,723



226



500Deferred income tax


77,324



67,344



21,294Depreciation, depletion and amortization


384,321



295,292



60,640Amortization of deferred financing costs


2,763







Ineffectiveness of derivative instruments


1,655



(4,175
)


Share-based compensation


10,890



10,229



25,726Impairment of production equipment held for use










1,845Changes in operating assets and liabilities:Receivables


(9,805
)


(12,972
)


(33,416
)Insurance receivables


(22,606
)


(55,690
)


(4,542
)Prepaid expenses and other


(23,406
)


18,626



(843
)Accounts payable and accrued liabilities


(30,680
)


(169,819
)


53,759Net realized loss on derivative contracts acquired






6,638



Net cash provided by operating activities


536,113



277,161



165,444Cash flow from investing activities:Acquisitions and additions to property and equipment


(674,712
)


(542,581
)


(247,817
)Property conveyances


4,102



33,829



18Purchase price adjustment






(20,808
)


Restricted cash designated for investment


26,830



(31,830
)


Minority interest


1







Net cash used in investing activities


(643,779
)


(561,390
)


(247,799
)Cash flow from financing activities:Debt and working capital acquired from Forest Energy Resources,
    Inc.






(176,200
)


Repayment of term note






(4,000
)


(6,000
)Credit facility borrowings (repayments), net


(175,000
)


202,000



47,000Proceeds from private equity offering










44,331Proceeds from note offering


300,000



300,000



Repurchase of stock


(1,553
)


(14,027
)


Net realized loss on derivative contracts acquired






(6,638
)


Proceeds from exercise of stock options


829



718



Deferred offering costs


(6,600
)


(12,601
)


(3,840
)Capital contributions from affiliates










2,879Partner contributions/ (distributions)


(1,000
)






Net cash provided by financing activities


116,676



289,252



84,370Increase in Cash and Cash Equivalents


9,010



5,023



2,015Cash and Cash Equivalents at Beginning of Period


9,579



4,556



2,541Cash and Cash Equivalents at End of Period

$
18,589


$
9,579


$
4,556   The accompanying Notes to the Consolidated Financial
    Statements
 are an integral part of these financial statements
 69




---



##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL STATEMENTS
 For the Years Ended December 31, 2007, 2006 and
    2005
  Note 1.
    Summary
    of Significant Accounting Policies    Cash and Cash Equivalents
  Restricted Cash
  Receivables
  Insurance receivables 
  Oil and Gas Properties
   70




---



##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
 For the Years Ended December 31, 2007, 2006 and 2005
    Unproved Properties 3-D
  Other Property and Equipment
  Prepaid Expenses and Other
  Other Assets
  Goodwill
 71




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##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
 For the Years Ended December 31, 2007, 2006 and 2005
    Income Taxes
      Abandonment Liability
   72




---



##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
 For the Years Ended December 31, 2007, 2006 and 2005
    (In millions)Abandonment Liability as of December 31, 2005(1)

$
49.5Liabilities Incurred


29.6Liabilities Settled


(31.1
)Accretion Expense


15.3Revisions to previous estimates


(10.5
)Liabilities incurred from assets acquired(2)


165.2Abandonment Liability as of December 31, 2006(3)

$
218.0Liabilities Incurred


6.6Liabilities Settled


(57.8
)Accretion Expense


17.0Revisions to previous estimates


38.2Abandonment Liability as of December 31, 2007(4)

$
222.0     (1)
    
    Includes $11.4 million classified as a current accrued
    liability at December 31, 2005.(2)
    
    Represents the fair value of the asset retirement obligation
    acquired through the Forest Merger.(3)
    
    Includes $29.7 million classified as a current accrued
    liability at December 31, 2006.(4)
    
    Includes $31.0 million classified as a current accrued
    liability at December 31, 2007.  Hedging Program
       73




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##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
 For the Years Ended December 31, 2007, 2006 and 2005
      Financial Instruments
  Revenue Recognition
  over-and-under
    Concentration of Credit Risk
  Operating Costs
 74




---



##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
 For the Years Ended December 31, 2007, 2006 and 2005
          General and Administrative Expense
    Accounting for Stock Options and Restricted
    Stock
  Capitalized Interest Costs
  Reclassifications and Use of Estimates in the Preparation of
    Financial Statements
    Principles of Consolidation
 75




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##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
 For the Years Ended December 31, 2007, 2006 and 2005
  Net Income per Share
      Comprehensive Income
  Years Ended December 31,2007


2006


2005(In thousands)Net Income

$
143,934


$
121,462


$
40,481Other comprehensive income (loss), net of tax:Derivative contracts settled and reclassified, net of tax


29,262



21,431



32,035Change in unrealized mark-to-market gains/(losses) arising
    during period, net of tax


(94,935
)


63,139



(61,878
)Change in accumulated other comprehensive income (loss)


(65,673
)


84,570



(29,843
)Comprehensive income

$
78,261


$
206,032


$
10,638   Major Customers
  Percentage of TotalRevenues forYear EndedDecember 31,Customer

2007


2006


2005BP Energy


9%



14%




*Bridgeline Gas Distributing Company(1)










15
%ChevronTexaco and affiliates(1)


23%



23%



24
%Louis Dreyfus Energy


9%



10%



7
%Plains Marketing LP


7%



11%



10
%Shell


10%



8%




*     (1)
    
    Bridgeline Gas Distributing Company is an affiliate of
    ChevronTexaco*
    
    Less than 1% 76




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##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
 For the Years Ended December 31, 2007, 2006 and 2005
   Recent
    Accounting Pronouncements
      No. 39-1, (FIN 39-1), FIN 39-1 FIN 39-1
     77




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##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
 For the Years Ended December 31, 2007, 2006 and 2005
  Note 2.
    Related
    Party Transactions  Organization
    and Ownership of the Company
      Note 3.
    Acquisitions
    and Dispositions  West Texas Acquisition.
  Interest in Cottonwood
  West Cameron 110/111
  Forest Gulf of Mexico Operations
 78




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##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
 For the Years Ended December 31, 2007, 2006 and 2005
        (In millions)Oil and natural gas properties

$
1,211.4Abandonment liabilities


(165.2
)Long-term debt


(176.2
)Fair value of oil and natural gas derivatives


(17.5
)Deferred tax liability


(199.4
)Other assets and liabilities


(24.5
)Goodwill


261.4Net Assets Acquired

$
890.0         Pro Forma Financial Information
 79




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##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
 For the Years Ended December 31, 2007, 2006 and 2005
    Year EndedDecember 31,2006


2005(Unaudited)(In thousands, except per share amounts)Pro Forma:Revenue

$
725,321


$
591,982Net income available to common stockholders

$
134,428


$
57,952Basic earnings per share

$
1.76


$
0.70Diluted earnings per share

$
1.75


$
0.69   Note 4.
    Long-Term
    Debt  Bank Credit Facility
         80




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##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
 For the Years Ended December 31, 2007, 2006 and 2005
      
    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 1 2 1 2 1 2
  1 2
     81




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##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
 For the Years Ended December 31, 2007, 2006 and 2005
  1 2 1 2
  1 2
  71/2% Notes

8% NotesApril 15, 2010 at 103.750%

May 15, 2012 at 104.000%April 15, 2011 at 101.875%

May 15, 2013 at 102.667%April 15, 2012 and thereafter at 100.000%

May 15, 2014 at 101.333%May 15, 2015 and thereafter at 100.000%   1 2 1 2
      
    make investments;
    incur additional indebtedness or issue preferred stock;
    create certain liens;
    sell assets;
    enter into agreements that restrict dividends or other payments
    from its subsidiaries to itself;
    consolidate, merge or transfer all or substantially all of its
    assets;
    engage in transactions with affiliates;
    pay dividends or make other distributions on capital stock or
    subordinated indebtedness; and
    create unrestricted subsidiaries.  1 2
  Term Promissory Note
 82




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##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
 For the Years Ended December 31, 2007, 2006 and 2005
    Capitalized Interest
  Cash Interest Expense
  Bank Debt Issuance Costs
  Note 5.
    Stockholders
    Equity  Increase in Number of Shares Authorized
  Equity Participation Plan
 83




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##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
 For the Years Ended December 31, 2007, 2006 and 2005
  Stock Incentive Plan
      Rollover Options
  Accounting for Stock Options and Restricted
    Stock
 84




---



##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
 For the Years Ended December 31, 2007, 2006 and 2005
    Weighted


AggregateAverage


IntrinsicExercise


Value(1)Shares


Price


($000)Outstanding at beginning of year January 1, 2007


802,322


$
13.77


$
4,678Granted










Exercised


(64,141
)

$
12.92



Forfeited(2)


(17,693
)






Outstanding at end of year December 31, 2007


720,488


$
13.82


$
6,526Vested and expected to vest


702,779


$
13.88


$
6,323Exercisable at end of year


514,338


$
13.88


$
4,629Available for future grant as options or restricted stock


4,072,801







     (1)
    
    Based upon the difference between the market price of the common
    stock on the last trading date of the year ($22.88) and the
    option exercise price of in-the-money options.(2)
    
    Rollover Options exercisable for 17,693 shares were
    forfeited due to terminations of employment, but may not be
    indicative of a historical forfeiture rate.      Options Outstanding


Options ExercisableWeightedAverage





WeightedRemaining





AverageShares


Contractual


Expected


SharesExercise Price

Outstanding


Life (Years)


Term


Exercisable$9.48


1,981



7.98



6.15



$9.67


660



7.92



6.08



$11.44


4,952



8.67



6.88



3,302$11.59


43,090



8.75



6.94



22,562$14.00


669,805



7.29



10.50



488,474Total number of shares


720,488











514,338  85




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##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
 For the Years Ended December 31, 2007, 2006 and 2005
    Options Outstanding


Options ExercisableWeightedAverage





WeightedRemaining





AverageShares


Contractual


Expected


SharesExercise Price

Outstanding


Life (Years)


Term


Exercisable$8.81


1,056



6.16



6.00



$9.48


5,283



7.15



6.00



$9.67


1,321



7.08



6.00



$11.44


4,952



7.88



6.00



1,651$11.59


71,226



7.94



6.00



23,173$14.00


706,880



8.31



6.00



347,216$15.50














(3,000
)$16.86


10,564



8.62



6.00



2,641$17.00


1,040



8.72



6.00



1,040Total number of shares


802,322











372,721     Options Outstanding

Options ExercisableWeightedAverage

Weighted



WeightedRemaining

Average



AverageNumber

Contractual

Exercise

Number

ExerciseRange of Exercise Prices

Outstanding

Life (Years)

Price

Exercisable

Price$14.00  $17.00


809,000



9.5


$
14.02







     12 Months Ended December 31,2007


2006


2005Stock Incentive


Stock Incentive





Stock IncentiveBlack-Scholes Assumptions

Plan Options(2)


Plan Options(1)


Rollover Options


Plan Options(2)Expected Term (years)


6.0



6.0



4.7



3.0Risk Free Interest Rate


4.80
%


4.80
%


4.79
%


3.79
%Expected Volatility


35.00
%


35.00
%


35.00
%


38.00
%Dividend Yield


0.00
%


0.00
%


0.00
%


0.00
%     (1)
    
    Stock Incentive Plan as amended and restated(2)
    
    There were no Rollover Options in 2007 or 2005   86




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##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
 For the Years Ended December 31, 2007, 2006 and 2005
      Restricted Shares under the Amendedand Restated Stock Incentive Plan2007


2006


2005Total unvested shares at beginning of period: January 1


875,380







Shares granted


906,104



907,371



Shares vested


(251,332
)


(4,500
)


Shares forfeited


(45,600
)


(27,491
)


Total unvested shares at end of period: December 31


1,484,552



875,380



Total shares vested at end of period: December 31


255,832



4,500



Available for future grant as options or restricted stock


4,072,801



4,862,132



Average fair value of shares granted during the period

$
21.73


$
19.54


$
     Restricted Shares under theEquity Participation Plan2006


2005Total unvested shares at beginning of period: January 1


2,267,270



Shares granted






2,267,270Shares vested


(2,267,270
)


Shares forfeited






Total unvested shares at end of period: December 31






2,267,270Total shares vested at end of period: December 31


2,267,270



Available for future grant under Equity Participation Plan






Average fair value of shares granted during the period

$



$
14.00   Private Equity Placement.
  Note 6.
    Employee
    Benefit and Royalty Plans  Employee Capital Accumulation Plan
 87




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##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
 For the Years Ended December 31, 2007, 2006 and 2005
    Overriding Royalty Interests
  Note 7.
    Earnings
    Per Share      2007


2006


2005Net








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 income per share

$
143,934



85,645


$
1.68


$
121,462



76,353


$
1.59


$
40,481



32,668


$
1.24Effect of dilutive securities:






481



(0.01
)






458



(0.01
)






1,099



(0.04
)Diluted net income earnings per share

$
143,934



86,126


$
1.67


$
121,462



76,811


$
1.58


$
40,481



33,767


$
1.20      88




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##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
 For the Years Ended December 31, 2007, 2006 and 2005
  Note 8.
    Commitments
    and Contingencies  Minimum Future Lease Payments
  2008

$
1,9222009


2,2172010


2,4892011


2,4992012 and thereafter


14,375Total

$
23,502     Hedging Program
    Year Ended December 31,2007


2006


2005(3)(In thousands)Cash Gain (Loss) on Settlements

$
46,732


$
11,273


$
(53,799
)Gain (Loss) on Hedge Ineffectiveness(1)


(1,655
)


4,175



Non-cash Gain on hedges acquired(2)






17,523



4,515Total

$
45,077


$
32,971


$
(49,284
)     (1)
    
    Unrealized gain (loss) recognized in natural gas revenue related
    to the ineffective portion of open contracts that are not
    eligible for deferral under SFAS 133 Accounting for
    Derivative Instruments and Hedging Activities, due
    primarily to the basis differentials between the contract price
    and the indexed price at the point of sale.(2)
    
    In 2006, relating to the hedges acquired through the Forest
    transaction.(3)
    
    $4.5 million of the $49.3 million loss relates to the
    hedge liability associated with the 2004 merger. 89




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##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
 For the Years Ended December 31, 2007, 2006 and 2005
     December 31,Weighted-Average


2007 Fair ValueFixed Price Swaps

Quantity


Fixed Price


Gain/(Loss)(In thousands)Natural Gas (MMBtus)January 1  December 31, 2008


40,583,847


$
8.46


$
27,672January 1  December 31, 2009


31,642,084


$
8.48



(1,494
)Crude Oil (Bbls)January 1  December 31, 2008


2,263,552


$
78.99



(31,219
)January 1  December 31, 2009


2,172,210


$
76.15



(23,158
)Total









$
(28,199
)   December 31,2007 Fair ValueCostless Collars

Quantity


Floor


Cap


Gain/(Loss)(In thousands)Natural Gas (MMBtus)January 1  December 31, 2008


12,347,000


$
7.83


$
14.60


$
7,201Crude Oil (Bbls)January 1  December 31, 2008


1,195,495


$
61.66


$
86.81



(11,259
)Total













$
(4,058
)     December 31,Weighted-Average


2006 Fair ValueFixed Price Swaps

Quantity


Fixed Price


Gain(In thousands)Natural Gas (MMBtus)January 1  December 31, 2007


15,846,323


$
9.67


$
47,855January 1  December 31, 2008


3,059,689


$
9.58



4,344Total









$
52,199   December 31,2006 Fair ValueCostless Collars

Quantity


Floor


Cap


Gain(In thousands)Natural Gas (MMBtus)January 1  December 31, 2007


14,106,750


$
6.87


$
11.82


$
5,916January 1  December 31, 2008


12,347,000


$
7.83


$
14.60



9,416Crude Oil (Bbls)January 1  December 31, 2007


2,032,689


$
59.84


$
84.21



717January 1  December 31, 2008


1,195,495


$
61.66


$
86.80



3,393Total













$
19,442    90




---



##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
 For the Years Ended December 31, 2007, 2006 and 2005
      Other Commitments
  MMS Proceedings
  
    In April 2005, the Interior Board of Land Appeals denied
    Mariners administrative appeal of the MMS
    April 2001 order asserting royalties were due for
    production during calendar year 2000 because price thresholds
    had been exceeded. In October 2005, Mariner filed suit in the
    U.S. District Court for the Southern District of Texas
    seeking judicial review of the dismissal. Upon motion of the
    MMS, the Companys lawsuit was dismissed on procedural
    grounds. In August 2006, the Company filed an appeal of such
    dismissal. In August 2007, the United States Court of Appeals
    for the Fifth Circuit affirmed the dismissal on procedural
    grounds. The Fifth Circuits dismissal is now final and
    unappealable. However, the Company believes the royalties
    asserted in the MMS April 2001 order are covered by its
    May 2006 order noted below, which the Company is appealing.
    In May 2006, the MMS issued an order asserting price thresholds
    were exceeded in calendar years 2000, 2001, 2003 and 2004 and,
    accordingly, that royalties were due under such leases on oil
    and gas produced in those years. Mariner has filed and is
    pursuing an administrative appeal of that order. The MMS has not
    yet made demand for non-payment of royalties alleged to be due
    for calendar years subsequent to 2004 on the basis of price
    thresholds being exceeded.    and/or
 91




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##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
 For the Years Ended December 31, 2007, 2006 and 2005
  Insurance
    Matters
  Current
    Insurance Against Hurricanes
    60-day
    Hurricanes
    Katrina and Rita (2005)
      Hurricane
    Ivan (2004)
   92




---



##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
 For the Years Ended December 31, 2007, 2006 and 2005
    Litigation and/or
  Letters of Credit
    Note 9.
    Income
    Taxes    For the Year Ended December 31,2007


2006


2005(In thousands)Current

$



$



$
Deferred


77,324



67,344



21,294Total Provision for Income Taxes

$
77,324


$
67,344


$
21,294     Year Ended December 31,2007


2006


2005(In thousands, except percentages)Income before taxes and minority interest

$
221,259






$
188,806






$
61,775Income tax expense computed at statutory rates

$
77,440



35.0
%

$
66,081



35.0
%

$
21,621



35.0
%State tax expense, net of the federal benefit


2,452



1.1
%


946



0.5
%






Forest purchase price adjustment


(2,034
)


(0.9
)%














Other


(534
)


(0.3
)%


317



0.2
%


(327
)


(0.5
)%Total Provision for Income Taxes

$
77,324



34.9
%

$
67,344



35.7
%

$
21,294



34.5
%    93




---



##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
 For the Years Ended December 31, 2007, 2006 and 2005
    At December 31,2007


2006(In thousands)Current Deferred Tax Assets:Employee share-based compensation

$
3,562


$
Total current deferred tax assets


3,562



Long-Term Deferred Tax Assets:Net operating loss carry forwards


215,834



114,728Alternative minimum tax credit


1,607



1,607Valuation allowance


(468
)


(468
)Reserve accruals


460



1,420Other


47



Total net deferred tax assets


217,480



117,287Current Deferred Tax Liabilities:Deferred gain


(808
)


(9,158
)Other comprehensive income-derivative instruments


3,478



(19,119
)Other






35Total current deferred tax liabilities


2,670



(28,242
)Long-Term Deferred Tax Liabilities:Deferred gain


(74
)


Other comprehensive income-derivative instruments


8,723



(6,019
)Differences between book and tax basis properties


(560,566
)


(372,771
)Texas margins tax


(189
)


Louisiana franchise tax


(9,357
)


Other


35



Total long-term deferred tax liabilities


(561,428
)


(378,790
)Total net deferred liability

$
(337,716
)

$
(289,745
)     FIN 48-1
 94




---



##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
 For the Years Ended December 31, 2007, 2006 and 2005
        Note 10.
    Segment
    Information    project-by-project
 95




---



##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
 For the Years Ended December 31, 2007, 2006 and 2005
  Note 11.
    Quarterly
    Financial Information (Unaudited)    Quarter Ended 2007December 31


September 30


June 30


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

$
253,595


$
196,484


$
213,081


$
211,565Operating income


91,254



51,196



63,218



63,042Income before taxes and minority interest


77,971



37,668



49,203



56,417Provision for income taxes


27,729



15,140



16,245



18,210Net income

$
50,241


$
22,528


$
32,958


$
38,207Earnings per share:(1)Net income per share  basic

$
0.59


$
0.26


$
0.38


$
0.45Net income per share  diluted

$
0.58


$
0.26


$
0.38


$
0.45Weighted average shares outstanding  basic


85,744,760



85,701,696



85,627,433



85,515,561Weighted average shares outstanding  diluted


86,276,871



85,964,108



85,905,296



85,704,529   Quarter Ended 2006December 31


September 30


June 30


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

$
221,114


$
190,466


$
167,665


$
80,260Operating income


78,955



67,713



57,787



23,015Income before taxes and minority interest


66,197



56,226



49,260



17,123Provision for income taxes


22,959



19,836



18,556



5,993Net income

$
43,238


$
36,390


$
30,704


$
11,130Earnings per share:(1)Net income per share  basic

$
0.51


$
0.43


$
0.36


$
0.22Net income per share  diluted

$
0.50


$
0.43


$
0.36


$
0.21Weighted average shares outstanding  basic


85,499,227



85,493,237



84,720,331



49,615,479Weighted average shares outstanding  diluted


85,750,225



85,581,108



85,027,561



51,844,610     (1)
    
    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 12.
    Supplemental
    Guarantor Information  1 2
 96




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##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
 For the Years Ended December 31, 2007, 2006 and 2005
     97




---



##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
 For the Years Ended December 31, 2007, 2006 and 2005
  MARINER
    ENERGY, INC. AND SUBSIDIARIES
  CONSOLIDATING BALANCE SHEET
 December 31, 2007
 (In thousands except share data)
  ConsolidatedParent


Subsidiary





MarinerCompany


Guarantors


Eliminations


Energy, Inc.Current Assets:Cash and cash equivalents

$
18,589


$



$



$
18,589Receivables, net of allowances


64,714



93,060







157,774Insurance receivables


3,950



22,733







26,683Derivative financial instruments


11,863











11,863Intagible assets


16,209



1,000







17,209Prepaid expenses and other


9,105



1,525







10,630Deferred tax asset


6,232











6,232Total current assets


130,662



118,318







248,980Property and Equipment:Proved oil and gas properties, full-cost method


1,469,989



1,648,284







3,118,273Unproved properties, not subject to amortization


40,025



430







40,455Total oil and gas properties


1,510,014



1,648,714







3,158,728Other property and equipment


15,219



326







15,545Accumulated depreciation, depletion and amortization


(403,159
)


(350,920
)






(754,079
)Total property and equipment, net


1,122,074



1,298,120







2,420,194Investment in Subsidiaries


1,014,536







(1,014,536
)


Intercompany Receivables / (Payables)


222,215



(222,215
)






Restricted Cash






5,000







5,000Goodwill






295,598







295,598Insurance Receivables


2,663



54,261







56,924Derivative Financial Instruments


691











691Other Assets, net of amortization


55,883



365







56,248TOTAL ASSETS

$
2,548,724


$
1,549,447


$
(1,014,536
)

$
3,083,635Current Liabilities:Accounts payable

$
1,064


$



$



$
1,064Accrued liabilities


70,467



26,469







96,936Accrued capital costs


85,839



73,171







159,010Abandonment liability


4,383



26,602







30,985Accrued interest


7,726











7,726Derivative financial instruments


19,468











19,468Total current liabilities


188,947



126,242







315,189Long-Term Liabilities:Abandonment liability


49,827



141,194







191,021Deferred income tax


80,095



263,853







343,948Derivative financial instruments


25,343











25,343Long-term debt, bank credit facility


179,000











179,000Long-term debt, senior unsecured notes


600,000











600,000Minority interest of consolidated subsidiary






1







1Other long-term liabilities


34,506



3,609







38,115Total long-term liabilities


968,771



408,656







1,377,428Commitments 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, 2007 and December 31, 2006














Common stock, $.0001 par value; 180,000,000 shares
    authorized, 87,229,312 shares issued and outstanding at
    December 31, 2007; 180,000,000 shares authorized,
    86,375,840 shares issued and outstanding at
    December 31, 2006


9



5



(5
)


9Additional
    paid-in-capital


1,054,089



886,142



(886,142
)


1,054,089Partner capital






6,000



(6,000
)


Accumulated other comprehensive income/(loss)


(22,576
)










(22,576
)Accumulated retained earnings


359,484



122,401



(122,389
)


359,496Total stockholders equity


1,391,006



1,014,548



(1,014,536
)


1,391,018TOTAL LIABILITIES AND STOCKHOLDERS EQUITY

$
2,548,724


$
1,549,447


$
(1,014,536
)

$
3,083,635  98




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##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
 For the Years Ended December 31, 2007, 2006 and 2005
  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



100







1,591Total revenues


445,331



429,394







874,725Costs and Expenses:Operating expenses


63,291



111,191







174,482General and administrative


38,420



2,706







41,126Depreciation, depletion and amortization


175,147



209,174







384,321Other miscellaneous expense


2,535



3,551







6,086Total costs and expenses


279,393



326,622







606,015OPERATING INCOME


165,938



102,772







268,710Other 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/(expense)






5,811







5,811Income Before Taxes and Minority Interest


127,247



94,012







221,259Provision for Income Taxes


(46,753
)


(30,571
)






(77,324
)Minority Interest Expense






(1
)






(1
)NET INCOME

$
80,494


$
63,440


$



$
143,934  99




---



##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
 For the Years Ended December 31, 2007, 2006 and 2005
  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


$
253,449


$
536,113Cash 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



1



26,831Net cash used in investing activities


(498,108
)


(145,671
)


(643,779
)Cash flow from financing activities:Credit facility borrowings (repayments), net


(175,000
)






(175,000
)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  100




---



##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
 For the Years Ended December 31, 2007, 2006 and 2005
  MARINER
    ENERGY, INC. AND SUBSIDIARIES
  CONSOLIDATING
    BALANCE SHEET
    December 31, 2006
    (In thousands except share data)
  ConsolidatedParent


Subsidiary





MarinerCompany


Guarantors


Eliminations


Energy, Inc.Current Assets:Cash and cash equivalents

$
9,579


$



$



$
9,579Receivables, net


51,140



98,552







149,692Insurance receivables


4,651



56,350







61,001Derivative financial instruments


54,488











54,488Intangible assets


19,468



1,367







20,835Prepaid expenses and other


8,869



1,554







10,423Total current assets


148,195



157,823







306,018Property and Equipment:Oil and gas properties, full-cost method: Proved


922,385



1,422,656







2,345,041Unproved, not subject to amortization


39,885



361







40,246Total oil and gas properties


962,270



1,423,017







2,385,287Other property and equipment


13,444



68







13,512Accumulated depreciation, depletion and amortization


(233,087
)


(153,650
)






(386,737
)Total property and equipment, net


742,627



1,269,435







2,012,062Investment in Subsidiaries


945,108







(945,108
)


Intercompany Receivable/(payables)


329,993



(329,993
)






Restricted Cash


31,830











31,830Goodwill






288,504







288,504Derivative Financial Instruments


17,153











17,153Other Assets, net of amortization


24,221



365







24,586TOTAL ASSETS

$
2,239,127


$
1,386,134


$
(945,108
)

$
2,680,153Current Liabilities:Accounts payable

$
1,822


$



$



$
1,822Accrued liabilities


61,779



13,101







74,880Accrued capital costs


60,146



38,882







99,028Deferred income tax


26,857











26,857Abandonment liability


9,312



20,348







29,660Accrued interest


7,355



125







7,480Total current liabilities


167,271



72,456







239,727Long-Term Liabilities:Abandonment liability


48,509



139,801







188,310Deferred income tax


36,701



226,187







262,888Long-term debt, bank credit facility


354,000











354,000Long-term debt, senior unsecured notes


300,000











300,000Other long-term liabilities


30,055



2,582







32,637Total long-term liabilities


769,265



368,570







1,137,835Commitments and Contingencies Stockholders Equity:Preferred stock, $.0001 par value; 20,000,000 shares
    authorized, no shares issued and outstanding at
    December 31, 2006














Common stock, $.0001 par value; 180,000,000 shares
    authorized, 86,375,840 shares issued and outstanding at
    December 31, 2006


9



5



(5
)


9Additional
    paid-in-capital


1,043,923



886,142



(886,142
)


1,043,923Accumulated other comprehensive income


43,097











43,097Accumulated retained earnings


215,562



58,961



(58,961
)


215,562Total stockholders equity


1,302,591



945,108



(945,108
)


1,302,591TOTAL LIABILITIES AND STOCKHOLDERS EQUITY

$
2,239,127


$
1,386,134


$
(945,108
)

$
2,680,153  101




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##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
 For the Years Ended December 31, 2007, 2006 and 2005
  MARINER
    ENERGY, INC. AND SUBSIDIARIES
    CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
    Year Ended December 31, 2006
    (In thousands)
  ConsolidatedParent


Subsidiary





MarinerCompany


Guarantors


Eliminations


Energy, Inc.Revenues:Natural gas

$
185,175


$
227,792


$



$
412,967Oil


120,269



82,475







202,744Natural gas liquids


21,593



18,914







40,507Other revenues


3,287











3,287Total revenues


330,324



329,181







659,505Costs and Expenses:Operating expenses


45,364



60,375







105,739General and administrative expense


31,695



1,677







33,372Depreciation, depletion and amortization


128,413



163,767







292,180Other miscellaneous expense


723



21







744Total costs and expenses


206,195



225,840







432,035OPERATING INCOME


124,129



103,341







227,470Interest:Income


8,737



1



(7,753
)


985Expense, net of amounts capitalized


(35,714
)


(11,688
)


7,753



(39,649
)Income Before Taxes


97,152



91,654







188,806Provision for Income Taxes


(34,651
)


(32,693
)






(67,344
)NET INCOME

$
62,501


$
58,961


$



$
121,462  102




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##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
 For the Years Ended December 31, 2007, 2006 and 2005
  MARINER
    ENERGY, INC. AND SUBSIDIARIES
    CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
    Year Ended December 31, 2006
    (In thousands)
  ConsolidatedParent


Subsidiary


MarinerCompany


Guarantors


Energy, Inc.Net cash provided by operating activities

$
191,225


$
85,936


$
277,161Cash flow from investing activities:Acquisitions and additions to property and equipment


(330,298
)


(212,283
)


(542,581
)Property conveyances


33,829







33,829Other investing activities


(31,830
)


(20,808
)


(52,638
)Net cash used in investing activities


(328,299
)


(233,091
)


(561,390
)Cash flow from financing activities:Credit facility repayments, net


202,000







202,000Debt and working capital acquired from Forest Energy Resources,
    Inc.






(176,200
)


(176,200
)Proceeds from note offering


300,000







300,000Other financing activities


(359,903
)


323,355



(36,548
)Net cash provided by financing activities


142,097



147,155



289,252Increase in Cash and Cash Equivalents


5,023







5,023Cash and Cash Equivalents at Beginning of Period


4,556







4,556Cash and Cash Equivalents at End of Period

$
9,579


$



$
9,579   Note 13.
    Subsequent
    Events  Gulf of Mexico Shelf Acquisition.
  
    Mariner internally estimated proved oil and gas reserves of
    52.4 Bcfe, 95% of which are developed;
    interests in 36 (16 net) producing wells producing approximately
    53 MMcfe per day net to MGOMs interest, 76% of which
    Mariner intends to operate;
    gas gathering systems comprised of 31 miles of
    10-inch,
    12-inch and
    16-inch
    pipelines; and
    approximately 106,000 net acres of developed leasehold and
    256,000 net acres of undeveloped leasehold.    Amendment of Bank Credit Facility.
  
    increase the facilitys maximum credit availability to
    $1 billion, including up to $50 million in letters of
    credit, subject to an increased borrowing base of
    $750 million as of January 31, 2008; 103




---



##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
 For the Years Ended December 31, 2007, 2006 and 2005
   
    extend the facilitys term to January 31, 2012;
    terminate an additional dedicated $40 million letter of
    credit facility in favor of Forest due to Mariners
    satisfaction of its obligations under a drill-to-earn
    program; and
    add as a permitted use of loan proceeds the funding of
    Mariners purchase of MGOM.  Note 14.
    Oil and
    Gas Producing Activities and Capitalized Costs
    (Unaudited)    Year Ended December 31,2007


2006


2005(In thousands)Oil and gas sales

$
873,134


$
656,218


$
196,122Lease operating costs


(152,593
)


(91,592
)


(24,882
)Severance and ad valorem taxes


(13,101
)


(9,070
)


(5,000
)Transportation


(8,788
)


(5,077
)


(2,336
)Depreciation, depletion and amortization


(384,321
)


(292,180
)


(59,469
)Results of operations

$
314,331


$
258,299


$
104,435     At December 31,2007


2006


2005(In thousands)Unevaluated properties, not subject to amortization

$
40,455


$
40,246


$
40,176Properties subject to amortization


3,118,273



2,345,041



574,725Capitalized costs


3,158,728



2,385,287



614,901Accumulated depreciation, depletion and amortization


(751,126
)


(384,948
)


(109,183
)Net capitalized costs

$
2,407,602


$
2,000,339


$
505,718     Year Ended December 31,2007


2006


2005(In thousands, except DD&A rate)Property acquisition costs:Unproved properties

$
48,891


$
47,655


$
12,366Unproved properties  Forest Acquisition






116,699



Proved properties  Tamarack


122,895







Proved properties  Forest Acquisition(1)






1,094,712



Proved properties  West Cameron 110/111






70,928



Proved properties  Other










52,503Exploration costs


157,943



143,054



50,049Development costs


444,462



323,843



121,685Capitalized internal costs


15,952



14,471



6,016Total costs incurred(2)

$
790,143


$
1,811,362


$
242,619     (1)
    
    In conjunction with the acquisition, includes asset retirement
    cost of approximately $165.2(2)
    
    Total costs are inclusive of other property and equipment
    additions and non cash items such as capital expenditure and
    asset retirement obligation accruals 104




---



##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
 For the Years Ended December 31, 2007, 2006 and 2005
       Period Incurred


Total atYear Ended December 31,


December 31,2007


2006


2005


Prior


2007(In thousands)Unproved leasehold acquisition and geological and geophysical
    costs

$
15,618


$
11,988


$
6,757


$
4,630


$
38,993Unevaluated exploration and development costs


990



2



(24
)


170



1,138Capitalized interest


132



19



43



130



324Total

$
16,740


$
12,009


$
6,776


$
4,930


$
40,455     Note 15.
    Supplemental
    Oil and Gas Reserve and Standardized Measure Information
    (Unaudited)     105




---



##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
 For the Years Ended December 31, 2007, 2006 and 2005
    ESTIMATED
    QUANTITIES OF PROVED RESERVES
  Natural GasOil & NGLs


Natural Gas


Equivalent(Mbbl)


(MMcf)


(MMcfe)December 31, 2004


14,255



151,933



237,465Revisions of previous estimates


835



963



5,971Extensions, discoveries and other additions


1,167



22,307



29,309Purchases of reserves in place


7,181



50,837



93,923Sales of reserves in place










Production


(1,791
)


(18,354
)


(29,100
)December 31, 2005


21,647



207,686



337,568Revisions of previous estimates


8,685



(58,055
)


(5,947
)Extensions, discoveries and other additions


9,823



93,112



152,050Purchases of reserves in place


12,410



244,741



319,201Sales of reserves in place


(354
)


(4,733
)


(6,857
)Production


(4,075
)


(56,064
)


(80,512
)December 31, 2006


48,136



426,687



715,503Revisions of previous estimates


5,707



2,402



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


(5,431
)


(67,689
)


(100,273
)December 31, 2007


64,563



448,439



835,815   ESTIMATED
    QUANTITIES OF PROVED DEVELOPED RESERVES
  Natural GasOil & NGLs


Natural Gas


Equivalent(Mbbl)


(MMcf)


(MMcfe)December 31, 2004


6,339



71,361



109,395December 31, 2005


9,564



110,011



167,395December 31, 2006


26,807



247,821



408,663December 31, 2007


39,634



326,069



563,874    106




---



##### Table of Contents



MARINER
    ENERGY, INC.
  NOTES TO
    THE CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
 For the Years Ended December 31, 2007, 2006 and 2005
    STANDARDIZED
    MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS
  Year Ended December 31,2007


2006


2005(In thousands)Future cash inflows

$
8,330,819


$
4,858,420


$
3,451,321Future production costs


(1,970,944
)


(1,278,228
)


(687,583
)Future development costs


(955,278
)


(1,016,519
)


(386,497
)Future income taxes


(1,467,999
)


(528,135
)


(695,921
)Future net cash flows


3,936,598



2,035,538



1,681,320Discount of future net cash flows at 10% per annum


(1,704,689
)


(795,677
)


(774,755
)Standardized measure of discounted future net cash flows

$
2,231,909


$
1,239,861


$
906,565       Year Ended December 31,2007


2006


2005(In thousands)Standardized Measure  January 1,

$
1,239,861


$
906,565


$
494,382Sales and transfers of oil and gas produced, net of production
    costs


(698,652
)


(553,766
)


(213,189
)Net changes in prices and production costs


470,932



(434,364
)


425,317Extensions and discoveries, net of future development and
    production costs


202,272



311,077



119,501Purchases of reserves in place


353,441



568,576



189,782Development costs during period and net change in development
    costs


812,655



245,050



46,632Revision of previous quantity estimates


175,039



101,331



16,323Sales of reserves in place


(1,383
)


(10,642
)


Net change in income taxes


(510,611
)


53,549



(201,647
)Accretion of discount before income taxes


123,986



90,656



49,438Changes in production rates (timing) and other


64,369



(38,171
)


(19,974
)Standardized Measure  December 31,

$
2,231,909


$
1,239,861


$
906,565  107




---



##### 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.
  Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters.  Form 10-K.
 108




---



##### Table of Contents



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.
 109




---



##### 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/  John
    H. KarnesJohn
    H. Karnes

Senior Vice President, Chief Financial Officer and Treasurer
    (Principal Financial and 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  110




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##### Table of Contents



INDEX TO
    EXHIBITS
  Number

Description2
.1*

Agreement and Plan of Merger dated as of September 9, 2005
    among Forest Oil Corporation, SML Wellhead Corporation, Mariner
    Energy, Inc. and MEI Sub, Inc. (incorporated by reference to
    Exhibit 2.1 to Mariners Registration Statement on
    Form S-4
    (File
    No. 333-137441)
    filed on September 19, 2006).2
.2*

Letter Agreement dated as of February 3, 2006 among Forest
    Oil Corporation, Forest Energy Resources, Inc., Mariner Energy,
    Inc. and MEI Sub, Inc. amending the transaction agreements
    (incorporated by reference to Exhibit 2.2 to Mariners
    Registration Statement on
    Form S-4
    (File
    No. 333-137441)
    filed on September 19, 2006).2
.3*

Letter Agreement, dated as of February 28, 2006, among
    Forest Oil Corporation, Forest Energy Resources, Inc., Mariner
    Energy, Inc. and MEI Sub, Inc. amended the transaction
    agreements (incorporated by reference to Exhibit 2.1 to
    Mariners
    Form 8-K
    filed on March 3, 2006).2
.4*

Letter Agreement, dated April 12, 2006, among Forest Oil
    Corporation, Mariner Energy Resources, Inc. and Mariner Energy,
    Inc. amended the transaction agreements (incorporated by
    reference to Exhibit 2.1 to Mariners
    Form 8-K
    filed on April 13, 2006).2
.5*

Membership Interest Purchase Agreement by and between Hydro Gulf
    of Mexico, Inc. and Mariner Energy, Inc., executed
    December 23, 2007 (incorporated by reference to
    Exhibit 2.1 to Mariners
    Form 8-K
    filed on February 5, 2008.3
.1*

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

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 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
.2*

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
.3*

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
.4*

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
.5*

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
.6*

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
.7*

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
.8*

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
.9*

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).10
.1*

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
.2*

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
.3*

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
.4*

Mariner Energy, Inc. Second Amended and Restated Stock Incentive
    Plan, effective as of February 6, 2007 (incorporated by
    reference to Exhibit 10.3 to Mariners
    Form 10-K
    filed on April 2, 2007).10
.5*

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
.6*+

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).10
.7*+

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
.8*+

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
.9*

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
.10*

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
.11*

Mariner Energy, Inc. Equity Participation Plan, effective
    March 11, 2005 (incorporated by reference to
    Exhibit 10.10 to Mariners Registration Statement on
    Form S-4
    (File
    No. 333-137441)
    filed on September 19, 2006).10
.12*

First Amendment to Mariner Energy, Inc. Equity Participation
    Plan, effective as of March 16, 2006 (incorporated by
    reference to Exhibit 10.11 to Mariners Registration
    Statement on
    Form S-4
    (File
    No. 333-137441)
    filed on September 19, 2006).10
.13*+

Form of Restricted Stock Agreement, Mariner Energy, Inc. Equity
    Participation Plan for employees with employment agreements
    (incorporated by reference to Exhibit 10.12 to
    Mariners Registration Statement on
    Form S-4
    (File
    No. 333-137441)
    filed on September 19, 2006).10
.14*

Form of Restricted Stock Agreement, Mariner Energy, Inc. Equity
    Participation Plan for employees without employment agreements
    (incorporated by reference to Exhibit 10.13 to
    Mariners Registration Statement on
    Form S-4
    (File
    No. 333-137441)
    filed on September 19, 2006).10
.15*+

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
.16*+

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).




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##### Table of Contents



Number

Description10
.17*+

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
.18*+

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
.19*+

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
.20*+

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
.21*+

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
.22*

Registration Rights Agreement among Mariner Energy, Inc. and
    each of the investors identified therein, dated March 11,
    2005 (incorporated by reference to Exhibit 10.24 to
    Mariners Registration Statement on
    Form S-4
    (File
    No. 333-137441)
    filed on September 19, 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.31
.1

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

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

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

Certification of Chief Financial Officer pursuant to
    18 U.S.C. Section 1350, as adopted pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.     *
    
    Incorporated by reference as indicated.+
    
    Management contract, plan or arrangement.  33-8238,