##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the Quarterly Period Ended June 30, 2005
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the transition period from            to
 Commission File No. 000-33275
 WARREN RESOURCES, INC.
  Maryland
(State or other jurisdiction of
incorporation or organization)
    
    11-3024080
(I.R.S. Employer
Identification Number)489 Fifth Avenue, New York,
New York
(Address of Principal Executive Offices)
    
    10017
(Zip Code)
  (212) 697-9660
  þ o
  o þ




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WARREN RESOURCES, INC.
 INDEX
  
 PAGEPART I FINANCIAL INFORMATIONItem 1. Financial Statements
    
    
    3Consolidated balance sheets as of June 30, 2005 (Unaudited) and December 31, 2004
    
    
    3Consolidated statements of operations (Unaudited) for three and six months ended June 30, 2005 and 2004
    
    
    4Consolidated statements of cash flows (Unaudited) for the six months ended June 30, 2005 and 2004
    
    
    5Notes to the consolidated financial statements (Unaudited)
    
    
    6Item 2. Managements discussion and analysis of financial conditions and results of operations
    
    
    12Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    19Item 4. Evaluation of Disclosure Controls and Procedures
    
    
    20PART II OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    20Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    21Item 3. Defaults upon Senior Securities
    
    
    21Item 4. Submission of Matters to a Vote of Security Holders
    
    
    21Item 5. Other Information
    
    
    22Item 6. Exhibits
    
    
    22Signatures
    
    
    22EX-31.1: CERTIFICATIONEX-31.2: CERTIFICATIONEX-32.1: CERTIFICATIONEX-32.2: CERTIFICATION
  2




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##### Table of Contents



PART IFINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 Warren Resources, Inc. and Subsidiaries
 
 CONSOLIDATED BALANCE SHEETS
 June 30,
    
    December 31,2005
    
    2004(Unaudited)ASSETSCURRENT ASSETSCash and cash equivalents
    
    $
    56,800,596
    
    
    $
    99,920,885Accounts
receivable  trade, net
    
    
    2,180,063
    
    
    
    1,481,925Accounts receivable from affiliated partnerships
    
    
    128,150
    
    
    
    143,297Trading securities
    
    
    108,429
    
    
    
    174,247Restricted
investments in U.S. Treasury Bondsavailable-for-sale, at fair value (amortized cost of $563,440 in 2005 and $5,944,587 in 2004)
    
    
    680,162
    
    
    
    6,099,968Other current assets
    
    
    537,358
    
    
    
    211,509Total current assets
    
    
    60,434,758
    
    
    
    108,031,831OTHER ASSETSOil and gas
propertiesat cost, based on successful efforts method of accounting, net of accumulated depreciation, depletion and amortization
    
    
    134,085,489
    
    
    
    116,595,306Property and equipmentat cost, net
    
    
    561,921
    
    
    
    395,444Restricted
investments in U.S. Treasury Bondsavailable for sale, at fair value (amortized cost of $5,783,579 in 2005 and $10,778,899 in 2004)
    
    
    7,105,197
    
    
    
    12,062,085Deferred bond offering costs (net of accumulated amortization of
$5,422,694 in 2005 and $4,080,257 in 2004)
    
    
    1,018,375
    
    
    
    2,360,812Goodwill
    
    
    3,430,246
    
    
    
    3,430,246Other assets
    
    
    6,761,147
    
    
    
    4,034,937Total other assets
    
    
    152,962,375
    
    
    
    138,878,830$
    213,397,133
    
    
    $
    246,910,661LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIESCurrent maturities of debentures
    
    $
    1,714,350
    
    
    $
    17,316,070Current maturities of other long-term liabilities
    
    
    356,697
    
    
    
    353,516Accounts payable and accruals
    
    
    13,406,883
    
    
    
    16,153,851Deferred incometurnkey drilling contracts with affiliated partnerships
    
    
    7,918,183
    
    
    
    11,908,389Total current liabilities
    
    
    23,396,113
    
    
    
    45,731,826LONG-TERM LIABILITIESDebentures, less current portion
    
    
    15,429,150
    
    
    
    29,160,630Other long-term liabilities, less current portion
    
    
    3,489,378
    
    
    
    3,207,80918,918,528
    
    
    
    32,368,439MINORITY INTEREST
    
    
    7,543,362
    
    
    
    11,240,990STOCKHOLDERS EQUITY8% convertible preferred stock, par value $.0001; authorized 10,000,000
shares, issued and outstanding, 1,475,120 shares in 2005 and 6,560,809 shares
in 2004 (aggregate liquidation preference $17,701,440 in 2005 and $78,729,708 in 2004)
    
    
    17,355,119
    
    
    
    77,270,413Common stock   $.0001 par value; authorized, 100,000,000 shares; issued
41,928,774 in 2005 and 34,347,854 shares in 2004
    
    
    4,193
    
    
    
    3,435Additional paid-in-capital
    
    
    226,842,399
    
    
    
    157,847,314Accumulated deficit
    
    
    (80,800,075
    )
    
    
    (77,689,476
    )Accumulated other comprehensive income, net of applicable income taxes of
$576,000 in 2005 and 2004
    
    
    865,549
    
    
    
    865,775164,267,185
    
    
    
    158,297,461Less common stock in Treasuryat cost; 632,250 shares in 2005 and 2004
    
    
    728,055
    
    
    
    728,055Total stockholders equity
    
    
    163,539,130
    
    
    
    157,569,406$
    213,397,133
    
    
    $
    246,910,661
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##### Table of Contents



Warren Resources, Inc. and Subsidiaries
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 Three Months Ended
    
    Six Months EndedJune 30, (Unaudited)
    
    June 30, (Unaudited)2005
    
    2004
    
    2005
    
    2004REVENUESTurnkey contracts with affiliated partnerships
    
    $
    1,324,538
    
    
    $
    2,341,462
    
    
    $
    3,603,855
    
    
    $
    3,250,396Oil and gas sales from marketing activities
    
    
    2,310,421
    
    
    
    1,411,992
    
    
    
    4,506,495
    
    
    
    2,795,567Well services
    
    
    284,636
    
    
    
    281,327
    
    
    
    825,295
    
    
    
    511,932Oil and gas sales
    
    
    2,929,324
    
    
    
    1,454,364
    
    
    
    5,105,911
    
    
    
    2,680,839Net gain on investments
    
    
    329,441
    
    
    
    (137,784
    )
    
    
    360,901
    
    
    
    (87,971
    )Interest and other income
    
    
    697,909
    
    
    
    558,692
    
    
    
    1,590,610
    
    
    
    1,091,592Gain on sale of oil and gas properties
    
    
    89,441
    
    
    
    120,193
    
    
    
    89,441
    
    
    
    120,1937,965,710
    
    
    
    6,030,246
    
    
    
    16,082,508
    
    
    
    10,362,548EXPENSESTurnkey contracts
    
    
    1,746,209
    
    
    
    1,909,964
    
    
    
    3,767,210
    
    
    
    3,343,404Cost of marketed oil and gas purchased from affiliated partnerships
    
    
    2,278,353
    
    
    
    1,376,182
    
    
    
    4,443,445
    
    
    
    2,724,401Well services
    
    
    171,642
    
    
    
    149,477
    
    
    
    366,031
    
    
    
    261,355Production & exploration
    
    
    1,999,872
    
    
    
    1,047,884
    
    
    
    2,673,034
    
    
    
    2,046,301Depreciation, depletion, amortization and impairment
    
    
    918,257
    
    
    
    1,131,469
    
    
    
    1,680,152
    
    
    
    1,533,614General and administrative
    
    
    1,467,007
    
    
    
    1,164,948
    
    
    
    2,932,351
    
    
    
    2,337,236Interest
    
    
    499,523
    
    
    
    147,352
    
    
    
    1,606,277
    
    
    
    256,205Retirement of debt
    
    
    349,037
    
    
    
    
    
    
    
    1,524,270
    
    
    
    9,429,900
    
    
    
    6,927,276
    
    
    
    18,992,770
    
    
    
    12,502,516Loss before income taxes and minority interest
    
    
    (1,464,190
    )
    
    
    (897,030
    )
    
    
    (2,910,262
    )
    
    
    (2,139,968
    )Deferred income tax expense (benefit)
    
    
    (114,000
    )
    
    
    360,000
    
    
    
    
    
    
    
    146,000Net loss before minority interest
    
    
    (1,350,190
    )
    
    
    (1,257,030
    )
    
    
    (2,910,262
    )
    
    
    (2,285,968
    )Minority interest
    
    
    (32,303
    )
    
    
    (2,285
    )
    
    
    (200,337
    )
    
    
    (32,213
    )Net loss
    
    
    (1,382,493
    )
    
    
    (1,259,315
    )
    
    
    (3,110,599
    )
    
    
    (2,318,181
    )Less dividends and accretion on preferred shares
    
    
    1,602,191
    
    
    
    1,644,396
    
    
    
    3,242,623
    
    
    
    3,290,321Net loss applicable to common stockholders
    
    $
    (2,984,684
    )
    
    $
    (2,903,711
    )
    
    $
    (6,353,222
    )
    
    $
    (5,608,502
    )Basic and diluted loss per common share
    
    $
    (0.08
    )
    
    $
    (0.15
    )
    
    $
    (0.18
    )
    
    $
    (0.31
    )Weighted average common shares outstanding
    
    
    36,379,461
    
    
    
    18,741,820
    
    
    
    35,146,437
    
    
    
    18,357,891
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Warren Resources, Inc. and Subsidiaries
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 For the six months endedJune 30, (Unaudited)2005
    
    2004Cash flows from operating activities:Net loss
    
    $
    (3,110,599
    )
    
    $
    (2,318,181
    )Adjustments to reconcile net loss to net cash used in operating activities:Accretion of discount on available-for-sale debt securities
    
    
    (362,487
    )
    
    
    (333,551
    )Amortization and write-off of deferred bond offering costs
    
    
    947,850
    
    
    
    221,623Gain on sale of US treasury bondsavailable for sale
    
    
    (418,001
    )
    
    
    Depreciation, depletion, amortization and impairment
    
    
    1,680,152
    
    
    
    1,533,614Accretion of asset retirement obligation
    
    
    36,543
    
    
    
    33,281Gain on sale of oil and gas properties
    
    
    (89,441
    )
    
    
    (120,193
    )Expense on the issuance of warrants
    
    
    21,705
    
    
    
    Deferred tax expense
    
    
    
    
    
    
    146,000Change in assets and liabilities:(Increase) decrease in trading securities
    
    
    65,818
    
    
    
    (72,720
    )Increase in accounts receivabletrade
    
    
    (698,138
    )
    
    
    (996,252
    )Decrease in accounts receivable from affiliated partnerships
    
    
    15,147
    
    
    
    251,213(Increase) decrease in other assets
    
    
    (3,052,059
    )
    
    
    1,106,514Decrease in accounts payable and accruals
    
    
    (1,306,195
    )
    
    
    (618,563
    )Decrease in deferred income from affiliated partnerships
    
    
    (3,990,206
    )
    
    
    (3,250,396
    )Decrease in other long term liabilities
    
    
    (13,069
    )
    
    
    (72,950
    )Net cash used in operating activities
    
    
    (10,272,980
    )
    
    
    (4,490,561
    )Cash flows from investing activities:Purchases of oil and gas properties
    
    
    (25,740,069
    )
    
    
    (10,235,162
    )Purchase of property and equipment
    
    
    (245,049
    )
    
    
    (6,108
    )Proceeds from the sale of oil and gas properties
    
    
    180,000
    
    
    
    120,193Proceeds from the sale of property and equipment
    
    
    
    
    
    
    24,000Proceeds from U.S. Treasury Bondsavailable-for-sale
    
    
    11,156,955
    
    
    
    64,616Net cash used in investing activities
    
    
    (14,648,163
    )
    
    
    (10,032,461
    )Cash flows from financing activities:Payments on debt and debentures
    
    
    (16,986,268
    )
    
    
    (1,209,460
    )Issuance of common stock, net
    
    
    361,716
    
    
    
    14,175,000Issuance of preferred stock, net
    
    
    
    
    
    
    126,730Dividends paid on preferred stock
    
    
    (1,574,594
    )
    
    
    (3,065,245
    )Net cash provided by (used in) financing activities
    
    
    (18,199,146
    )
    
    
    10,027,025Net decrease in cash and cash equivalents
    
    
    (43,120,289
    )
    
    
    (4,495,997
    )Cash and cash equivalents at beginning of period
    
    
    99,920,885
    
    
    
    24,528,999Cash and cash equivalents at end of period
    
    $
    56,800,596
    
    
    $
    20,033,002Supplemental disclosure of cash flow informationCash paid for interest, net of amount capitalized
    
    $
    1,340,484
    
    
    $
    Cash paid for income taxes
    
    $
    
    
    
    $
    
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WARREN RESOURCES, INC. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 NOTE 1ORGANIZATION
   NOTE 2 STOCK OPTIONS
 Accounting for Stock Issued to Employees Accounting for
Stock-Based Compensation
 Three months ended June 30,
    
    Six months ended June 30,2005
    
    2004
    
    2005
    
    2004Net loss, applicable to common stockholders,
as reported
    
    $
    (2,984,684
    )
    
    $
    (2,903,711
    )
    
    $
    (6,353,222
    )
    
    $
    (5,608,502
    )Deduct: Total stock-based employee
compensation expense determined under
fair-value-based method for all awards,
net of related tax effects
    
    
    
    
    
    
    (693,875
    )
    
    
    (2,614,482
    )
    
    
    (711,373
    )Pro forma net loss applicable to common
stockholders, as reported
    
    $
    (2,984,684
    )
    
    $
    (3,597,586
    )
    
    $
    (8,967,704
    )
    
    $
    (6,319,875
    )Basic and diluted loss per share:As reported

    
    $
    (0.08
    )
    
    $
    (0.15
    )
    
    $
    (0.18
    )
    
    $
    (0.31
    )Pro forma

    
    $
    (0.08
    )
    
    $
    (0.19
    )
    
    $
    (0.26
    )
    
    $
    (0.34
    )
  6




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##### Table of Contents



NOTE 3PLUGGING AND ABANDONMENT LIABILITY
  NOTE 4 CHANGES IN STOCKHOLDERS EQUITY
  Period
    
    Preferred to CommonJuly 1, 2005 through June 30, 2006
    
    1 to .75July 1, 2006 through redemption
    
    1 to .50
    7




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NOTE 5LOSS PER SHARE
  NOTE 6LONG-TERM DEBT
 
 December 31,June 30, 2005
    
    200412% Sinking Fund Debentures, due December 31, 2007 (1)
    
    $
    
    
    
    $
    9,036,00012% Secured Convertible Debentures, due December 31, 2009 (2)
    
    
    735,000
    
    
    
    770,00012% Secured Convertible Bonds, due December 31, 2010 (2)
    
    
    1,685,000
    
    
    
    1,700,00013.02% Sinking Fund Convertible Debentures, due December 31, 2010
(4)
    
    
    
    
    
    
    14,372,20013.02% Sinking Fund Convertible Debentures, due December 31, 2015
(3)
    
    
    10,832,500
    
    
    
    11,632,50012% Secured Convertible Bonds, due December 31, 2016 (2)
    
    
    1,270,000
    
    
    
    1,305,00012% Sinking Fund Convertible Debentures, due December 31, 2017 (1)
    
    
    
    
    
    
    5,040,00012% Secured Convertible Bonds, due December 31, 2020 (3)
    
    
    1,485,000
    
    
    
    1,485,00012% Secured Convertible Bonds, due December 31, 2022 (3)
    
    
    1,136,000
    
    
    
    1,136,00017,143,500
    
    
    
    46,476,700Less current portion
    
    
    1,714,350
    
    
    
    17,316,070Long-term portion
    
    $
    15,429,150
    
    
    $
    29,160,630
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##### Table of Contents



(1)
    
    In January 2005, the Company called for full redemption on June 30, 2005, certain sinking fund
debentures. The 2007 and 2017 bonds were called at a premium of 2% and 6%, respectively, which
resulted in an expense of approximately $482,000 in the first quarter of 2005 relating to
retirement of this debt. Also in the first quarter of 2005, the Company wrote off approximately
$694,000 of deferred offering costs relating to these bonds. This redemption resulted in a release
of restricted U.S. Treasury Bonds to the Company, having a fair market value of approximately
$4,839,000 and will decrease future annual interest expense by approximately $1,686,000.(2)
    
    Debentures can be called at a premium of 10%, if the Companys stock trades at or above 133% of
the conversion price for a period of ninety consecutive trading days.(3)
    
    Debentures can be called at par, if the Companys stock trades at or above 133% of the
conversion price for a period of ninety consecutive trading days.(4)
    
    On April 29, 2005, the Company called for full redemption on June 29, 2005 its 2010 sinking
fund bonds. Bond holders were given the option to either convert their bonds into shares of the
Companys common stock at the conversion rate of $5.00 per share or accept a 10% premium on cash
redemption. Accordingly, the Company paid $2.8 million in cash resulting in a premium of $280
thousand and issued 2,047,000 shares of Common Stock for conversion of the Bonds. Also in the
second quarter of 2005, the Company wrote off approximately $68,000 of deferred offering costs
relating to redeemed bonds and allocated approximately $379 thousand of deferred offering costs to
additional paid-in capital for bond conversions. This redemption resulted in a release of
restricted U.S. Treasury Bonds to the Company, having a fair market value of approximately
$5,900,000 and will decrease future annual interest expense by approximately $1,700,000. NOTE 7 CAPITALIZED INTEREST
  NOTE 8CONTINGENCIES
 Litigation
 Gotham Insurance Company v. Warren.
 9




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Repurchase Agreements
   10




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##### Table of Contents



NOTE 9BUSINESS SEGMENT INFORMATION
  Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,
    
    June 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004RevenueTurnkey Contracts
    
    $
    1,324,538
    
    
    $
    2,341,462
    
    
    $
    3,603,855
    
    
    $
    3,250,396Oil and Gas Marketing
    
    
    2,310,421
    
    
    
    1,411,992
    
    
    
    4,506,495
    
    
    
    2,795,567Oil and Gas Operations
    
    
    3,018,765
    
    
    
    1,454,364
    
    
    
    5,195,352
    
    
    
    2,680,839Well Services
    
    
    284,636
    
    
    
    281,327
    
    
    
    825,295
    
    
    
    511,932Other
    
    
    1,027,350
    
    
    
    541,101
    
    
    
    1,951,511
    
    
    
    1,123,814$
    7,965,710
    
    
    $
    6,030,246
    
    
    $
    16,082,508
    
    
    $
    10,362,548
 June 30
    
    June 30,
    
    June 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004Operating Income / (Loss)Turnkey Contracts
    
    $
    (447,475
    )
    
    $
    405,436
    
    
    $
    (216,362
    )
    
    $
    (144,616
    )Oil and Gas Marketing
    
    
    32,068
    
    
    
    35,810
    
    
    
    63,050
    
    
    
    71,166Oil and Gas Operations
    
    
    121,752
    
    
    
    (689,926
    )
    
    
    885,247
    
    
    
    (784,898
    )Well Services
    
    
    112,994
    
    
    
    131,850
    
    
    
    459,264
    
    
    
    250,577Other
    
    
    (1,283,529
    )
    
    
    (780,200
    )
    
    
    (4,101,461
    )
    
    
    (1,532,197
    )$
    (1,464,190
    )
    
    $
    (897,030
    )
    
    $
    (2,910,262
    )
    
    $
    (2,139,968
    )
 NOTE 10COMPREHENSIVE LOSS
  2005
    
    2004Six Months ending June 30,
    
    $
    (3,110,825
    )
    
    $
    (2,536,080
    )Three Months ending June 30,
    
    $
    (1,212,587
    )
    
    $
    (1,800,418
    )
 NOTE 11GOODWILL
 Goodwill and Other Intangible Assets,
 11




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NOTE 12NEW ACCOUNTING PRONOUNCEMENTS
  
 Item 2. Managements discussion and analysis of financial conditions and results of operations
 FORWARD-LOOKING INFORMATION
  OVERVIEW:
   LIQUIDITY AND CAPITAL RESOURCES:
    12




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Contractual Obligations
  Payments due by periodContractual Obligations
    
    
    
    
    
    Less Than
    
    1-3
    
    3-5
    
    More ThanAs of June 30, 2005
    
    Total
    
    1 Year
    
    Years
    
    Years
    
    5 YearsDebentures
 net of sinking fund
requirements
    
    $
    11,408,864
    
    
    $
    1,299,236
    
    
    $
    2,041,037
    
    
    $
    1,832,593
    
    
    $
    6,235,998Debenture sinking fund requirements
    
    
    5,734,636
    
    
    
    415,114
    
    
    
    890,501
    
    
    
    975,964
    
    
    
    3,453,057Leases
    
    
    714,880
    
    
    
    109,053
    
    
    
    431,016
    
    
    
    147,015
    
    
    
    27,796Total
    
    $
    17,858,380
    
    
    $
    1,823,403
    
    
    $
    3,362,554
    
    
    $
    2,955,572
    
    
    $
    9,716,851
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##### Table of Contents



RESULTS OF OPERATIONS:
 Three months Ended June 30, 2005 Compared to Three Months Ended June 30, 2004
 Turnkey contract revenue and expenses.
  Oil and gas sales and costs from marketing activities.
  Well services activities.
  Oil and gas sales.
 Net gain on investments.
 Interest and other income.
 Production & exploration.
 Depreciation, Depletion, Amortization and Impairment.
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##### Table of Contents



General and administrative expenses.
 Interest expense.
 Retirement of debt.
 RESULTS OF OPERATIONS:
 Six months Ended June 30, 2005 Compared to Six Months Ended June 30, 2004
 Turnkey contract revenue and expenses.
  Oil and gas sales and costs from marketing activities.
  Well services activities.
  Oil and gas sales.
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##### Table of Contents



Net gain on investments.
 Interest and other income.
 Production & exploration.
 Depreciation, Depletion, Amortization and Impairment.
 General and administrative expenses.
 Interest expense.
 Retirement of debt. nd st
 Off-Balance Sheet Arrangements
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##### Table of Contents



Amount of repurchase commitment per periodLess Than
    
    1-3
    
    3-5
    
    More Than1 Year
    
    Years
    
    Years
    
    5 Years
    
    Total(in thousands)Maximum potential repurchase
commitment (1)
    
    $
    3,357
    
    
    $
    12,774
    
    
    $
    2,568
    
    
    $
    343
    
    
    $
    19,042
 
 (1)
    
    Based on the partnership reserves taken from the Williamson partnership reserve report as of
December 31, 2004 and using pricing at that date. This report does not include reserves for 9
net wells that are scheduled to be drilled for these programs by the fourth quarter of 2005 or
for the 35 net wells drilled and waiting to be placed on production.  
    
    An increase in the price of oil and natural gas, or an increase in the amount of
proved reserves (from drilling the remaining 9 net wells that are scheduled to be
drilled for these drilling programs during 2005, from the 35 net wells drilled and
waiting to be placed on production, or from other factors) may increase the PV-10
value of the drilling programs and, as a result, increase the price of our
repurchase. After the acquisition of the drilling program interests, oil and
natural gas prices may decline resulting in a decline in the expected future net
cash flow or fair market value of the assets acquired in the repurchase and a
possible recording of impairment expense.
    
    If our existing working capital is inadequate to fund the repurchase of drilling
programs interests, we may be unable to obtain financing, or obtain financing on
terms acceptable to us, to purchase the drilling program interests at their PV-10
value.
 Additional Repurchase Commitments
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##### Table of Contents



Amount of repurchase commitment per periodOther Commitments
    
    Less Than
    
    1-3
    
    4-5
    
    More ThanAs of June 30, 2005
    
    1 Year
    
    Years
    
    Years
    
    5 Years
    
    Total(in thousands)Partnership repurchase commitments:Pre-1998 Partnerships
    
    
    
    
    
    
    
    
    
    $
    42
    
    
    $
    675
    
    
    $
    717
 CRITICAL ACCOUNTING POLICIES
 Oil and Gas Producing Activities
       Revenue Recognition
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##### Table of Contents



Capitalized Interest
  Asset Retirement Obligations
  New Accounting Pronouncements
  
 Item 3. Quantitative and qualitative disclosure about market risk
 Commodity Risk
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##### Table of Contents



Interest Rate Risk
  Inflation and Changes in Prices
  
 Item 4. Evaluation of Disclosure Controls and Procedures
   
 PART IIOTHER INFORMATION
 
 Item 1. Legal Proceedings
 Gotham Insurance Company v. Warren.
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##### Table of Contents



Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
 a.
    
    Not applicableb.
    
    Not applicablec.
    
    Not applicable
 
 Item 3. Defaults upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
  1.
    
    On June 15, 2005, we held our Annual Meeting of Stockholders. At
the meeting, the following two matters
were considered and approved:


a)
    
    Proposal that Chet Borgida, Michael Quinlan and Norman Swanton be elected as directors for a
term expiring at the 2008 annual meeting or until their successors are duly elected; Anthony
Coelho, Dominick DAlleva and Marshall Miller be elected as directors for a term expiring at the
2007 annual meeting or until their successors are duly elected; and Lloyd Davies and Thomas Noonan
be elected as directors for a term expiring at the 2006 annual meeting, or until their successors
are duly elected:


Chet Borgida
    
    
    18,604,618
    
    
    FOR
    
    
    4,153,715
    
    
    WITHHOLDAnthony Coelho
    
    
    22,347,569
    
    
    FOR
    
    
    410,764
    
    
    WITHHOLDDominick DAlleva
    
    
    18,605,824
    
    
    FOR
    
    
    4,152,509
    
    
    WITHHOLDLloyd Davies
    
    
    22,548,104
    
    
    FOR
    
    
    210,229
    
    
    WITHHOLDMarshall Miller
    
    
    18,606,193
    
    
    FOR
    
    
    4,152,140
    
    
    WITHHOLDThomas Noonan
    
    
    22,382,487
    
    
    FOR
    
    
    375,846
    
    
    WITHHOLDMichael Quinlan
    
    
    21,991,098
    
    
    FOR
    
    
    767,235
    
    
    WITHHOLDNorman Swanton
    
    
    22,622,034
    
    
    FOR
    
    
    136,299
    
    
    WITHHOLD


b)
    
    Proposal to ratify the appointment of Grant Thornton LLP as the Companys auditors for 2005:
17,920,121 For; 4,811,507 Against; and 26,705 Abstain.


2.
    
    Effective as of June 30, 2005, the 8% preferred stockholders agreed by greater than the
requisite 66.67% majority to amend their Articles Supplementary filed with the State of
Maryland to allow for a dividend on the preferred stock to be paid in kind with Warren
Resources common stock for the dividends accrued for the quarters
ended March 31 and June 30,
2005, which amount equals $.48 per share, or $3,149,188 in the aggregate. Therefore, in lieu
of paying cash, Warren plans to issue a total of 315,867 shares of its common stock as a
preferred dividend for the quarters ended March 31 and June 30, 2005, after these common shares are registered under a Form S-3
registration statement.


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##### Table of Contents



Item 5. Other Information
  
 Item 6. Exhibits
 a)
    
    ExhibitsExhibits not incorporated by reference to a prior filing are designated by an (*) and are
filed herewith; all exhibits not so designated are incorporated herein by reference to a
prior filing as indicated.
 ExhibitNumber
    
    Description31.1*
    
    Certification of Chief Executive Officer pursuant to Rule 13a-15(e)/15d-15(e)31.2*
    
    Certification of Chief Financial Officer pursuant to Rule 13a-15(e)/15d-15(e)32.1*
    
    Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350,
as adopted by Section 906 of the Sarbanes-Oxley Act of 200232.2*
    
    Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350,
as adopted by Section 906 of the Sarbanes-Oxley Act of 2002
 
 *
    
    Filed herewith. 
 SIGNATURES
  WARREN RESOURCES, INC.
(Registrant)Date: August 9, 2005
    By:
    /s/ Timothy A. LarkinTimothy A. LarkinExecutive Vice President,
Chief Financial Officer and
Principal Accounting Officer 22