Highlights

Oil and gas segment operational results during the third quarter of 2009 included the following:

Quarterly oil and gas production of 134.9million cubic feet of natural gas equivalent (MMcfe) per day, or 12.4 billion cubic feet of natural gas equivalent (Bcfe), representing production growth of six percent from 127.1 MMcfe per day, or 11.7 Bcfe, in the third quarter of 2008 (nine percent less than 148.9 MMcfe per day, or 13.6Bcfe, produced in the second quarter of 2009);

Oil and gas capital expenditures of approximately $16 million, including approximately $8million for drilling and completion activities;

Two (0.8 net) Granite Wash wells drilled, one of which was successful and the other of which is waiting on completion; and

Initiated the process of selling our Gulf Coast properties and expect to complete a transaction during the fourth quarter of 2009. In connection with this divestiture, we incurred a non-cash impairment charge on proved properties held for sale of $87.9 million in the third quarter.

Full-Year 2009 and Preliminary 2010 Guidance Update

Full-year 2009 guidance updates are as follows:

Production guidance of approximately 136 to 140 MMcfe per day, or 49.5 to 51.0 Bcfe, an increase of 1.0 to 1.5 Bcfe over previous guidance due to better than expected third quarter volumes. This production guidance range represents production growth of six to nine percent over 2008 production of approximately 128 MMcfe per day, or 46.9 Bcfe. Based on the first nine months' production of 39.7 Bcfe, we estimate fourth quarter 2009 production to be in the range of approximately 107 to 123 MMcfe per day, or 9.8 to 11.3 Bcfe. The expected sequential decrease in production is due to natural production declines and the expected sale of the Gulf Coast assets; and

Oil and gas capital expenditures guidance of $216.0 to $228.7 million, which is $48.7 to $51.0 million higher than the previous guidance range. The increase in guidance is primarily due to the resumption of PVA-operated drilling in the Lower Bossier (Haynesville) Shale in East Texas and an expanded leasehold acquisition effort in the Marcellus Shale, Granite Wash and Lower Bossier Shale.

As a result of the sale of non-core assets and other financing transactions during 2009, we expect to have over $400 million of available liquidity in the form of cash and equivalents and revolver availability as we enter 2010. Assuming 2010 oil and gas capital expenditures are between $300 and $400 million, or approximately 35 to 80 percent higher than the mid-point of revised 2009 capital expenditures guidance, full-year 2010 production is estimated to be approximately 130 to 140 MMcfe per day, or approximately 47 to 51 Bcfe. This 2010 production guidance range, which reflects the divestiture of our Gulf Coast assets, is approximately five to 14 percent higher than 2009 production guidance, excluding 2009 Gulf Coast production. In December 2009, we will announce our approved 2010 oil and gas capital expenditures budget and production guidance range, along with additional details regarding expected 2010 activities.

Management Comment

A. James Dearlove, President and Chief Executive Officer, said, "We are pleased to have recommenced PVA-operated drilling and look forward to a more active drilling program in 2010 in our core Lower Bossier Shale, Granite Wash and Selma Chalk plays, which should allow us to resume our production growth profile. In addition, we have increased our 2009 capital expenditures outlook by approximately $25 million to fund an expanded Marcellus Shale leasing effort.

"Natural gas prices have begun to show modest signs of improvement in recent weeks and the prospect of a recovery of gas prices in 2010 appears to be increasing. In addition, positive results from Granite Wash and Lower Bossier Shale drilling, along with our improved financial liquidity, have given us the confidence to resume drilling. As a result, we have provided preliminary 2010 capital expenditures guidance of $300 to $400 million and production growth of five to 14 percent."

Third Quarter 2009 Operational Results

Production in the third quarter of 2009 was 134.9 MMcfe per day, or 12.4 Bcfe, an increase of sixpercent over the 127.1 MMcfe per day, or 11.7 Bcfe, in the third quarter of 2008. Production in the third quarter of 2009 was nine percent lower than 148.9 MMcfe per day, or 13.6 Bcfe, in the second quarter of 2009 due to natural production declines and significantly reduced drilling activity.

The realized natural gas price, prior to the impact of derivatives, during the third quarter of 2009 was $3.45 per thousand cubic feet (Mcf), 66 percent lower than the $10.14 per Mcf natural gas price in the third quarter of 2008 and onepercent lower than the $3.49 per Mcf natural gas price in the second quarter of 2009. The realized oil price, prior to the impact of derivatives, during the third quarter of 2009 was $65.64 per barrel, 44percent lower than the $117.64 per barrel oil price in the third quarter of 2008 and 19 percent higher than the $55.00 per barrel oil price in the second quarter of 2009.