Mariner's Second-quarter Profit Edges Upward

Mariner Energy, Inc. late Thursday announced financial results for the second quarter 2007 and provided an operational update.

Production, revenue and net income for the second quarter 2007 increased over the second quarter 2006 due to restoration of production from fields shut-in by Hurricanes Katrina and Rita as well as steady organic growth across Mariner's asset base.

--Net income totaled $33.0 million for the second quarter 2007, an increase of 7% from the second quarter 2006.
--Basic and diluted earnings per share (EPS) for the second quarter 2007 were $0.38 for each measure, compared to $0.36 for each measure in the second quarter 2006.
--Net production was in line with Mariner's expectation at 24.6 billion cubic feet equivalents of natural gas (Bcfe) for the second quarter 2007, an increase of 15% from the same period last year.
--Revenue totaled $213 million for the second quarter 2007, an increase of 27% from the second quarter 2006.
--Mariner reaffirms its original 2007 production guidance within a range of 105 to 115 Bcfe, or 30-42% over 2006.

NET INCOME AND EARNINGS PER SHARE

Second quarter 2007 net income was $33.0 million compared to $30.7 million for the second quarter 2006, an increase of 7%. The increase was primarily due to restored incremental production from several fields previously shut-in from the 2005 hurricanes and organic growth, offset by an increase in operating costs and interest expense. Basic and fully-diluted EPS for the second quarter 2007 were $0.38 for each measure, compared to $0.36 for each measure in the second quarter 2006.

NET PRODUCTION AND PRICING

For the second quarter 2007, Mariner reported net production of 24.6 Bcfe compared to 21.3 Bcfe for the second quarter 2006, an increase of 15%. Total natural gas net production was 16.4 billion cubic feet (Bcf) at an average realized price including the effects of hedging of $8.18 per thousand cubic feet (Mcf), compared to 14.8 Bcf for the second quarter 2006 at an average realized price including the effects of hedging of $7.13/Mcf. Total oil net production was 1.08 million barrels (MMBbls) at an average realized price including the effects of hedging of $61.69 per barrel (Bbl), compared to 0.79 MMBbls in the second quarter 2006 at an average realized price including the effects of hedging of $64.79/Bbl. Natural gas liquids (NGL) net production was 0.28 MMBbls at an average realized price of $40.51/Bbl compared to 0.29 MMBbls in the second quarter 2006 at an average realized price of $33.66/Bbl.

REVENUES

Second quarter 2007 total revenues were $213 million compared to $168 million for second quarter 2006, an increase of 27%. Settlements under Mariner's hedge positions in the second quarter 2007 resulted in a gain of $6.9 million in the second quarter 2007 compared to a loss of $1.8 million in the second quarter 2006. In both the second quarter 2007 and the second quarter 2006, natural gas comprised 63% of total revenues.

OPERATING AND GENERAL & ADMINISTRATIVE EXPENSES

Lease Operating Expense and Production Taxes

Lease operating expense (LOE) in the second quarter 2007 totaled $40.3 million, or $1.64 per thousand cubic feet equivalent of natural gas (Mcfe) compared to $22.6 million, or $1.07/Mcfe, in the second quarter 2006. The increase in LOE year-over-year is due to expenses associated with Mariner's restoration of shelf production from several fields that during the second quarter 2006, remained shut-in due to the 2005 hurricanes. Due to increases in windstorm insurance premiums and a more active workover schedule during the second half of 2007, the Company now estimates LOE running between $39 million and $42 million per quarter, equating to a yearly average of between $1.40/Mcfe and $1.50/Mcfe for 2007, based on the number of projects scheduled to commence production before year-end.

In addition, severance and ad valorem taxes in the second quarter 2007 totaled $2.9 million or $0.12/Mcfe, compared to $1.8 million or $0.08/Mcfe in the second quarter 2006. These production taxes are expected to remain fairly constant at an average of $0.12/Mcfe for 2007.

General & Administrative Expense

General and administrative (G&A) expense for the second quarter 2007 totaled $11.4 million, or $0.46/Mcfe. This compares to $7.0 million, or $0.33/Mcfe, in the second quarter 2006. G&A expense in the second quarter 2007 increased primarily due to additional personnel, payroll taxes on restricted stock vesting during the quarter, professional fees associated with our Sarbanes/Oxley compliance efforts, audit fees and routine litigation matters. For the full year 2007, Mariner reaffirmed its G&A expense guidance of $0.29 to $0.36 per Mcfe, inclusive of stock compensation expense.

OTHER INCOME (EXPENSE)

Other expenses of $0.4 million in the second quarter 2007 reflect expenses attributable to Mariner's 2006 acquisition of the Forest Gulf of Mexico operations.

OPERATIONAL UPDATE

Offshore -- Mariner drilled eight offshore wells in the second quarter 2007, six of which were successful. Information regarding the successful wells is shown below:




                                                Water
                                    Working     Depth
    Well Name           Operator    Interest    (Ft)   Location
    HI A467 A1ST1       Mariner       100%      185    Conventional Shelf
    WC 252 #1           EPL            25%       82    Conventional Shelf
    BA A24 #1           Hydro          20%      142    Deep Shelf
    HI A467 A17         Mariner       100%      185    Conventional Shelf
    VR 261 A4ST1        Mariner        86%      157    Conventional Shelf
    EI 354 A6ST1        Devon          17%      265    Conventional Shelf


As of June 30, 2007, three offshore wells were drilling. CAPITAL EXPENDITURES

Mariner's capital expenditures for the three-month periods ended June 30, 2007 and 2006, are summarized below:


                                                          Three Months Ended
                                                               June 30,
                                                          2007          2006
                                                        (Dollars in Millions)
    Oil and Natural Gas Exploration                      $59.5         $92.3
    Oil and Natural Gas Development                      102.7          75.0
    Acquisitions/Dispositions/Other                        2.7           4.4
     Total Capital Expenditures                         $164.9        $171.7


Scott D. Josey, the Company's Chairman and Chief Executive Officer, commented on the quarter noting:

"The groundwork has been laid and we anticipate a significant increase in production from known projects, most of which we operate. Provided these projects come online as we expect, and excluding the effects of our natural decline rates, we anticipate adding 70-100+ MMcfe per day of net production for the second half of 2007 and an additional 50-75 MMcfe per day from our deepwater projects at Northwest Nansen and Bass Lite in the first half of 2008."

Mariner Energy, Inc. is an independent oil and gas exploration, development and production company headquartered in Houston, Texas, with principal operations in the Gulf of Mexico and West Texas.

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