Mariner Posts Strong Profit Growth for Third Quarter

Mariner Energy has reported record quarterly income, revenues and production for the three-month period ended September 30, 2008. Net income for third quarter 2008 was $64.7 million, an increase of 187% compared with the same period of 2007. Fully-diluted earnings per share (EPS) increased 181% to $0.73.

Third-quarter earnings include a non-cash provision for an additional retrospective insurance premium equating to $0.05 per share in connection with Mariner's membership in OIL Insurance Limited, an energy industry insurance cooperative. This compares with $0.26 fully-diluted EPS reported for third quarter 2007.

Other financial and operational highlights for third quarter 2008 include:

• Total revenues increased to $317.9 million, up from the $196.5 million reported for the third quarter a year ago.
• Net cash provided by operations for the nine-month period ended September 30, 2008 increased 114% to $861.8 million, up from $402.5 million for the same period in the prior year.
•  Three of five offshore wells drilled during the quarter were successful.
• 100% success rate on 29 Permian Basin wells drilled.
• Production increased to 27.1 billion cubic feet equivalent (Bcfe), an average of 294 million cubic feet of natural gas equivalent per day (MMcfe/d), which includes the effects of hurricane shut-ins that postponed the production of an estimated 7-9 Bcfe. This is up from 2007 third-quarter production of 23.2 Bcfe (approximately 252 MMcfe/d).

Additionally, Mariner reported that it expects its daily production rate to approach pre-hurricane levels of approximately 390 MMcfe/d by year end, as repairs are made primarily to third-party pipelines and processing facilities. As a result of hurricane shut-ins, the company expects its total production for 2008 to range from 120 - 123 Bcfe, down from its original guidance range of 130 - 140 Bcfe. The company expects no material loss of reserves due to the effects of the hurricane and that most of the production shortfall will be deferred into 2009.

Scott D. Josey, Chairman, Chief Executive Officer and President of Mariner Energy, commented, "Mariner delivered improved year-over-year quarterly results in earnings and production, despite back-to-back hurricanes in September that are still affecting the industry in the Gulf of Mexico. Mariner is on track for significant growth this year and poised for additional growth in 2009 with the onset of production from three new deepwater fields - Geauxpher, Daniel Boone, and Viosca Knoll 821. We recently made another deepwater discovery, Dalmatian in De Soto Canyon block 48, and we have additional opportunities in the area."

Josey added, "I believe the company is well positioned both operationally and financially. We have a rich opportunity set, ample liquidity in our borrowing base, and we consistently strive to maintain our capital spending within our cash flow. We believe the business model that has served the company well in the past will continue to do so going forward."

THIRD QUARTER 2008 RESULTS

Third quarter 2008 net income was $64.7 million, compared with $22.5 million for the same period in 2007. Basic and fully-diluted EPS for third quarter 2008 were $0.74 and $0.73, respectively, up from the $0.26 basic and fully-diluted EPS reported for third quarter 2007.

Mariner's third quarter 2008 net production was 27.1 Bcfe, a 17% increase from 23.2 Bcfe for third quarter 2007. Net natural gas production for third quarter 2008 was 18.4 billion cubic feet (Bcf), an 18% increase compared with the 15.5 Bcf reported for third quarter 2007. Net oil production for third quarter 2008 was up 7% to 1.05 million barrels (MMBbls), compared with 0.99 MMBbls for the same period in 2007. Net natural gas liquids (NGL) production for third quarter 2008 was 0.40 MMBbls, a 38% increase compared with the 0.29 MMBbls reported for third quarter 2007.

For third quarter 2008, Mariner's average realized natural gas price was $10.50 per thousand cubic feet (Mcf), compared with $7.18 per Mcf for the same period in 2007. Mariner's average realized oil price was $92.97 per barrel (Bbl) for third quarter 2008, compared with $70.68 per Bbl for the same period in 2007. The third quarter 2008 average realized NGL price was $61.05 per Bbl, compared with $49.02 per Bbl for third quarter 2007. Average realized prices reflect settlements during the period under Mariner's hedging program.

Mariner provides additional information regarding its hedging activities in quarterly and annual reports filed with the Securities and Exchange Commission (SEC).

OPERATIONAL UPDATE

Offshore

Mariner drilled five offshore wells during the third quarter of 2008, three of which were successful: Well Name Working Water Depth Operator Interest (Ft) Location Garden Banks 462#2 (Geauxpher) Mariner 60.0% 2815 Deepwater Vermilion 380 A21 Mariner 100.0% 340 Conventional Shelf East Cameron 14#13 Mariner 50.0% 34 Conventional ShelfMariner has been successful on 13 out of 17 offshore wells drilled during the first nine months of 2008. As of September 30, 2008, seven offshore wells were drilling, and Mariner expects to spud four additional wells by year-end.

Onshore

In the third quarter of 2008, Mariner drilled 29 wells in the Permian Basin, all of which were successful. As of September 30, 2008, five rigs were running on Mariner's Permian Basin properties. Subsequent to the end of the third quarter period, Mariner drilled five additional onshore wells, all of which were successful. The company has participated in 104 onshore wells through mid-October 2008 and expects to spud approximately 120 onshore wells this year.