ATP Reports Second Quarter Results and Operational Update

ATP Oil & Gas Corporation (NASDAQ:ATPG) today announced second quarter 2007 results and an operational update: Achieved quarterly production of 160.3 MMcfe per day resulting in revenue of $132.2 million; Achieved net income of $6.1 million or $0.20 per basic and diluted share; Drilled and completed Wenlock W1 well in the U.K. sector North Sea with a company record 3,900’ horizontal completion and flowed at the limit of the test equipment; Placed two wells on production at Ship Shoal 351 in the Gulf of Mexico and expanded the development plan to include two additional extension wells; Successful well test of the Mississippi Canyon 711 #8 well which flowed at the limit of the test equipment; Increasing throughput capacity of Gomez Hub to approximately 200 MMcfe per day, gross; Finalizing the tie-in of the fourth and fifth wells at our Gomez Hub. Results of Operations During the second quarter of 2007, production increased 8% to 14.6 Bcfe (160.3 MMcfe per day) from the comparative period in 2006 while revenues from production increased 21% to $132.2 million during this same period. Price realizations reflect an overall 12% increase in our average sales price per Mcfe from $8.05 for the second quarter 2006 to $9.05 for the second quarter 2007. For the first half of 2007 compared to the same period in 2006, production increased 57% to 30.5 Bcfe, revenue increased 79% to $276.6 million, and price realizations have risen 15% to $9.07 per Mcfe. Lease operating expenses ("LOE”) for the second quarter of 2007 decreased to $20.1 million ($1.38 per Mcfe) from $21.3 million ($1.57 per Mcfe) in the second quarter of 2006. The 2006 period included costs related to hurricane repairs performed on certain of our oil and gas properties in the Gulf of Mexico. The 2007 period included increased costs primarily attributable to the production gains noted above, higher insurance premiums and costs associated with our increased ownership in the Canyon Express Pipeline. For the first six months of 2007 compared to the same period in 2006, LOE per Mcfe has decreased from $1.64 to $1.35. General and administrative expense ("G&A”) decreased 11% to $6.6 million for the second quarter of 2007 compared to $7.4 million for the same period of 2006, primarily due to noncash compensation, related charges and professional fees, partially offset by higher general office costs. Included in G&A is noncash stock-based compensation expense of $1.7 million and $3.3 million for the three months ended June 30, 2007 and 2006, respectively. ATP recorded a net tax benefit of $1.1 million during the quarter ended June 30, 2007 related to our foreign jurisdictions, based on the expected 2007 effective tax rate of each jurisdiction. The rates were determined based on the projected results of operations for the year, the valuation allowance released and permanent differences affecting the overall tax rate in each foreign jurisdiction. In the comparable quarter of 2006, we recorded a tax provision of $3.3 million related to our foreign jurisdictions. In the U.S., the tax provision recorded on our book income for both periods was offset by a partial release of the valuation allowance. For the second quarter 2007, ATP reported net income available to common shareholders of $6.1 million, or $0.20 per basic and diluted share, as compared with a net income available to common shareholders of $6.4 million, or $0.21 per basic and diluted share for the second quarter 2006. Second quarter net income available to common shareholders was impacted by a previously announced exploration expense of $10.6 million. In addition, ATP recorded impairment expense of $5.8 million. Research analysts typically exclude the nonrecurring impairment charge from their published estimates. Accordingly, after adjusting for impairment expense, ATP had net income available to common shareholders of $11.9 million or $0.40 and $0.39 per basic and diluted share. A reconciliation of non-GAAP net income for the quarter can be found near the end of this press release. The company's selected operating statistics and financial information included within this press release contains additional information on activities for the second quarter and the comparable 2006 period. Three Months Ended Six Months Ended June 30, June 30, 2007   2006 2007   2006 Selected Operating Statistics   Production Natural gas (MMcf) 8,426 8,621 18,250 13,654 Gulf of Mexico 6,937 5,142 13,074 9,568 North Sea 1,489 3,479 5,176 4,086 Oil and condensate (MBbls) 1,027 816 2,039 966 Gulf of Mexico 1,024 808 2,029 957 North Sea 3 8 10 9 Natural gas equivalents (MMcfe) 14,590 13,518 30,486 19,452 Gulf of Mexico 13,082 9,989 25,251 15,315 North Sea 1,508 3,529 5,235 4,137   Average Prices (includes effect of cash flow hedges) Natural gas (per Mcf) $ 8.24 $ 7.06 $ 8.74 $ 7.28 Gulf of Mexico 8.47 7.48 8.47 7.44 North Sea 7.19 6.44 9.40 6.89 Oil and condensate (per Bbl) 60.80 58.85 57.48 56.64 Natural gas, oil and condensate (per Mcfe) 9.05 8.05 9.07 7.92   Other Expenses, per Mcfe Lease operating expense (per Mcfe) $ 1.38 $ 1.57 $ 1.35 $ 1.64 Gulf of Mexico 1.25 1.65 1.26 1.72 North Sea 2.45 1.35 1.77 1.35 Depreciation, depletion and amortization (DD&A) 3.61 3.20 3.48 3.11 Gulf of Mexico 3.52 3.15 3.32 3.04 North Sea 4.32 3.34 4.22 3.38   Selected Financial Data (In Thousands, Except Per Share Data)   Oil and gas revenues, including settled derivatives (1) $ 131,919 $ 108,877 $ 276,593 $ 154,102 Net income (loss) 6,125 17,360 33,559 14,315 Preferred dividends - (10,986 ) - (17,804 ) Net income (loss) available to common shareholders 6,125 6,374 33,559 (3,489 )   Net income (loss) per common share - basic $ 0.20   $ 0.21   $ 1.12   $ (0.12 ) Net income (loss) per common share - diluted   0.20     0.21     1.10     (0.12 )   Average number of common shares outstanding Basic   30,058     29,715     30,031     29,576   Diluted   30,639     30,396     30,612     30,302     (1) See oil and gas revenue reconciliation toward the end of this press release. Operations and Development Gulf of Mexico Mississippi Canyon ("MC”) 711 (Gomez - 100% Working Interest) – During the second quarter, we successfully drilled the MC 711 #8 well. The well encountered high quality sands in the 3750B and 3750C interval. The well flowed at the limit of the testing equipment, 28 MMcfe per day. We anticipate booking additional proved reserves at year end Gomez because of the results of this well. ATP is currently upgrading processing and compression capacity on the ATP Innovator to approximately 200 MMcfe per day, gross. The capacity upgrade began at the end of May with a complete shut-down of the facility for 18 days. For the remainder of June and the beginning of July, the ATP Innovator handled production from Gomez at a reduced rate. A second complete shut-down of the facility began on July 18th and ended on August 5th when Gomez was placed back on production. In total the ATP Innovator was shut-down for 37 days, a period shorter than our expected shut-down of 45 days. During the third quarter of 2007, the MC 755 (Anduin) #2 and MC 711 #8 wells will be tied back and brought on production. In the second half of 2008, the operator of MC 800 and MC 754 is planning to drill exploratory targets in these blocks. If successful, these exploratory targets will be brought on production through the ATP Innovator. ATP owns a 50% W.I. in MC 754 and a 25% W.I. in MC 800. Ship Shoal ("SS”) 351 (100% Working Interest) – ATP achieved successful drilling results in two wells at SS 351 and expanded its drilling program at this property from two wells to four wells. The first two wells at SS 351 are currently producing. The third well, SS 351 #A4, is expected to start producing in the third quarter, bringing net field production from approximately 10 MMcfe per day to approximately 17 MMcfe per day. High Island ("HI”) A-589 (100% Working Interest) - ATP is currently developing HI A-589 using a fixed production platform. The company completed construction of the jacket and deck in the second quarter 2007 and installation was completed in July of this year. ATP is planning to drill up to two wells at this location and we expect first production in the first quarter of 2008. Telemark Hub - MC 941/942 and Atwater Valley ("AT”) 63 (100 % Working Interest) - ATP commenced the construction of a MinDOC (Deep Draft Floating Platform) for use at MC 941/942 and AT 63. Drilling at MC 941/942 will occur via a platform rig to be located on the MinDOC. The AT 63 well is expected to be drilled from a floating drilling unit. The subsea well at AT 63 will be tied into the MinDOC and the MinDOC will serve as the primary production facility for MC 941/942 and AT 63. Construction of the hull is underway in Texas and construction of the topside is progressing in Louisiana. The MinDOC sail-out is currently scheduled for the summer of 2008 with first production late in the same year. North Sea Tors – Kilmar & Garrow (85% Working Interest) – ATP produces from three wells at Tors, the most recent of which (G1) was placed on production in February of 2007. ATP is currently drilling a fourth well (K3) at Tors. The K3 well is expected to be completed and on production in the fourth quarter 2007 and is expected to initially expand production at the Tors field to 60-80 MMcfe per day, net. Production at the Tors field was voluntarily curtailed during the second quarter due to seasonally low natural gas prices in the U.K. As favorable prices return during the third and fourth quarters, Tors production should increase to 60-80 MMcfe per day, net. Wenlock (100% Working Interest) - ATP successfully completed and tested the W1 well in July 2007 with a company record 3,900’ horizontal completion. The W1 well encountered additional sands in an exploratory target across a fault and tested at the limit of the test equipment with a flow rate of 58 MMcf per day. In the coming months, ATP will dewater, hydrostatically test and tie-in the 27-kilometer pipeline to bring the field onto production. First production is scheduled for the fourth quarter of 2007 at a rate of approximately 60 MMcfe per day, net. Beyond the existing well, further upside is expected from two additional drilling opportunities which are currently under evaluation in the vicinity of Wenlock. Helvellyn (50% Working Interest) - Helvellyn was returned to production at 9 MMcfe per day, net, in July following its planned summer shut-in and should remain on production through next winter. Production Update Production for the second quarter averaged approximately 160 MMcfe per day, a rate higher than had been expected. In spite of the complete shut-down for 18 days of Gomez during the quarter due to the ATP Innovator expansion, Gulf of Mexico oil production from the first quarter 2007 to the second quarter 2007 increased from 11.1 MBbls per day to 11.3 MBbls per day. ATP previously forecasted production of approximately 10 MMcf per day in the North Sea due to voluntary curtailments. Natural gas volumes produced during the quarter exceeded volumes hedged at the end of the first quarter, rising to 16.5 MMcf per day. Production was increased to take advantage of new hedges in the North Sea and a higher-than-forecast natural gas price. Based on the company’s current production capacity, including the ATP Innovator capacity upgrade and the new wells scheduled to commence production during the second half 2007, estimated production for the third and fourth quarters of 2007 is expected to exceed production for each of the previous quarters in 2007. ATP is on target to exit 2007 at a production rate in excess of 300 MMcfe per day, net. Acquisitions Update Since the beginning of 2007, ATP has closed transactions covering 8 blocks in the Gulf of Mexico. In July 2007, ATP acquired the remaining 22% interest in South Timbalier 77 and the remaining 44% interest in High Island 74, both producing properties operated by ATP. ATP also acquired a 100% interest in Ship Shoal 350 adjacent to the previously discussed Ship Shoal 351. Future development plans for each of these properties are currently being finalized. Additionally, ATP is in discussions with parties regarding potential acquisitions and divestitures of other properties, including the sell down of a portion of ATP’s working interest in certain properties, in both the Gulf of Mexico and the North Sea. ATP expects to continue to pursue opportunities that meet its acquisition and divestiture strategy. Coupled with extension well discoveries at existing locations, ATP estimates these acquisitions have added approximately 80 Bcfe of recoverable hydrocarbons to its portfolio of properties in 2007. Proved and probable reserves associated with these acquisitions and extension well discoveries are being evaluated by ATP’s independent reserve engineers and will be reported in conjunction with the annual 2007 year-end reserve report. Hedging Update In total for the second half of 2007, and for 2008 and 2009, ATP has 103 Bcfe hedged at an average price of $9.09 per Mcfe, representing potential future revenue of $938 million. Since its first quarter earnings press release dated May 10, 2007, ATP has hedged an additional 8.8 Bcfe for 2007 and 2008. Included in these hedges are 548 thousand barrels of crude oil fixed forward sales at prices ranging from $73.00 per Bbl to $73.45 per Bbl and 5.5 Bcf of U.K. natural gas swaps at prices ranging from $6.12 to $10.20 per Mcf. A detailed listing of all of our hedges is provided near the end of this press release. ATP entered into its first currency hedge on July 26, 2007. The currency swap locks in a $2.049 USD/GBP exchange rate for GBP 33 million, protecting $67.6 million in projected cash flow from our U.K. subsidiary. A complete listing of the company’s currency hedge positions can be found near the end of this press release. Capital Resources and Liquidity Cash flow from operating activities was $177.5 million during the first six months of 2007, compared to $46.6 million in cash flow from operating activities for the same 2006 period. Cash flow from operating activities prior to changes in assets and liabilities, a non-GAAP measure frequently used by research analysts, was $175.1 million for the first six months of 2007, compared to $91.1 million for the same 2006 period. A reconciliation of non-GAAP cash flow from operating activities prior to changes in assets and liabilities can be found near the end of this press release. ATP had $132.6 million in cash and cash equivalents on hand at June 30, 2007, compared to $182.6 million at December 31, 2006. Cash paid for acquisition and development activities for the six months ended June 30, 2007 was $390.0 million, compared to $203.4 million for the same period in 2006. At June 30, 2007, ATP had a GAAP working capital deficit of $24.9 million, compared to working capital of $77.5 million at December 31, 2006. At June 30, 2007, ATP had positive working capital per its credit agreement of $49.6 million, which includes ATP’s $50 million fully available and un-drawn revolver. ATP previously announced that it was evaluating an MLP or similar partnership structure for certain of its platform and pipeline assets. ATP completed its preliminary evaluation in June and determined that this initiative may be achievable and, if successful, might provide advantages for the Company. ATP continues to work to identify both the assets and a structure that may be appropriate. 2nd Quarter 2007 Conference Call ATP Oil & Gas Corporation will host a live conference call on Thursday, August 9th at 10:00 am central time. Chairman and President T. Paul Bulmahn, Senior Vice President Gerald W. Schlief, Chief Operating Officer Leland E. Tate and Chief Financial Officer Albert L. Reese, Jr. will discuss the company’s first quarter results followed by a Q&A session. Date: Thursday, August 9, 2007 Time: 11:00 am ET; 10:00 am CT; 9:00 am MT and 8:00 am PT ATP invites interested persons to listen to the live Internet webcast on the company’s website, www.atpog.com, linking through the Investor Info page and the Conference Calls link. Phone participants should dial (888) 202-2422. The audio download file in MP3 format will be released within 48 hours of the call. A digital replay of the conference call will be available at (888) 203-1112, ID number 2875473, for a period of 24 hours beginning at 1:00 pm CT, and the webcast will be archived for 30 business days at www.atpog.com. About ATP Oil & Gas ATP Oil & Gas is an international offshore oil and gas development and production company with operations in the Gulf of Mexico and the North Sea. The company trades publicly as ATPG on the Nasdaq Global Select Market. For more information about ATP Oil & Gas, visit www.atpog.com. Forward-looking Statements Certain statements included in this news release are "forward-looking statements” under the Private Securities Litigation Reform Act of 1995. ATP cautions that assumptions, expectations, projections, intentions, or beliefs about future events may, and often do, vary from actual results and the differences can be material. Some of the key factors which could cause actual results to vary from those ATP expects include changes in natural gas and oil prices, the timing of planned capital expenditures, availability of acquisitions, uncertainties in estimating proved reserves and forecasting production results, operational factors affecting the commencement or maintenance of producing wells, the condition of the capital markets generally, as well as our ability to access them, and uncertainties regarding environmental regulations or litigation and other legal or regulatory developments affecting our business. The SEC has generally permitted oil and gas companies, in filings made with the SEC, to disclose only proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. We and our independent third party reservoir engineers use the terms "probable" and "possible” and we use the term "recoverable hydrocarbons” to describe volumes of reserves potentially recoverable through additional drilling or recovery techniques that the SEC's guidelines may prohibit us from including in filings with the SEC. These estimates are by their nature more speculative than estimates of proved reserves. All estimates of probable and possible reserves in this news release have been prepared by our independent third party engineers and all estimates of recoverable hydrocarbons have been prepared by management. More information about the risks and uncertainties relating to ATP's forward-looking statements are found in our SEC filings. CONSOLIDATED BALANCE SHEETS (In Thousands)   June 30, December 31, 2007 2006 Assets   Current assets: Cash and cash equivalents $ 132,602 $ 182,592 Restricted cash 28,122 27,497 Accounts receivable (net of allowances of $382 and $409) 73,560 105,030 Deferred tax asset 1,259 1,113 Derivative asset 5,310 1,170 Other current assets   8,401     9,931   Total current assets   249,254     327,333     Oil and gas properties: Oil and gas properties (using the successful efforts method of accounting) 2,010,936 1,539,352 Less: Accumulated depletion, impairment and amortization   (557,095 )   (443,707 ) Oil and gas properties, net   1,453,841     1,095,645     Furniture and fixtures, net 1,013 1,079 Deferred tax asset 1,417 - Derivative asset 5,902 - Deferred financing costs, net 18,579 13,272 Other assets, net   7,230     9,729     34,141     24,080   Total assets $ 1,737,236   $ 1,447,058     Liabilities and Shareholders' Equity   Current liabilities: Accounts payable and accruals $ 220,678 $ 195,846 Current maturities of long-term debt 12,737 8,987 Current maturities of long-term capital lease - 23,699 Asset retirement obligation 17,064 21,297 Other current liabilities   23,668     -   Total current liabilities 274,147 249,829   Long-term debt 1,252,335 1,062,454 Asset retirement obligation 104,551 87,092 Deferred tax liability 19,843 11,765 Other long-term liabilities   3,468     -   Total liabilities   1,654,344     1,411,140     Shareholders' equity: Preferred stock: $0.001 par value - - Common stock: $0.001 par value 30 30 Additional paid-in capital 155,853 151,467 Accumulated deficit (107,122 ) (140,681 ) Accumulated other comprehensive income 35,042 26,013 Treasury stock, at cost   (911 )   (911 ) Total shareholders' equity   82,892     35,918   Total liabilities and shareholders' equity $ 1,737,236   $ 1,447,058   CONSOLIDATED INCOME STATEMENTS (In Thousands, Except Per Share Amounts)   Three Months Ended Six Months Ended June 30, June 30, 2007 2006 2007 2006   Oil and gas revenues $ 132,153 $ 108,885 $ 276,902 $ 154,130 Other revenues   -     -     1,598     -   Total revenues   132,153     108,885     278,500     154,130     Costs and operating expenses: Lease operating 20,105 21,259 41,174 31,952 Exploration 10,605 367 11,336 508 General and administrative 6,572 7,375 15,340 15,360 Depreciation, depletion and amortization 52,612 43,249 106,012 60,519 Impairment of oil and gas properties 5,770 - 5,770 - Accretion of asset retirement obligation 3,020 1,671 5,980 3,218 Loss on abandonment   2     3,451     79     3,506   Total costs and operating expenses   98,686     77,372     185,691     115,063   Income from operations   33,467     31,513     92,809     39,067     Other income (expense): Interest income 2,550 1,207 4,618 1,780 Interest expense   (31,025 )   (12,097 )   (57,824 )   (23,269 ) Total other income (expense)   (28,475 )   (10,890 )   (53,206 )   (21,489 )   Income (loss) before income taxes   4,992     20,623     39,603     17,578   Income tax expense: Current 22 (1,841 ) (34 ) (1,841 ) Deferred   1,111     (1,422 )   (6,010 )   (1,422 ) Total   1,133     (3,263 )   (6,044 )   (3,263 )   Net income (loss)   6,125     17,360     33,559     14,315     Preferred dividends   -     (10,986 )   -     (17,804 )   Net income (loss) available to common shareholders $ 6,125   $ 6,374   $ 33,559   $ (3,489 ) Net income (loss) per common share: Basic $ 0.20   $ 0.21   $ 1.12   $ (0.12 ) Diluted   0.20     0.21     1.10     (0.12 )   Weighted average common shares outstanding: Basic   30,058     29,715     30,031     29,576   Diluted   30,639     30,396     30,612     30,302   CONSOLIDATED CASH FLOW DATA (In Thousands)   Six Months Ended June 30, 2007 2006   Cash flows from operating activities: Net income (loss) $ 33,559 $ 14,315 Adjustments to operating activities 141,536 76,799 Changes in assets and liabilities   2,434     (44,527 ) Net cash provided by operating activities   177,529     46,587     Cash flows from investing activities: Additions to oil and gas properties (389,972 ) (203,445 ) Additions to furniture and fixtures (207 ) (250 ) Increase in restricted cash   1     129   Net cash used in investing activities   (390,178 )   (203,566 )   Cash flows from financing activities: Proceeds from long-term debt 375,000 178,500 Principal payments of long-term debt (181,369 ) (875 ) Deferred financing costs (8,445 ) (11,116 ) Issuance of preferred stock, net of related costs - 145,463 Principal payments of capital lease (23,950 ) (20,869 ) Exercise of stock options   1,140     4,231   Net cash provided by financing activities   162,376     295,334     Effect of exchange rate changes on cash   283     (1,112 )   Net increase (decrease) in cash and cash equivalents (49,990 ) 137,243 Cash and cash equivalents, beginning of period   182,592     65,566     Cash and cash equivalents, end of period $ 132,602   $ 202,809   Hedges, Derivatives and Fixed Price Contracts   2007 2008 1Q   2Q   3Q   4Q   FY 1Q   2Q   3Q   4Q   FY Gulf of Mexico Fixed Forwards Natural Gas Volumes (MMMBtu) 2,255 3,175 2,740 3,648 11,818 4,078 3,625 2,740 2,745 13,188 Price ($/MMBtu) $ 9.81 $ 8.17 $ 8.24 $ 8.40 $ 8.57 $ 8.45 $ 7.98 $ 8.09 $ 8.43 $ 8.24 Crude Oil Volumes (MBbls) 297 346 396 580 1,618 455 455 276 276 1,462 Price ($/Bbl) $ 69.61 $ 70.74 $ 70.90 $ 71.64 $ 70.90 $ 71.75 $ 71.75 $ 70.76 $ 70.76 $ 71.38 Equivalents Volumes (MMMBtue) 4,037 5,250 5,114 7,126 21,526 6,808 6,355 4,396 4,401 21,960 Price ($/MMBtue) $ 10.60 $ 9.60 $ 9.90 $ 10.13 $ 10.03 $ 9.86 $ 9.69 $ 9.49 $ 9.69 $ 9.70   Puts Crude Oil Volumes (MBbls) 585 91 92 92 860 619 619 626 626 2,489 Floor Price ($/Bbl) $ 57.88 $ 60.00 $ 60.00 $ 60.00 $ 58.56 $ 54.68 $ 54.68 $ 54.68 $ 54.68 $ 54.68   North Sea Fixed Forwards & Swaps Natural Gas Volumes (MMMBtu) 2,700 1,510 2,760 5,830 12,800 6,970 3,640 3,680 4,784 19,074 Price ($/MMBtu) $ 12.95 $ 7.36 $ 6.81 $ 9.42 $ 9.36 $ 9.69 $ 6.62 $ 6.62 $ 8.33 $ 8.17   2009 1Q   2Q   3Q   4Q   FY Gulf of Mexico Fixed Forwards Natural Gas Volumes (MMMBtu) 2,700 1,815 1,830 1,830 8,175 Price ($/MMBtu) $ 8.60 $ 7.56 $ 7.57 $ 8.10 $ 8.03 Crude Oil Volumes (MBbls) 180 182 184 184 730 Price ($/Bbl) $ 66.23 $ 66.23 $ 66.23 $ 66.23 $ 66.23 Equivalents Volumes (MMMBtue) 3,780 2,907 2,934 2,934 12,555 Price ($/MMBtue) $ 9.29 $ 8.87 $ 8.87 $ 9.21 $ 9.08   Puts Crude Oil Volumes (MBbls) 369 373 377 377 1,497 Floor Price ($/Bbl) $ 54.00 $ 54.00 $ 54.00 $ 54.00 $ 54.00   North Sea Fixed Forwards & Swaps Natural Gas Volumes (MMMBtu) 3,780 - - - 3,780 Price ($/MMBtu) $ 8.07 $ - $ - $ - $ 8.07   Exchange rate = 2.04 USD/GBP The above are hedges, derivatives and fixed price contracts that are currently in effect or have settled prior to such date. Additional hedges, derivatives and fixed price contracts, if any, will be announced during the year.   Recent North Sea Gas Swaps: May 17, 2007: 20,000 MMBtu/d June 2007 to September 2007 at GBP 3.00/MMBtu ($6.12/MMBtu) May 17, 2007: 7,000 MMBtu/d October 2008 to March 2009 at GBP 3.00/MMBtu ($6.12/MMBtu) July 11, 2007: 10,000 MMBtu/d January 2008 to March 2008 at GBP 4.71/MMBtu ($9.61/MMBtu) July 24, 2007: 10,000 MMBtu/d December 2007 to February 2008 at GBP 5.00/MMBtu ($10.20/MMBtu)   Recent Gulf of Mexico Oil Fixed Forwards: July 11, 2007: 1,000 Bbls/d October 2007 to June 2008 at $73.00 /Bbl July 11, 2007: 1,000 Bbls/d October 2007 to June 2008 at $73.45 /Bbl 2007 2008 (Currency in thousands) October   November   December January   February   March Exchange rate (USD/GBP) 2.049 2.049 2.049 2.049 2.049 2.049 Notional amount (GBP) 4,000 5,000 6,000 6,000 6,000 6,000 Dollars hedged (USD) $8,196 $10,245 $12,294 $12,294 $12,294 $12,294   Recent exchange rate hedges: July 26, 2007: GBP 4 million October 2007 at 2.049 USD/GBP July 26, 2007: GBP 5 million November 2007 at 2.049 USD/GBP July 26, 2007: GBP 6 million December 2007 to March 2008 at 2.049 USD/GBP Oil and Gas Revenue Reconciliation (1) (In Thousands)   Three Months Ended Six Months Ended June 30, June 30, 2007 2006 2007 2006   Oil and gas revenues, including the effects of settled derivatives (1) $ 131,919 $ 108,877 $ 276,593 $ 154,102 Hedging ineffectiveness and other (2)   234   8   309   28 Oil and gas revenue per income statements $ 132,153 $ 108,885 $ 276,902 $ 154,130   (1) Oil and gas revenues including the effects of settled derivative activities differ from our reported revenues from oil and gas production because such numbers omit the effects of previously recognized changes in the fair market value of derivatives settled during the period. Set forth above is a table reconciling the presented information with revenues from oil and gas production. The total of oil and gas revenues, including the effects of settled derivative activities, is presented because of its acceptance as an indicator of the Company's realized cash flow from its oil and gas production during the period for which it is presented.     (2) Hedging ineffectiveness is the portion of gains (losses) on derivatives that is based on imperfect correlations to benchmark oil and natural gas prices. Cash Flow From Operating Activities (In Thousands)   Six Months Ended June 30, 2007 2006 Cash flows from operating activities: Net income (loss) $ 33,559 $ 14,315 Adjustments to operating activities   141,536   76,799   Cash flows from operating activities before changes in assets and liabilities 175,095 91,114 Changes in assets and liabilities   2,434   (44,527 ) Net cash provided by operating activities $ 177,529 $ 46,587   Net Income Before Significant Nonrecurring Charges (In Thousands, except per share data)   Three Months Ended June 30, 2007 2006   Net income (loss) available to common shareholders $ 6,125 $ 6,374 Impairment of oil and gas properties 5,770 - Loss on abandonment   2   3,451 Pro forma net income (loss) available to common shareholders before significant nonrecurring charges $ 11,897 $ 9,825   Pro forma net income (loss) per common share: Basic $ 0.40 $ 0.33 Diluted $ 0.39 $ 0.32   Weighted average number of common shares: Basic   30,058   29,715 Diluted   30,639   30,396