Operating Regions
Mariner Energy, Inc. is an independent oil and gas exploration, development, and production company. We currently operate in three principal geographic areas: • West Texas, where we are an active driller in the prolific Spraberry field in the Permian Basin at depths between 6,000 and 10,000 feet. Our increasing West Texas operation, which is characterized by long reserve life, stable drilling and production performance, and relatively lower capital requirements, somewhat counterbalances the higher geological risk, operational challenges and capital requirements attendant to most of our deepwater Gulf of Mexico operations. We are aggressively expanding our presence in the region, targeting a combination of infill drilling activities in established producing trends, including the Spraberry, Dean, Wolfcamp and Devonian/Fusselman trends, as well as exploration activities in emerging plays such as the Wolfberry and newer Wolfcamp trends.
• Deepwater Gulf of Mexico, where we have actively conducted exploration and development projects since 1996 in water depths ranging from 1,300 feet up to 7,000 feet. Employing our experienced geoscientists, rich seismic database, and extensive subsea tieback expertise, we have participated in more than 75 deepwater wells. Our deepwater exploration operation targets larger potential reserve accumulations than are generally accessible onshore or on the Gulf of Mexico shelf.
• Shelf of the Gulf of Mexico, where we drill or participate in conventional shelf wells and deep shelf wells extending to 1,300 foot water depths. We significantly increased our shelf operations and effectively doubled our size with our 2006 acquisition of the Gulf of Mexico operations of Forest Oil Corporation (“Forest”). See “Note 3. — Acquisitions and Dispositions” in the Notes to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for more information regarding this transaction. We currently pursue a two-pronged strategy on the shelf, combining opportunistic acquisitions of legacy producing fields believed to hold exploitation potential and active exploration activities targeting conventional and deep shelf opportunities. Given the highly mature nature of this area and the steep production declines characteristic of most wells in this region, the goal of our shallow water or shelf operation is to maximize cash flow for reinvestment in our deepwater and West Texas operations, as well as for expansion into new operating areas.
In 2007, we generated net income of $143.9 million on total revenues of $874.7 million. We produced approximately 100.3 Bcfe during 2007 and our average daily production rate was 275 MMcfe per day. Our average realized sales price per unit, including the effects of hedging, was $8.71/Mcfe for 2007. At December 31, 2007, we had 835.8 Bcfe of estimated proved reserves, of which approximately 54% were natural gas and 46% were oil, natural gas liquids (“NGLs”) and condensate. Approximately 67% of our estimated proved reserves were classified as proved developed.
