Given our drilling success in 2007, we are evaluating development options for our discoveries at Vicksburg, South Marsh Island 257 and Mississippi Canyon 72 and look forward to developing the Longhorn discovery in 2008. Our undeveloped deep-water discoveries include:

During 2007, we drilled ten exploratory dry holes on the shelf. We also converted our interests in Anduin and Great White West to overriding royalty interests to accelerate monetization of the reserves with no further capital investment. We acquired deep-water acreage during the year and hold approximately 200 blocks and expect this acreage and future exploration opportunities to position us well for continued growth. In 2008, we plan to drill seven exploration and appraisal wells and have secured drilling rigs for more than half of the wells. Access to deep-water rigs remains limited. To explore our inventory and evaluate existing discoveries, we have secured two new-build dynamically-positioned fifth-generation semi-submersible drilling rigs. We will have access to each rig for at least two years. We expect the first rig to be available mid 2009, followed by the second rig in 2010.

In the Eastern Gulf of Mexico, we recently spud the Fredericksburg exploration well. This is the third prospect to be drilled in this area following earlier success at Vicksburg and Shiloh. We have a 20% interest in Fredericksburg and Shiloh, and a 25% interest in Vicksburg, with Shell operating all three. When we combine the discoveries at Shiloh and Vicksburg with several prospects we see on our land holdings, this area has the potential to become a significant part of our Gulf of Mexico business.

Development of the Longhorn discovery is progressing well and first production is expected in 2009 with a peak production rate of approximately 200 mmcf/d gross (50 mmcf/d net to us). We have a 25% non-operated working interest and ENI is the operator.

At Knotty Head, we plan to drill an appraisal well in mid 2009 when the first of our two new deep-water drilling rigs arrives. We have a 25% operated interest in the field.