“This will increase our expected 2013 South Texas capital expenditures by approximately $50 million which will be funded initially through our credit facility. We expect this additional spending to afford more consistent levels of production and predictable production growth in 2014.”

Second Quarter Revenues and Expenses

Total revenues for the second quarter of 2013 increased 6% to $142.5 million from the $134.8 million generated in the second quarter of 2012. This increase is primarily attributable to significantly higher natural gas prices in the 2013 period, as well as higher oil and NGL production volumes.

Depreciation, depletion and amortization expense (“DD&A”) of $21.40 per barrel of oil equivalent (“Boe”) in the second quarter of 2013 increased 2% from $21.00 per Boe in the comparable period in 2012 due to a higher depletable base partially offset by the addition of reserves.

Lease operating expenses, excluding transportation and processing expense and before severance and ad valorem taxes, were $9.70 per Boe in the second quarter 2013, a 14% increase when compared to $8.48 per Boe in the same period of 2012, primarily related to higher costs in South Texas for chemical treating, compliance costs, and surface maintenance costs, partially offset by lower salt water disposal costs than in the 2012 period.

Severance and ad valorem taxes decreased to $3.78 per Boe in the second quarter 2013 from $4.18 per Boe in the second quarter of 2012 primarily due to the shift of our revenues to Texas, with lower relative severance tax rates and associated tax credits earned.

General and administrative expenses decreased to $4.03 per Boe during the second quarter of 2013, down from $4.18 per Boe in the same period in 2012 as a result of lower overall compensation costs. Interest expense increased to $6.12 per Boe in the second quarter of 2013 compared to $4.56 per Boe for the same period in 2012 due to the additional long term debt issued during the fourth quarter of 2012.

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