St. Mary's presence in south Louisiana dates to the early 1900s when our founders acquired our namesake property in St. Mary Parish, Louisiana abutting the Gulf of Mexico. These 24,914 acres of fee lands yielded $3.7 million of gross oil and gas royalty revenue in 2007. Our Gulf Coast regional presence expanded as a result of the acquisition of King Ranch Energy, Inc. in 1999. During 2007 we reached a significant inflection point in this region as it shifted from an office centered on geotechnically driven exploration to one focused on repeatable development and exploitation with our acquisition of two Olmos shallow gas assets in South Texas. The Gulf Coast region is run from our office in Houston, Texas.

Our development and exploration budget in the Gulf Coast region for 2008 is $80 million and focused primarily on the development of the Olmos assets acquired in 2007. St. Mary will operate 75 percent of the planned capital investment next year. Roughly $38 million, or 47 percent, of the budget will be dedicated to grass roots Olmos wells and approximately $10 million, or 12 percent, of the budget will be spent on Olmos recompletions.