HOUSTON, TX, Mar 01 (MARKET WIRE) —
Mariner Energy, Inc. (NYSE: ME) today reported fiscal fourth-quarter and
full-year 2009 financial and operating results. For the three months
ended December 31, 2009, the company reported net income of $83.3 million
or $0.83 per basic and $0.82 per diluted share, compared with a loss of
$648.9 million or $7.41 per basic and diluted share for the same period
in the prior year. For the full year ended December 31, 2009, the company
reported a net loss of $319.4 million ($3.34 per basic and diluted
share). This compares to a net loss of $388.7 million ($4.44 per basic
and diluted share) for 2008. Excluding a non-recurring, non-cash gain and
certain non-cash charges, the company’s adjusted net income for fourth
quarter 2009 was $21.0 million or $0.22 per basic and diluted share, and
for full-year 2009 adjusted net income was $92.2 million or $0.96 per
basic and diluted share. Operating cash flow was $531.1 million for 2009.
See the notes below for reconciliation of non-GAAP measures adjusted net
income and operating cash flow.

Highlights for 2009 and first quarter 2010 to date include:

– First quarter 2010 discoveries at Mandy, a deepwater oil field on
Mississippi Canyon Block 199, and on South Pass 75, a gas field on the
shelf, as well as the previously announced success at the Lucius
sidetrack well on Keathley Canyon Block 875.
– A 2009 drilling success rate of 63% (10 for 16) offshore, including
the Heidelberg and Lucius oil fields in the deepwater Gulf of Mexico
and the discovery and appraisal onshore of a new oil field at Deadwood
in the Permian Basin.
– Expanding into a new core area in the Gulf Coast with the acquisition
of producing properties located principally in South Texas.
– Building a new leasehold position in unconventional resource plays,
including approximately 43,000 net acres in Wyoming, North Dakota
and Arkansas principally targeting low-entry-cost oil opportunities.
– A 12% increase in 2009 year-end estimated proved reserves to 1.087
trillion cubic feet of natural gas equivalent (Tcfe), a reserve
replacement rate from all sources of 190% at a cost of $3.24 per
thousand cubic feet equivalent (Mcfe) (see related notes below), and
a year-over-year production increase of 7% to 126.5 billion cubic feet
of natural gas equivalent (Bcfe).

“Mariner Energy continues to create and build value, our primary
focus. Consistent with our business plan, we expanded onshore into new
areas, conventional and unconventional, that should provide predictable
and repeatable results going forward, while tapping the significant upside
potential in our offshore exploration portfolio, principally in the
deepwater. We’ve had another successful year with the drillbit in all
areas and realized continued success in the prolific deepwater subsalt
play. For the sixth year in a row, we increased our estimated proved oil
and gas reserves, which now approach 1.1 Tcfe, a milestone for our
company. The increase occurred without a material increase in the
percentage of our proved undeveloped reserves. Our proved reserves do not
yet reflect any contribution from a number of our deepwater discoveries,
including the significant Heidelberg and Lucius discoveries as well as
Bushwood, Wide Berth and Dalmatian and include only relatively small
amounts from Balboa, Smoothie and the Deadwood field in the Permian
Basin. These unbooked projects should significantly enhance reserves and
production in future years. More than half of our proved reserves now are
onshore. Additionally, almost half of our proved reserves are oil and
liquids; and we have evolved into an oil company, especially when the
unbooked discoveries, comprised largely of oil and liquids, are
considered. Our excellent operational success in 2009 and early 2010
again validates our balanced business model,” said Scott D. Josey,
Mariner’s Chairman, Chief Executive Officer and President.

NON-CASH GAIN AND CHARGES

The company’s results for fourth-quarter and full-year 2009 reflect a
non-recurring, non-cash gain of $107.3 million attributable to the
December 31, 2009 acquisition of the subsidiaries and operations of Edge
Petroleum Corporation. Based on lower average commodity prices for 2009,
Mariner recorded full cost ceiling test impairments of its proved oil and
gas properties in the amount of $754.3 million for full-year 2009 and
$49.6 million for fourth quarter 2009. The company also recorded a
non-recurring, non-cash charge of $12.0 million at year-end 2009 related
to a contingent OIL withdrawal premium. Stock compensation expense of
$25.4 million was recorded for the full-year 2009, which includes $7.1
million for the fourth-quarter. These items are detailed below in the
reconciliation of adjusted net income, a non-GAAP measure.

FOURTH QUARTER 2009 RESULTS

For fourth quarter 2009, Mariner reported net income of $83.3 million, or
$0.83 per basic and $0.82 per diluted share, which reflects the non-cash
gain and charges noted above. This compares with a net loss of $648.9
million or $7.41 per basic and diluted share for the same three-month
period in the prior year. Adjusted net income, which excludes the non-cash
gain and charges, was $21.0 million for fourth quarter 2009, or $0.22 per
share (see reconciliation of this non-GAAP measure below).

Net production for fourth quarter 2009 was 30.8 Bcfe, compared with 23.5
Bcfe for fourth quarter 2008. Total natural gas production net to Mariner
for fourth quarter 2009 was 20.8 billion cubic feet (Bcf), compared with
16.1 Bcf for the same period in the prior year. Total oil net production
for fourth quarter 2009 was 1.2 million barrels (MMBbls), compared with
1.0 MMBbls for the same period in 2008. Natural gas liquids net
production for fourth quarter 2009 was 0.4 MMBbls, compared with 0.3
MMBbls for fourth quarter 2008. Mariner has begun posting its estimated
monthly production volumes on its website (www.mariner-energy.com) on the
last business day of the month following the applicable reporting period.
The first such report, disclosing January 2010 estimated production, was
posted on February 26, 2010.

For fourth quarter 2009, Mariner’s average realized natural gas price was
$6.08 per thousand cubic feet (Mcf) compared with $7.44 per Mcf for the
same period in 2008. Mariner’s average realized oil price was $77.96 per
barrel (Bbl) for fourth quarter 2009, compared with $65.29 per Bbl for
fourth quarter 2008. These average realized prices reflect settlements
during the period under Mariner’s hedging program. The average realized
NGL price was $41.49 per Bbl for fourth quarter 2009, compared with $26.63
per Bbl for the same period in 2008.

FULL-YEAR 2009 RESULTS

For the year ended December 31, 2009, Mariner reported a net loss of
$319.4 million, which equates to a loss of $3.34 per basic and diluted
share. For 2008, Mariner reported a net loss of $388.7 million, or $4.44
per basic and diluted share. Adjusted net income, which excludes the
non-cash gain and charges noted above, was $92.2 million for 2009 or
$0.96 per basic and diluted share (see reconciliation of this non-GAAP
measure below).

For the full-year 2009, Mariner reported net production of 126.5 Bcfe, up
from 118.4 Bcfe reported in 2008. Daily production averaged more than
347.0 million cubic feet of natural gas equivalent (MMcfe), a record for
Mariner. Total natural gas net production during 2009 was 90.8 Bcf at an
average realized price of $6.08 per Mcf, compared with 79.8 Bcf for 2008
at an average realized price of $9.31 per Mcf. Total oil net production
for 2009 was 4.5 MMBbls at an average realized price of $70.59 per Bbl,
compared to 4.9 MMBbls during 2008 at an average realized price of $86.02
per Bbl. These average realized prices reflect settlements during the
period under Mariner’s hedging program. Total NGL net production during
2009 was 1.5 MMBbls at an average realized price of $33.10, compared to
1.6 MMBbls at an average realized price of $55.02 per Bbl for the prior
year.

Operating cash flow was $531.1 million for the full 2009 fiscal year,
compared with $885.9 million in 2008 (see reconciliation of this non-GAAP
measure below).

CAPITAL EXPENDITURES

Mariner’s capital expenditures for the fourth-quarter and full-year 2009
are summarized in the table below.

Fourth Full-
Quarter Year
2009 2009
——— ———
(In thousands)
Exploration $ 39,006 $ 204,805

Development
Gulf of Mexico – Deepwater $ 2,170 $ 67,538
Gulf of Mexico – Shelf 31,153 179,973
Permian Basin 22,621 59,323

Acquisitions $ 239,517 $ 236,661

Corporate expenditures and other $ 696 $ 38,462

——— ———
Total Capital Expenditures $ 335,163 $ 786,762
========= =========

OPERATIONAL UPDATE

Offshore

Mariner was successful in 10 of its 16 offshore wells drilled in 2009.
Mariner drilled five offshore wells in fourth quarter 2009, four of which
were successful:

Working Water Depth
Well Name Operator Interest (Ft) Location
——– ——— ———— ———————-
Green Canyon 490#1
(Wide Berth) Mariner 56.25% 3,700 Conventional Deepwater
South Marsh
Island 10 #4 Mariner 100% 70 Conventional Shelf
Keathley Canyon
875#1 (Lucius) Anadarko 16.67% 7,100 Deepwater Subsalt
Viosca Knoll
917#1ST2
(Swordfish) Noble 15% 4,370 Conventional Deepwater

The unsuccessful well during the fourth quarter was South Marsh
Island 150 D1ST1.

Subsequent to the end of fourth quarter 2009, Mariner drilled five wells,
all of which were successful:

Working Water Depth
Well Name Operator Interest (Ft) Location
——– ——– ———– ———————-
Keathley Canyon
875#1ST1 (Lucius) Anadarko 16.67% 7,100 Deepwater Subsalt
Mississippi
Canyon 199#1
(Mandy) LLOG 35% 2,500 Conventional Deepwater
Mississippi Canyon
199#2 (Mandy) LLOG 35% 2,500 Conventional Deepwater
South Pass 75
A6ST1 Apache 28.8% 356 Conventional Shelf
South Pass 75 A11
ST2 Apache 28.8% 356 Conventional Shelf

Mariner currently has three rigs working in the Gulf of Mexico.

Onshore

In fourth quarter 2009, Mariner drilled 25 wells in the Permian Basin, of
which 21 were successful. The non-commercial wells were shallow gas
targets drilled at the company’s Homestake prospect in Edwards County,
Texas. Mariner currently has six rigs working on its Permian Basin
properties. The company participated in 51 onshore wells in 2009.

CONFERENCE CALL TO DISCUSS RESULTS

A conference call has been scheduled for 10:30 a.m. Eastern Time (9:30
a.m. Central Time) on Monday, March 1, 2010, to discuss fiscal 2009
financial and operating results.

To participate in the call, please dial one of the numbers listed below at
least 10 minutes prior to the scheduled start time:

Callers from the United States and Canada: +1 (866) 202-0886
Callers from International locations: +1 (617) 213-8841

The conference passcode for both numbers is 8460 0122.

The call also will be webcast live over the Internet and can be accessed
through the Investor Information section of Mariner’s website at
http://www.mariner-energy.com. Speakers may refer to data in the company’s
latest investor presentation, which is accessible on the company’s website
under “Investor Information,” then clicking “Webcasts and Presentations.”

A telephonic replay of the call will be available through March 11, 2010
by dialing (888) 286-8010 or (617) 801-6888, pass code 7201 1598. An
archive of the webcast will be available shortly after the call on
Mariner’s website through March 31, 2010.

About Mariner Energy, Inc.

Mariner Energy is an independent oil and gas exploration, development, and
production company headquartered in Houston, Texas, with principal
operations in the Permian Basin, Gulf Coast and Gulf of Mexico. For more
information about Mariner, visit the company’s website
at
www.mariner-energy.com.

MARINER ENERGY, INC.
SELECTED OPERATING DATA
(Unaudited)

Net Production, Realized Prices and Operating
Costs
Three Months Twelve Months
Ended Ended
December 31, December 31,
2009 2008 2009 2008
—— ——- ——- ——-

Net production:
Natural gas (Bcf) 20.8 16.1 90.8 79.8
Oil (MMBbls) 1.2 1.0 4.5 4.9
Natural gas liquids (MMBbls) 0.4 0.3 1.5 1.6
Total production (Bcfe) 30.8 23.5 126.5 118.4

Realized prices (net of hedging):
Natural gas ($/Mcf) $ 6.08 $ 7.44 $ 6.08 $ 9.31
Oil ($/Bbl) 77.96 65.29 70.59 86.02
Natural gas liquids ($/Bbl) 41.49 26.63 33.10 55.02

Operating costs per Mcfe:
Lease operating expense $ 2.72 $ 2.73 $ 1.97 $ 1.96
Severance and ad valorem taxes 0.09 0.15 0.11 0.15
Transportation expense 0.16 0.16 0.15 0.13
General and administrative expense 0.73 1.03 0.63 0.51
Depreciation, depletion and amortization 3.18 3.91 3.16 3.95
Other expense (0.12) 0.09 0.07 0.03

Estimated Proved Reserves

As of the Year As of the Year
Ended Ended
December 31, 2009 December 31, 2008
—————– —————–
Estimated proved natural gas, oil and
natural gas liquids reserves:
Natural gas (Bcf) 571.4 558.0
Oil (MMBbls) 52.5 43.8
Natural gas liquids (MMBbls) 33.5 25.5
—————– —————–
Total estimated proved reserves
(Bcfe) 1,087.1 973.9
—————– —————–
Total proved developed reserves
(Bcfe) 716.4 677.7
—————– —————–

MARINER ENERGY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)

Three Months Ended Twelve Months Ended
December 31, December 31,
———————- ———————-
2009 2008 2009 2008
———- ———- ———- ———-
Revenues:
Natural gas sales $ 126,512 $ 119,665 $ 552,259 $ 742,370
Oil sales 94,855 63,721 315,642 419,878
Natural gas liquids sales 18,523 7,136 48,921 85,715
Other revenues 399 46,746 26,119 52,544
———- ———- ———- ———-
Total revenues 240,289 237,268 942,941 1,300,507
Cost and Expenses:
Lease operating expense 83,633 64,304 249,449 231,645
Severance and ad valorem
taxes 2,742 3,505 14,410 18,191
Transportation expense 4,867 3,708 18,494 14,996
General and
administrative expense 22,505 24,333 79,960 60,613
Depreciation, depletion
and amortization 98,095 92,095 399,400 467,265
Full cost ceiling test
impairment 49,594 575,607 754,325 575,607
Goodwill impairment – 295,598 – 295,598
Other property impairment – 15,252 – 15,252
Other miscellaneous
expense (3,654) 2,087 8,306 3,052
———- ———- ———- ———-
Total costs and
expenses 257,782 1,076,489 1,524,344 1,682,219
———- ———- ———- ———-
OPERATING LOSS (17,493) (839,221) (581,403) (381,712)

Other Income/(Expenses):
Interest income 56 386 499 1,362
Interest expense, net of
capitalized amounts (19,058) (2,757) (70,134) (56,398)
Gain on acquisition 107,259 – 107,259 -
———- ———- ———- ———-
Income (loss) before taxes 70,764 (841,592) (543,779) (436,748)
Benefit for income taxes 12,510 192,672 224,370 48,223
———- ———- ———- ———-
Net income (loss) 83,274 (648,920) (319,409) (388,525)
Less: net income
attributable to
non-controlling
interest – – – (188)
———- ———- ———- ———-
Net Income (Loss)
Attributable to Mariner $ 83,274 $ (648,920) $ (319,409) $ (388,713)
========== ========== ========== ==========

Earnings per share:
Net income (loss) per
Share – basic $ 0.83 $ (7.41) $ (3.34) $ (4.44)
Net income (loss) per
Share – diluted $ 0.82 $ (7.41) $ (3.34) $ (4.44)

Weighted average shares
Outstanding – basic 100,826 87,623 95,607 87,491
Weighted average shares
Outstanding – diluted 101,406 87,623 95,607 87,491

MARINER ENERGY, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)

December 31, December 31,
2009 2008
———– ———–
Current Assets
Cash and cash equivalents $ 8,919 $ 3,251
Receivables, net of allowances 148,725 219,920
Insurance receivables 8,452 13,123
Derivative financial instruments 2,239 121,929
Intangible assets 22,615 2,353
Prepaid expenses and other 11,667 14,377
Deferred income tax 9,704 -
———– ———–
Total current assets 212,321 374,953

Property and equipment:
Proved oil and gas properties, full cost
method 5,117,273 4,448,146
Unproved properties, not subject to
amortization 292,237 201,121
———– ———–
Total oil and gas properties 5,409,510 4,649,267
Other property and equipment 55,695 53,115
Accumulated depreciation, depletion and
amortization:
Proved oil and gas properties (2,884,411) (1,767,028)
Other properties (8,235) (5,477)
———– ———–
Total accumulated depreciation,
depletion and amortization (2,892,646) (1,772,505)
———– ———–
Total property and equipment, net 2,572,559 2,929,877

Insurance receivables – 22,132
Derivative financial instruments 902 -
Deferred income tax 12,491 -
Other Assets, net of amortization 68,932 65,831
———– ———–
TOTAL ASSETS $ 2,867,205 $ 3,392,793
=========== ===========

Current Liabilities
Accounts payable $ 3,579 $ 3,837
Accrued liabilities 137,206 107,815
Accrued capital costs 140,941 195,833
Deferred income tax – 23,148
Abandonment liability 54,915 82,364
Accrued interest 8,262 12,567
Derivative financial instruments 27,708 -
———– ———–
Total current liabilities 372,611 425,564

Long-Term Liabilities
Abandonment liability 362,972 325,880
Deferred income tax – 319,766
Derivative financial instruments 15,017 -
Long-term debt 1,194,850 1,170,000
Other long-term liabilities 38,800 31,263
———– ———–
Total long-term liabilities $ 1,611,639 $ 1,846,909

Stockholders’ Equity
Common stock, $.0001 par value; 180,000,000
shares authorized; 101,806,825 shares issued
and outstanding at December 31, 2009;
180,000,000 shares authorized, 88,846,073
shares issued and outstanding at December 31,
2008 10 9
Additional paid-in capital 1,257,526 1,071,347
Accumulated other comprehensive (loss)
income (25,955) 78,181
Accumulated deficit (348,626) (29,217)
———– ———–
Total stockholders’ equity 882,955 1,120,320
———– ———–
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 2,867,205 $ 3,392,793
=========== ===========

MARINER ENERGY, INC.
SELECTED CASH FLOW INFORMATION (1)
(in thousands)
(unaudited)

12 Months Ended December 31,

—————————-
2009 2008
————- ————-

Operating cash flow (2) $ 531,149 $ 885,887
Changes in operating assets and liabilities 46,518 (23,870)
————- ————-
Net cash provided by operating activities $ 577,667 $ 862,017
============= =============

Net cash used in investing activities $ (747,108) $ (1,264,784)
============= =============

Net cash provided by financing activities $ 175,109 $ 387,429
============= =============

Increase (Decrease) in cash and cash
equivalents $ 5,668 $ (15,338)
============= =============

(1) Certain prior year amounts have been reclassified to conform to current
year presentation.
(2) See below for reconciliation of this non-GAAP measure.

Important Information Concerning Forward-Looking Statements

This press release includes forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. All statements, other than statements of
historical facts, that address activities that Mariner assumes, plans,
expects, believes, projects, estimates or anticipates (and other similar
expressions) will, should or may occur in the future are forward-looking
statements. Our forward-looking statements generally are accompanied by
words such as “may,” “will,” “estimate,” “project,” “predict,” “believe,”
“expect,” “anticipate,” “potential,” “plan,” “goal,” or other words that
convey the uncertainty of future events or outcomes. Forward-looking
statements provided in this press release are based on Mariner’s current
belief based on currently available information as to the outcome and
timing of future events and assumptions that Mariner believes are
reasonable. Mariner does not undertake to update its guidance, estimates
or other forward-looking statements as conditions change or as additional
information becomes available. Estimated reserves are related to
hydrocarbon prices. Hydrocarbon prices used in estimating reserves may
vary significantly from actual future prices. Therefore, volumes of
reserves actually recovered may differ significantly from such estimates.
Mariner cautions that its forward-looking statements are subject to all of
the risks and uncertainties normally incident to the exploration for and
development, production and sale of oil and natural gas. These risks
include, but are not limited to, price volatility or inflation,
environmental risks, drilling and other operating risks, regulatory
changes, the uncertainty inherent in estimating future oil and gas
production or reserves, and other risks described in Mariner’s latest
Annual Report on Form 10-K and other documents filed by Mariner with the
Securities and Exchange Commission (SEC). Any of these factors could cause
Mariner’s actual results and plans of Mariner to differ materially from
those in the forward-looking statements. Investors are urged to read
Mariner’s latest Annual Report on Form 10-K and other documents filed by
Mariner with the SEC.

“Proved” oil and gas reserves are those that can be estimated with
reasonable certainty to be economically and legally producible under
existing economic conditions, operating methods and government
regulations. “Probable,” “possible” and “non-proved” reserves, reserve
“potential” or “upside” or other descriptions of volumes of reserves
potentially recoverable involve estimates that by their nature are more
speculative than estimates of proved reserves and accordingly are subject
to substantially greater risk of actually being realized by Mariner. The
SEC generally does not permit a company’s filings with the SEC to include
estimates of oil or gas resources other than reserves, and any estimated
values of such resources, due to concern that resources other than
reserves are too speculative and may be misleading.

This press release does not constitute an offer to sell or a solicitation
of an offer to buy any securities of Mariner.

Note on reserve replacement rate: Mariner’s reserve replacement rate
reported above was calculated by dividing total estimated proved reserve
changes for the period from all sources, including acquisitions and
divestitures, by production for the same period. The method Mariner uses
to calculate its reserve replacement rate may differ from methods used by
other companies to compute similar measures. As a result, its reserve
replacement rate may not be comparable to similar measures provided by
other companies.

2009 net additions, revisions, conversions, purchases,
sales: 239.8 Bcfe
2009 production: 126.5 Bcfe

2009 proved reserves adds/2009 production: 189.6%

Note on reserve replacement cost: Reserve replacement cost is
calculated by dividing hydrocarbon development, exploration and
acquisition capital expenditures (including capitalized internal costs
and excluding hurricane expenditures net of insurance recoveries and
non-cash changes to asset retirement obligations) for the period by net
estimated proved reserve additions for the period from all sources,
including acquisitions and divestitures. Mariner’s calculation of reserve
replacement cost includes costs and reserve additions related to the
purchase of proved reserves. The method Mariner uses to calculate its
reserve replacement cost may differ significantly from methods used by
other companies to compute similar measures. As a result, its reserve
replacement cost may not be comparable to similar measures provided by
other companies. Mariner believes that providing a measure of reserve
replacement cost is useful in evaluating the cost, on a per-Mcfe basis,
to add proved reserves. However, this measure is provided in addition to,
and not as an alternative for, and should be read in conjunction with,
the information contained in our financial statements prepared in
accordance with generally accepted accounting principles. Due to various
factors, including timing differences in the addition of proved reserves
and the related costs to develop those reserves, reserve replacement
costs do not necessarily reflect precisely the costs associated with
particular reserves. As a result of various factors that could materially
affect the timing and amounts of future increases in reserves and the
timing and amounts of future costs, the company cannot assure you that
its future reserve replacement costs will not differ materially from
those presented.

2007 2008 2009
———– ———– ———–
(in millions)

Capital costs related to property
acq, expl, and devel 788.6 1,344.1 784.2
Hurricane expenditures, net of
insurance recoveries (12.3) (60.1) (6.6)
Proceeds from divestitures 4.1 – -
———– ———– ———–
Capital expenditures before
divestitures ($MM) (1) 780.4 1,284.0 777.6

Reserve additions (Bcfe) 222.6 256.7 239.8
Reserve Replacement Cost/Mcfe $ 3.51 $ 5.00 $ 3.24

Rolling 3-year capital expenditures 2,842.0
Rolling 3-year reserve additions 719.1
Rolling 3-year Reserve Replacement
Cost/Mcfe $ 3.95

(1) Unaudited

Reconciliation of Non-GAAP Measure: Adjusted Net Income

Mariner Energy’s reported net income and earnings per share for the fiscal
fourth quarter and full-year 2009 includes a non-recurring, non-cash gain
and non-cash charges. Mariner’s management believes that it is common
among investment analysts to consider earnings excluding the effects of
these items when evaluating the company’s operating results. These items
and their effects on reported earnings for the fiscal fourth quarter and
full-year 2009 are listed below.

– A non-recurring gain attributable to the December 31, 2009 acquisition
of the subsidiaries and operations of Edge Petroleum Corporation
positively impacting net income. The $107.3 million non-taxable gain
equates to $1.12 for the year and $1.06 for fourth-quarter contribution
to basic and diluted earnings per share (EPS).
– Ceiling test impairments in the fourth-quarter and full-year 2009
negatively impacted net income. For the full-year 2009, the ceiling
test impairment was $754.3 million ($494.5 million after tax), for a
$5.17 after-tax loss per basic and diluted share. For fourth-quarter
2009, the ceiling test impairment was $49.6 million ($32.5 million
after tax), for a $0.32 loss per basic and diluted share.
– A non-cash charge for a contingent withdrawal premium related to
Mariner’s participation in the OIL insurance mutual negatively impacted
net income. The additional premium was $12.0 million charge ($7.9
million after-tax) or a loss per basic and diluted share of $0.08 for
the fourth-quarter and full-year 2009.
– Non-cash stock compensation expense in the fourth-quarter and full-year
2009 negatively impacted net income. For the full-year 2009, the
expense was $25.4 million ($16.5 million after tax), which equates to
$0.17 loss per basic and diluted share. For fourth quarter 2009, this
charge was $7.1 million ($4.6 million after tax) for a loss per basic
and diluted share of $0.05.

Excluding the items above, Mariner would have reported earnings for
the fourth quarter 2009 of $21.0 million or $0.22 per basic and diluted
share. Fiscal 2009′s full year net income and basic and diluted EPS would
have been $92.2 million and $0.96, respectively. Adjusted net income
should not be considered in isolation or as a substitute for net income
or another measure of financial performance presented in accordance with
GAAP. This is further outlined in the table below.

MARINER ENERGY, INC.
RECONCILIATION OF ADJUSTED NET INCOME
(in millions, except per share data)
(Unaudited)

Three Months Ended Twelve Months Ended
December 31, 2009 December 31, 2009

After-Tax After-Tax
Impact (1) EPS (2) Impact (1) EPS (3)

Net income (loss) $ 83.3 $ 0.83 $ (319.4) $ (3.34)
Gain on acquisition (107.3) (1.06) (107.3) (1.12)
Ceiling test impairment 32.5 0.32 494.5 5.17
Contingent OIL premium
charges 7.9 0.08 7.9 0.08
Stock compensation
expense 4.6 0.05 16.5 0.17
Adjusted net income
(non-GAAP) $ 21.0 $ 0.22 $ 92.2 $ 0.96

(1) Calculated using Mariner’s effective tax rate
(2) Denotes basic earnings per share. In fourth-quarter 2009 Mariner
reported $0.82 diluted earnings per share.
(3) Denotes basic and diluted earnings per share.

Reconciliation of Non-GAAP Measure: Operating Cash Flow

Operating cash flow (OCF) is not a financial or operating measure under
generally accepted accounting principles in the United States of America
(GAAP). The table below reconciles OCF to related GAAP information.
Mariner believes that OCF is a widely accepted financial indicator that
provides additional information about its ability to meet its future
requirements for debt service, capital expenditures and working capital,
but OCF should not be considered in isolation or as a substitute for net
income, operating income, net cash provided by operating activities or any
other measure of financial performance presented in accordance with GAAP
or as a measure of a company’s profitability or liquidity.

12 Months Ended
December 31,
2009 2008
——– ——–
(in thousands)
(Unaudited)

Net cash provided by operating activities $ 577,667 $ 862,017
Less: Changes in operating assets and liabilities 46,518 (23,870)
———— ———–
Operating cash flow (non-GAAP) $ 531,149 $ 885,887
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