10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2009

OR

( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

for the transition period from to ____

Commission file number 000-21644

CRIMSON EXPLORATION INC.

(Exact name of Registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation)	20-3037840 (IRS Employer Identification No.)
717 Texas Avenue, Suite 2900 Houston, Texas (Address of principal executive offices)	77002 (zip code)

(713) 236-7400

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o	Accelerated filer o	Non-accelerated filer o	Smaller reporting company x
		(Do not check if smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

On May 11, 2009, there were 6,438,323 shares outstanding of the Registrant’s Common Stock, par value $0.001.

FORM 10-Q

CRIMSON EXPLORATION INC.

FOR THE QUARTER ENDED MARCH 31, 2009

	Page
Part I:  Financial Statements
Item 1. Financial Statements
Consolidated Balance Sheets as of March 31, 2009 and December 31, 2008	3
Consolidated Statements of Operations for the Three Months Ended March 31, 2009 and 2008	4
Consolidated Statement of Stockholders’ Equity for the Three Months Ended March 31, 2009	5
Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2009 and 2008	6
Notes to Consolidated Financial Statements	7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3. Quantitative and Qualitative Disclosures about Market Risk	22
Item 4T. Controls and Procedures	23
Part II: Other Information
Item 5. Other Information	25
Item 6. Exhibits	25
Signatures	26

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PART I.FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

CRIMSON EXPLORATION INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

ASSETS

		March 31,			December 31,
		2009			2008
		(unaudited)
CURRENT ASSETS
Cash and cash equivalents	$	—		$	—
Accounts receivable, net of allowance		21,026,674			21,078,815
Prepaid expenses		308,754			77,293
Derivative instruments		31,538,881			25,191,445
Total current assets		52,874,309			46,347,553
PROPERTY AND EQUIPMENT
Oil and gas properties (successful efforts method of accounting)		594,885,575			584,093,885
Other property and equipment		3,361,957			3,282,088
Accumulated depreciation, depletion and amortization		(151,866,268	)		(138,220,237	)
Total property and equipment, net		446,381,264			449,155,736
NONCURRENT ASSETS
Deposits		104,697			104,697
Debt issuance cost, net		2,631,722			2,890,094
Deferred charges		1,324,907			1,324,907
Derivative instruments		14,826,352			11,722,802
Total noncurrent assets		18,887,678			16,042,500
TOTAL ASSETS	$	518,143,251		$	511,545,789
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Current portion of long-term debt	$	88,277		$	90,368
Accounts payable		32,466,534			47,726,858
Income taxes payable		—			546,944
Accrued liabilities		8,226,816			24,369,060
Asset retirement obligations		1,215,314			1,659,371
Derivative instruments		1,088,047			1,265,801
Deferred tax liability, net		10,687,475			8,331,208
Total current liabilities		53,772,463			83,989,610
NONCURRENT LIABILITIES
Long-term debt, net of current portion		306,508,222			276,690,426
Asset retirement obligations		11,856,866			11,409,171
Derivative instruments		1,553,538			1,491,755
Deferred tax liability, net		16,109,431			15,609,315
Other noncurrent liabilities		721,683			732,709
Total noncurrent liabilities		336,749,740			305,933,376
Total liabilities		390,522,203			389,922,986
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY
Preferred stock (see Note 7)		826			826
Common stock (see Note 7)		6,459			5,808
Additional paid-in capital		96,647,731			95,676,875
Retained earnings		31,216,626			26,189,888
Treasury stock (see Note 7)		(250,594	)		(250,594	)
Total stockholders’ equity		127,621,048			121,622,803
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	518,143,251		$	511,545,789

The Notes to Consolidated Financial Statements are an integral part of these statements.

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CRIMSON EXPLORATION INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

		Three Months Ended
		March 31,
		2009			2008
OPERATING REVENUES
Natural gas sales	$	20,648,222		$	26,455,419
Crude oil sales		7,433,175			10,704,401
Natural gas liquids sales		2,481,987			7,768,376
Operating overhead and other income		167,483			107,895
Total operating revenues		30,730,867			45,036,091
OPERATING EXPENSES
Lease operating expenses		5,451,753			4,397,024
Production and ad valorem taxes		2,474,742			4,303,310
Exploration expenses		729,978			85,842
Depreciation, depletion and amortization		13,851,886			11,288,794
General and administrative		5,218,289			4,746,707
Gain on sale of assets		—			(15,185,929	)
Total operating expenses		27,726,648			9,635,748
INCOME FROM OPERATIONS		3,004,219			35,400,343
OTHER INCOME (EXPENSE)
Interest expense, net of amount capitalized		(4,379,069	)		(5,206,870	)
Other financing cost		(301,111	)		(377,255	)
Unrealized gain (loss) on derivative instruments		9,566,957			(28,482,519	)
Total other income (expense)		4,886,777			(34,066,644	)
INCOME BEFORE INCOME TAXES		7,890,996			1,333,699
Income tax expense		(2,856,383	)		(670,056	)
NET INCOME		5,034,613			663,643
Dividends on preferred stock (Paid 2009 — $7,875; 2008 — $84,295)		(1,081,729	)		(1,024,982	)
NET INCOME (LOSS) AVAILABLE TO COMMON STOCKHOLDERS	$	3,952,884		$	(361,339	)
NET INCOME (LOSS) PER SHARE
Basic	$	0.66		$	(0.07	)
Diluted	$	0.46		$	(0.07	)
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic		6,026,888			5,149,341
Diluted		10,856,219			5,149,341

The Notes to Consolidated Financial Statements are an integral part of these statements

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CRIMSON EXPLORATION INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 2009 (UNAUDITED)
	NUMBER OF SHARES
	PREFERRED STOCK	COMMON STOCK		PREFERRED STOCK		COMMON STOCK		ADDITIONAL PAID-IN CAPITAL		RETAINED EARNINGS			TREASURY STOCK			TOTAL STOCKHOLDERS’ EQUITY
BALANCE, DECEMBER 31, 2008	82,600	5,787,287	$	826	$	5,808	$	95,676,875	$	26,189,888		$	(250,594	)	$	121,622,803
Share-based compensation	—	648,936		—		649		962,983		—			—			963,632
Dividends paid on preferred stock	—	2,100		—		2		7,873		(7,875	)		—			—
Current period net income	—	—		—		—		—		5,034,613			—			5,034,613
BALANCE, MARCH 31, 2009	82,600	6,438,323	$	826	$	6,459	$	96,647,731	$	31,216,626		$	(250,594	)	$	127,621,048

The Notes to Consolidated Financial Statements are an integral part of these statements.

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CRIMSON EXPLORATION INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

		Three Months Ended March 31,
		2009			2008
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	5,034,613		$	663,643
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation, depletion and amortization		13,851,886			11,288,794
Asset retirement obligations		(202,216	)		—
Stock compensation expense		963,632			1,363,662
Debt issuance cost		258,372			285,347
Income taxes (deferred)		2,309,439			670,056
Dry holes, abandoned property, impaired assets		11,234			—
Gain on sale of assets		—			(15,185,929	)
Unrealized (gain) loss on derivative instruments		(9,566,957	)		28,482,519
Changes in operating assets and liabilities
(Increase) decrease in accounts receivable		52,144			(1,505,956	)
Increase in prepaid expenses		(231,461	)		(66,411	)
Decrease in accounts payable and accrued liabilities		(31,413,594	)		(2,726,199	)
Net cash provided by (used in) operating activities		(18,932,908	)		23,269,526
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of assets		—			31,249,001
Capital expenditures		(10,882,797	)		(23,485,476	)
Net cash provided by (used in) investing activities		(10,882,797	)		7,763,525
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of common stock options		—			9,000
Proceeds from debt		58,418,993			11,492,202
Payments on debt		(28,603,288	)		(36,507,526	)
Net cash provided by (used in) financing activities		29,815,705			(25,006,324	)
INCREASE IN CASH AND CASH EQUIVALENTS		—			6,026,727
CASH AND CASH EQUIVALENTS,
Beginning of period		—			4,882,511
CASH AND CASH EQUIVALENTS,
End of period	$	—		$	10,909,238
Cash Paid for Interest	$	4,808,855		$	5,946,930
Cash Paid for Income Taxes	$	5,000,000		$	—

The Notes to Consolidated Financial Statements are an integral part of these statements.

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CRIMSON EXPLORATION INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1. ORGANIZATION AND NATURE OF OPERATIONS

Crimson Exploration Inc., together with its subsidiaries, (“Crimson”, “we”, “our”, “us”) is a growing independent natural gas and crude oil company engaged in the acquisition, development, exploitation and exploration of natural gas and crude oil properties, primarily in the onshore U.S. Gulf Coast and South Texas regions.

2. BASIS OF PRESENTATION

Presentation – The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S.”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by U.S. generally accepted accounting principles (“GAAP”) for complete financial statements. The accompanying consolidated financial statements at March 31, 2009 (unaudited) and December 31, 2008 and for the first quarter 2009 (unaudited) and 2008 (unaudited) contain all normally recurring adjustments considered necessary for a fair presentation of our financial position, results of operations and cash flows for such periods. Operating results for the first quarter 2009 are not necessarily indicative of the results that may be expected for the year ending December 31, 2009. These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying notes included in our annual report on Form 10-K for the year ended December 31, 2008.

The accompanying financial statements include Crimson Exploration Inc. and its wholly-owned subsidiaries: Southern G Holdings, LLC, acquired May 8, 2007, and merged with Crimson Exploration Operating, Inc. on January 1, 2008, Crimson Exploration Operating, Inc., formed January 5, 2006 and LTW Pipeline Co., formed April 19, 1999. All material intercompany transactions and balances are eliminated upon consolidation. Certain reclassifications were made to previously reported amounts to make them consistent with the current presentation format.

Adoption of SFAS 162 — We adopted Statement of Financial Accounting Standard (“SFAS”) No. 162, “The Hierarchy of Generally Accepted Accounting Principles” (“SFAS 162”). This new standard was intended to improve financial reporting by identifying a consistent framework, or hierarchy, for selecting accounting principles to be used in preparing financial statements that are presented in conformity with GAAP for nongovernmental entities. Prior to the issuance of SFAS 162, GAAP hierarchy was defined in the American Institute of Certified Public Accountants (“AICPA”) Statement on Auditing Standards (“SAS”) No. 69, “The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles” in the Independent Auditor’s Report.  The adoption of this statement did not have a material impact on our financial position or results of operations.

Adoption of SFAS 161 — We adopted SFAS No. 161, “Disclosure about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133” (“SFAS161”), as of January 1, 2009. SFAS 161 amends and expands the disclosure requirements of SFAS No. 133 “Accounting for Derivative Instruments and Hedging Activities” (“SFAS 133”) with the intent to provide users of financial statements with an enhanced understanding of: (i) how and why an entity uses derivative instruments; (ii) how derivative instruments and related hedged items are accounted for under SFAS 133 and its related interpretations; and (iii) how derivative instruments and related hedged items affect an entity’s financial position, financial performance and cash flows. See Note 5 – “Derivative Instruments” for these

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additional disclosures. The adoption of this statement did not have an impact on our financial position or results of operations.

Adoption of SFAS 141(R) — We adopted the revision to SFAS 141 “Business Combinations” (“SFAS141(R)”) as of January 1, 2009. The revision broadens the definition of a business combination to include all transactions or other events in which control of one or more businesses is obtained. Further, this statement establishes principles and requirements for how an acquirer recognizes assets acquired, liabilities assumed and any non-controlling interests acquired. Also in April 2009, the FASB issued FSP FAS 141(R)-1 “Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise From Contingencies” (FSP FAS 141(R)-1”). FSP FAS 141(R)-1 deals with the initial recognition and measurement of an asset acquired or a liability assumed in a business combination that arises from a contingency provided the asset or liability’s fair value on the date of acquisition can be determined. FSP FAS 141(R)-1 is effective for assets or liabilities from contingencies in business combinations that occur following the start of the first fiscal year that begins on or after December 15, 2008. The adoption of this statement and this FSP has not had an impact on our financial position or results of operations, because we have not yet had any business combinations in 2009.

Adoption of FSP SFAS 157-2 — We adopted Staff Position (“FSP”) No. SFAS 157-2, “Effective Date of FASB Statement No. 157” (“SFAS 157”) (“FSP157-2”) as of January 1, 2009. FSP 157-2 deferred the effective date of SFAS 157 to fiscal years beginning after November 15, 2008, and interim periods within those fiscal years, for all nonfinancial assets and nonfinancial liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). See Note 4 – “Fair Value Measurements” for additional disclosures. The adoption of this FSP did not have a material impact on our financial position or results of operations.

3. OIL AND GAS PROPERTIES

Acquisition from Smith Production Inc

In May 2008, we acquired four producing gas fields and undeveloped acreage in South Texas from Smith Production Inc. (“Smith”) for a purchase price of $65.0 million with an effective date of January 1, 2008. After adjustment for the estimated results of operations, and other typical purchase price adjustments of approximately $7.4 million for the period between the effective date and the closing date, the cash consideration was $57.6 million.

Fort Worth Barnet Shale Disposition

In January 2008, we and our operator-partner entered into a series of agreements to sell our interests in wells and undeveloped acreage in the Fort Worth Barnett Shale Play in Johnson and Tarrant counties, Texas to another industry participant active in that area. We owned a 12.5% non-operated working interest in the assets being sold and had 1.5 Bcfe in proved reserves at December 31, 2007. The final total consideration paid by the buyer was based on existing wells and undeveloped acreage owned by us and our partner at the time of the final closing. Our share of the consideration received was approximately $34.4 million. Proceeds received for our interest were primarily used to repay amounts outstanding under our senior revolving credit facility and to help finance our acquisition of the properties from Smith. Our net book value of these assets sold was $18.8 million, which resulted in a gain of $15.6 million.

4. FAIR VALUE MEASUREMENTS

SFAS 157, which we adopted as of January 1, 2008, establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three levels. The fair value hierarchy gives the highest priority to quoted market prices (unadjusted) in active markets for identical

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assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). Level 2 inputs are inputs, other than quoted prices included within Level 1, which are observable for the asset or liability, either directly or indirectly. We use Level 1 inputs when available, as Level 1 inputs generally provide the most reliable evidence of fair value.

Certain of our assets and liabilities are reported at fair value in our consolidated balance sheets.  The following methods and assumptions were used to estimate the fair values for each class of financial instruments:

Cash, Cash Equivalents, Accounts Receivable and Accounts Payable. The carrying amounts approximate fair value due to the short-term nature or maturity of the instruments. Our allowance for doubtful accounts as of March 31, 2009 and December 31, 2008 remains at $0.2 million.

Derivative Instruments. Our derivative instruments consist of variable to fixed price commodity swaps, costless collars and interest rate swaps. We value our derivative instruments utilizing estimates of present value as calculated by the respective counterparty financial institutions and reviewed by management. See Note 5 – “Derivative Instruments” for further information. Fair value information for assets and liabilities that are measured at fair value is as follows at March 31, 2009:

		Total		Fair Value Measurements Using
	Carrying Value			Level 1		Level 2			Level 3
Derivatives
Crude oil & natural gas swaps	$	3,472,071		$	—	$	3,472,071		$	—
Crude oil & natural gas collars		46,365,233			—		46,365,233			—
Interest rate swaps		(6,113,656	)		—		(6,113,656	)		—

Asset Impairments – In accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” we review a proved oil and gas property for impairment when events and circumstances indicate a significant decline in the recoverability of the carrying value of such property. If events indicate a significant decline in the recoverability of such property, we estimate the future cash flows expected in connection with the property and compare such future cash flows to the carrying amount of the property to determine if the carrying amount is recoverable. If the carrying amount of the property exceeds its estimated undiscounted future cash flows, the carrying amount of the property is reduced to its estimated fair value. Fair value may be estimated using comparable market data, a discounted cash flow method, or a combination of the two. In the discounted cash flow method, estimated future cash flows are based on management’s expectations for the future and include estimates of future oil and gas production, commodity prices based on commodity futures price strips as of the date of the estimate, operating and development costs, and a risk-adjusted discount rate. We had no asset impairments in the first quarter 2009.

Debt –The fair value of floating-rate debt approximates the carrying amounts because the interest rates paid on such debt are typically set for periods of three months or less and are based on Prime or LIBOR rates at the time the loans are renewed. See Note 6 – “Debt” for further information.

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Asset Retirement Obligations – We estimate the fair values of asset retirement obligations (AROs) based on discounted cash flow projections using numerous estimates, assumptions and judgments regarding such factors as the existence of a legal obligation for an ARO; estimated probabilities, amounts and timing of settlements; the credit-adjusted risk-free rate to be used; and inflation rates.

		Total	Fair Value Measurements Using
	Carrying Value		Level 1		Level 2		Level 3
Asset retirement obligations	$	13,072,180	$	—	$	—	$	13,072,180

ARO Rollforward
January 1, 2009	$	13,068,542
Additions		—
Accretion		205,854
Revisions		—
Sales		(11,488	)
P&A Activity		(190,728	)
Ending March 31, 2009 Liability	$	13,072,180

5. DERIVATIVE INSTRUMENTS

In the past we have entered into, and may in the future enter into, certain derivative arrangements with respect to portions of our natural gas and crude oil production, to reduce our sensitivity to volatile commodity prices, and with respect to portions of our debt, to reduce our sensitivity to volatile interest rates. None of our derivative instruments are designed cash flow hedges under SFAS 133. We believe that these derivative arrangements, although not free of risk, allow us to achieve a more predictable cash flow and to reduce exposure to commodity price and interest rate fluctuations. However, derivative arrangements limit the benefit of increases in the prices of natural gas, crude oil and natural gas liquids sales and limit the benefit of decreases in interest rates. Moreover, our derivative arrangements apply only to a portion of our production and our debt and provide only partial protection against declines in commodity prices and increases in interest rates. Such arrangements may expose us to risk of financial loss in certain circumstances. We continuously reevaluate our hedging programs in light of changes in production, market conditions, commodity price forecasts, capital spending and debt service requirements.

We used a mix of swaps and costless collars to accomplish our hedging strategy. We also constructively fixed the base LIBOR rate on $200.0 million of our variable rate debt by entering into interest rate swap agreements. Derivative assets and liabilities with the same counterparty, subject to contractual terms which provides for net settlement, are reported on a net basis on our consolidated balance sheets. We have exposure to financial institutions in the form of derivative transactions in connection with our hedges. These transactions are with counterparties in the financial services industry specifically with members of our bank group. These transactions could expose us to credit risk in the event of default of our counterparties. In addition, if any lender under our credit facility is unable to fund its commitment, our liquidity could be reduced by an amount up to the aggregate amount of such lender’s commitment under our credit facility. We believe our counterparty risk is low because of the offsetting relationship we have with each of our counterparties. See Note 4 — “Fair Value Measurements” for further information.

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The following derivative contracts were in place at March 31, 2009:

Crude Oil		Volume/Month	Price/Unit		Fair Value
Apr 2009-Dec 2009	Swap	5,200 Bbls	$74.20	$	895,665
Apr 2009-Dec 2009	Collar	12,800 Bbls	$66.55-$71.40		1,428,280
Apr 2009-Dec 2009	Collar	10,694 Bbls	$115.00-$171.50		5,767,470
Jan 2010-Dec 2010	Swap	4,250 Bbls	$72.32		484,493
Jan 2010-Dec 2010	Collar	9,000 Bbls	$65.28-$70.60		486,257
Jan 2010-Dec 2010	Collar	7,604 Bbls	$110.00-$181.25		4,360,169
Jan 2011-Dec 2011	Swap	3,300 Bbls	$70.74		118,866
Jan 2011-Dec 2011	Collar	7,000 Bbls	$64.50-$69.50		(69,220	)
Natural Gas
Apr 2009-Dec 2009	Swap	36,000 Mmbtu	$8.32		1,302,525
Apr 2009-Dec 2009	Collar	475,000 Mmbtu	$7.90-$9.45		15,418,809
Apr 2009-Dec 2009	Collar	100,833 Mmbtu	$9.50-$18.70		4,711,260
Jan 2010-Dec 2010	Swap	29,000 Mmbtu	$7.88		670,522
Jan 2010-Dec 2010	Collar	351,000 Mmbtu	$7.57-$9.05		7,797,979
Jan 2010-Dec 2010	Collar	85,167 Mmbtu	$9.00-$15.25		3,384,311
Jan 2011-Dec 2011	Collar	266,000 Mmbtu	$7.32-$8.70		3,079,918
Interest rate		Notional Amount	Fixed LIBOR Rate
Apr 2009-Dec 2010	Swap	$50,000,000	1.50%		(453,195	)
Apr 2009- May 2011	Swap	$150,000,000	2.90%		(5,660,461	)
Total net fair value asset of derivative instruments				$	43,723,648

The total net fair value asset for derivative instruments at March 31, 2009 was $43.7 million and at December 31, 2008 was $34.2 million, which are shown as derivative instruments on the balance sheet.

The following table details the effect of the Company’s derivative contracts on the consolidated statements of operations for the first quarter 2009 and 2008, respectively:

Contract Type	Location of Gain or (Loss) Recognized in Income		Amount of Gain or (Loss) Recognized in Income
Commodity contracts	Operating revenues	$	9,685,298		$	(1,016,202	)
Interest rate contracts	Interest expense		(1,003,158	)		(605,645	)
	Realized gain (loss)	$	8,682,140		$	(1,621,847	)
Commodity contracts	Other income (expense)	$	9,995,087		$	(25,260,920	)
Interest rate contracts	Other income (expense)		(428,130	)		(3,221,599	)
	Unrealized gain (loss)	$	9,566,957		$	(28,482,519	)

6. DEBT

We maintain a senior secured revolving credit facility with Wells Fargo Bank, National Association, as agent (the “Senior Credit Agreement”), to provide for acquisitions of oil and gas properties and for general corporate purposes. The Senior Credit Agreement provides for aggregate borrowings of up to $400.0 million, with an initial borrowing base of $200.0 million that decreased to $172.5 and $170.0 million effective April 1, 2009 and May 1, 2009, respectively, is subject to semi-annual redeterminations, and matures on May 8, 2011. The borrowing base will be further reduced by $5.0 million on the first day of each month, beginning June 1, 2009, until the next borrowing base redetermination scheduled for October 1, 2009. As of March 31, 2009, we had an outstanding loan balance of $156.5 million under our Senior Credit Agreement.

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On May 13, 2009, we entered into a second amendment to our second lien credit agreement dated May 8, 2007 (the “Second Lien Credit Agreement”) with our lenders, including an affiliate of OCM GW Holdings, LLC, our majority stockholder. The Second Lien Credit Agreement provides for term loans to be made to us in a single draw in an aggregate principal amount of $150.0 million, with a term of five years with all principal amounts, together with all accrued and unpaid interest, due and payable in full on May 8, 2012. This second amendment amends the Second Lien Credit Agreement by, among other things, (i) modifying the leverage ratio to not be greater than the ratio equal to the sum of the leverage ratio for the Senior Credit Agreement and 0.25 to 1.00 , (ii) modifying the PV-10 ratio beginning with the fiscal quarter ending June 30, 2009, to be less than 1.2x, beginning with the fiscal quarter ending December 31, 2009, to be less than 1.25x and beginning with the fiscal quarter ending December 31, 2010 and thereafter, to be less than 1.5x, (iii) increasing the applicable margin to 8.0% for loans bearing interest at the LIBO Rate and 7.0% for loans bearing interest at the alternate base rate, unless we meet certain leverage and PV-10 ratios, in which case the applicable margin will be 7.0% and 6.0%, respectively, (iv) setting a minimum LIBO Rate of 3.0%, and (v) including certain fee acreage in calculations of our borrowing base after we have granted a lien on such fee acreage. In connection with the second amendment to the Second Lien Credit Agreement, a waiver was obtained for non-compliance related to historical financial and proved reserve covenants. As of March 31, 2009, we had an outstanding loan balance of $150.0 million under our Second Lien Credit Agreement.

The Senior Credit Agreement and the Second Lien Credit Agreement (the “Credit Agreements”) are secured by a lien on substantially all of our assets, as well as a security interest in the stock of our subsidiaries. The obligations under the Second Lien Credit Agreement are subordinate and junior to those under the Senior Credit Agreement. Interest is payable on the Credit Agreements as borrowings mature and renew.

The Credit Agreements include usual and customary affirmative covenants for credit facilities of the respective types and sizes, as well as customary negative covenants, including, among others, limitations on liens, hedging, mergers, asset sales or dispositions, payments of dividends, incurrence of additional indebtedness, certain leases and investments outside of the ordinary course of business, as well as events of default. The Credit Agreements also contain certain financial and proved reserve covenants. See Note 10 of our 2008 Annual Report on Form 10-K for a more detailed description of our covenants under the Credit Agreements, other than those revised above. At March 31, 2009, we were in compliance with the aforementioned covenants, or waivers have been obtained for non-compliance.

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7. STOCKHOLDERS’ EQUITY

In the first quarter 2009, we issued approximately 0.6 million shares of restricted stock to our employees under the performance-based Long-Term Incentive Plan (“LTIP”) for the 2008 plan year.

In the first quarter 2008, we issued 34,821 shares of common stock, par value $0.001 per share (“Common Stock”), in conjunction with the conversion of 500 shares of Series G Preferred Stock, of which 7,043 shares were for accrued dividends.

		March 31,			December 31,
		2009			2008
Preferred Stock
Series G, par value $0.01; 81,000 shares authorized; 80,500 shares issued and outstanding at March 31, 2009 and December 31, 2008, respectively.	$	805		$	805
Series H, par value $0.01; 6,500 shares authorized; 2,100 shares issued and outstanding at March 31, 2009 and December 31, 2008, respectively.		21			21
	$	826		$	826
Common Stock
Par value $0.001; 200,000,000 shares authorized; 6,438,323 and 5,787,287 shares issued and outstanding – net of treasury shares at March 31, 2009 and December 31, 2008, respectively	$	6,459		$	5,808
Treasury Stock
At cost, 20,625 shares at March 31, 2009 and December 31, 2008, respectively	$	(250,594	)	$	(250,594	)

The following table sets forth the accumulated value of undeclared dividends on our preferred stock at March 31, 2009 and December 31, 2008, respectively:

		March 31,		December 31,
		2009		2008
Series G Preferred Stock	$	15,443,214	$	14,365,860
Series H Preferred Stock		5,880		9,380
	$	15,449,094	$	$14,375,240

Until such time as the Board of Directors declares and pays dividends on our Series G Preferred Stock, dividends shall continue to accumulate. Dividends on our Series H Preferred Stock are declared quarterly by our Board of Directors, and as such, are paid out in Common Stock, the following period.

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8. SHARE-BASED COMPENSATION

We have share-based compensation for employees and directors, which includes both stock option and restricted stock awards. The following table reflects share-based compensation expense, assuming a 36.5% effective tax rate for the periods ended:

		Three Months Ended March 31,
			2009			2008
Share-based compensation expense, net of tax of $351,726 and $451,955, respectively	$	611,906			$	786,277
Basic earnings per share impact	$	(0.10		)	$	(0.15	)
Diluted earnings per share impact	$	(0.06		)	$	(0.15	)

In the first quarter 2009, we awarded approximately 0.6 million shares of restricted stock and 0.5 million shares in stock options to our employees under the performance-based Long-Term Incentive Plan (“LTIP”) for the 2008 plan year. There were 9,500 shares in stock options and no restricted stock awards granted in the first quarter 2008.

9. INCOME TAXES

Income tax expense for the first quarter 2009 was $2.9 million, compared to $0.7 million for the first quarter 2008. The quarterly income tax expense was based on our estimate of the effective tax rate expected to be applicable for the full year. The effective tax rate of 36.2% for the first quarter 2009 differs from the federal statutory rate of 35% primarily because of state taxes.

10. RECENT ACCOUNTING PRONOUNCEMENTS

FSP FAS 157-4. In April 2009, the Financial Accounting Standards Board (“FASB”) issued FSP 157-4 “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP FAS 157-4”). FSP FAS 157-4 provides guidelines for a broad interpretation of when to apply market-based fair value measures. It reaffirms management’s need to use judgment to determine when a market that was once active has become inactive and in determining fair values in markets that are no longer active. FSP FAS 157-4 is effective for interim and annual periods ending after June 15, 2009, but may be adopted early for interim and annual periods ending after March 15, 2009. We are currently evaluating the provisions of FSP FAS 157-4 and assessing the impact it may have on our financial statements.

FSP FAS 107-1 and APB 28-1. Also in April 2009, the FASB issued FSP FAS 107-1 and APB 28-1 “Interim Disclosures about Fair Value of Financial Instruments” (“FSP FAS 107-1 and APB 28-1”). This FSP increases the frequency of fair value disclosures to a quarterly instead of annual basis. The guidance relates to fair value disclosures for any financial instruments that are not currently reflected on the balance sheet at fair value. FSP FAS 107-1 and APB 28-1 are effective for interim and annual periods ending after June 15, 2009, but may be adopted early for interim and annual periods ending after March 15, 2009. We are currently evaluating the provisions of FSP FAS 107-1 and APB 28-1 and assessing the impact it may have on our financial reporting disclosures.

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ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

Forward-looking statements

The following discussion should be read in conjunction with the consolidated financial statements and the notes thereto included in this quarterly report on Form 10-Q and with the consolidated financial statements, notes and management’s discussion and analysis reported on our 2008 Annual Report on Form 10-K. Statements in this discussion may be forward-looking. These forward-looking statements involve risks and uncertainties.

These forward-looking statements include, but are not limited to, statements regarding:

• estimates of proved reserve quantities and net present values of those reserves;

• estimates of probable and possible reserve quantities;

• reserve potential;

• business strategy;

• estimates of future commodity prices;

• amounts and types of capital expenditures and operating expenses;

• expansion and growth of our business and operations;

• expansion and development trends of the oil and natural gas industry;

• acquisitions of oil and natural gas properties;

• production of oil and natural gas reserves;

• exploration prospects;

• wells to be drilled, and drilling results;

• operating results and working capital; and

• future methods and types of financing.

We caution that a number of factors could cause future production, revenues and expenses to differ materially from our expectations. For a discussion on risk factors affecting our business, see the information in “ITEM1A.Risk Factors” contained in our most recent Annual Report filed on Form10-K with the Securities and Exchange Commission.

Overview

We are primarily engaged in the acquisition, development, exploitation and exploration of natural gas, crude oil and natural gas liquids, primarily in the onshore U.S. Gulf Coast and South Texas regions. Our focus is on increasing production from our existing properties through further exploitation, development and exploration, and on acquiring additional interests in oil and natural gas properties. Our gross revenues are derived from the following sources:

1. Natural gas, crude oil and natural gas liquids sales that are proceeds from the sale of natural gas, crude oil and natural gas liquids production.  This represents over 99% of our gross revenues.

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2. Operating overhead and other income that consists primarily of administrative fees received for operating natural gas and crude oil properties for other working interest owners and for marketing and transporting natural gas for those owners.

Disposition in 2008

In January 2008, we and our operator-partner entered into a series of agreements to sell our interests in wells and undeveloped acreage in the Fort Worth Barnett Shale Play in Johnson and Tarrant counties, Texas to another industry participant active in that area. We owned a 12.5% non-operated working interest in the assets being sold and had 1.5 Bcfe in proved reserves at December 31, 2007. The final total consideration paid by the buyer was based on existing wells and undeveloped acreage owned by us and our partner at the time of the final closing. Our share of the consideration received was approximately $34.4 million. Proceeds received for our interest were primarily used to repay amounts outstanding under our senior revolving credit facility (defined below) and to help finance our acquisition of the properties from Smith. Our net book value of these assets sold was $18.8 million, which resulted in a gain of $15.6 million.

Results of Operations

The following is a discussion of our consolidated results of operations, financial condition and capital resources. You should read this discussion in conjunction with our Consolidated Financial Statements and the Notes thereto contained elsewhere in this Form 10-Q.

Comparative results of operations for the periods indicated are discussed below.

Three Months Ended March31,2009 Compared to Three Months Ended March31, 2008

Revenues

		Three months ended March 31,
		2009		2008		Change		Percent Change
Revenues:		(in millions, except percentages)
Natural gas sales	$	20.7	$	26.4	$	(5.7	)	-21.6%
Crude oil sales		7.4		10.7		(3.3	)	-30.8%
Natural gas liquids sales		2.5		7.8		(5.3	)	-67.9%
Product revenues	$	30.6	$	44.9	$	(14.3	)	-31.8%

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Natural Gas, Crude Oil And Natural Gas Liquids Sales. Revenues from the sale of crude oil, natural gas and natural gas liquids, net of the realized effects of our hedging instruments, were $30.6 million for the first quarter 2009 compared to $44.9 million for the first quarter 2008 due to an approximate 10% decrease in production and an approximate 25% decline in realized commodity prices.

	Three months ended March 31,
	2009	2008	Change		Percent Change
Sales (production) volumes:
Natural gas (Mcf)	3,076,114	3,151,837	(75,723	)	-2.4%
Crude oil (Bbl)	96,305	136,157	(39,852	)	-29.3%
Natural gas liquids (Bbl)	110,242	135,854	(25,612	)	-18.9%
Natural gas equivalents (Mcfe)	4,315,396	4,783,903	(468,507	)	-9.8%

Quarterly production was approximately 4.3 Bcfe for the first quarter 2009 compared to approximately 4.8 Bcfe for the first quarter 2008. On a daily basis, we produced an average of 47,949 Mcfe for the 2009 quarter compared to an average of 52,570 Mcfe for the 2008 quarter. Production volumes decreased primarily due to natural field decline and limited production enhancing capital expenditure activity in the first quarter 2009.

		Three months ended March 31,
		2009		2008		Change		Percent Change
Realized prices (net of hedges):
Natural gas (Mcf)	$	6.71	$	8.39	$	(1.68	)	-20.0%
Crude oil (Bbl)		77.18		78.62		(1.43	)	-1.8%
Natural gas liquids (Bbl)		22.51		57.18		(34.67	)	-60.6%
Natural gas equivalents (Mcfe)		7.08		9.39		(2.31	)	-24.6%

		Three months ended March 31,
		2009		2008		Change		Percent Change
Prices before effects of hedges:
Natural gas (Mcf)	$	4.75	$	8.09	$	(3.34	)	-41.3%
Crude oil (Bbl)		39.30		93.05		(53.75	)	-57.8%
Natural gas liquids (Bbl)		22.51		57.18		(34.67	)	-60.6%
Natural gas equivalents (Mcfe)		4.84		9.60		(4.76	)	-49.6%

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Natural gas, crude oil and natural gas liquids prices are reported net of the realized effect of our hedging agreements. We realized gains of $3.6 million on our crude oil hedges and $6.0 million on our natural gas hedges in the first quarter 2009, compared to realized losses of $2.0 million for crude oil hedges and realized gains of $1.0 million for natural gas hedges in the first quarter 2008.

Costs and Expenses

		Three months ended March 31,
		2009		2008		Change		Percent Change
Operating Expenses:		(in millions, except percentages)
Lease operating expenses	$	5.4	$	4.4	$	1.0		22.7%
Production and ad valorem taxes		2.5		4.3		(1.8	)	-41.9%
Exploration expenses		0.7		0.1		0.6		600.0%
General and administrative(1)		4.2		3.5		0.7		20.0%
		12.8		12.3		0.5		4.1%
Depreciation, depletion & amortization		13.9		11.3		2.6		23.0%
Share-based compensation		1.0		1.2		(0.2	)	-16.7%
Operating expenses	$	27.7	$	24.8	$	2.9		11.7%

(1) Total general and administrative costs include share-based compensation on the Consolidated Statements of Operations.

		Three months ended March 31,
		2009		2008		Change		Percent Change
Selected Costs ($ per Mcfe):		(in millions, except percentages)
Lease operating expenses	$	1.27	$	0.92	$	0.35		38.0%
Production and ad valorem taxes		0.57		0.90		(0.33	)	-36.7%
Exploration expenses		0.17		0.02		0.15		750.0%
General and administrative(1)		0.99		0.73		0.26		35.6%
		3.00		2.57		0.43		16.7%
Depreciation, depletion & amortization		3.21		2.36		0.85		36.0%
Share-based compensation		0.22		0.26		(0.04	)	-15.4%
Selected costs	$	6.43	$	5.19	$	1.24		23.9%

(1) Total general and administrative costs include share-based compensation on the Consolidated Statements of Operations.

Lease Operating Expenses. Lease operating expenses for the first quarter 2009 were $5.4 million, compared to $4.4 million in the first quarter 2008, an increase due to the acquisition from Smith Production, Inc.

Production and Ad Valorem Tax Expenses. Production and ad valorem tax expenses for the first quarter 2009 were $2.5 million, compared to $4.3 million for the first quarter 2008, due to lower production and realized prices in 2009.

Exploration Expenses. Exploration expenses were $0.7 million in the first quarter 2009 compared to $0.1 million for the first quarter 2008. The increase in exploration expenses was primarily due to geological and geophysical (“G&G”) costs and settled asset retirement costs incurred in the first quarter 2009. There were only minimal G&G costs and no settled asset retirement costs in the first quarter 2008.

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Depreciation, Depletion and Amortization (“DD&A”). DD&A expense for the first quarter 2009 was $13.9 million compared to $11.3 million for the first quarter 2008, due to a higher DD&A rate resulting from asset acquisitions and capital expenditures during the 2008 high-cost environment.

General and Administrative (“G&A”) Expenses. Total G&A expenses were $5.2 million for the first quarter 2009 compared to $4.7 million for the first quarter 2008. Included in G&A expense is a non-cash stock expense of $1.0 million ($0.22 per Mcfe) and $1.2 million ($0.26 per Mcfe) for the first quarter 2009 and 2008, respectively. G&A expenses increased primarily due to higher office costs related to our expanded infrastructure.

Gain on Sale of Assets. We sold no assets during the first quarter 2009 quarter, while the gain on the sale of assets in the first quarter 2008 was $15.2 million primarily due to the disposition of our interest in the Barnett Shale Play in the first quarter 2008.

Interest Expense. Interest expense was $4.4 million for the first quarter 2009, compared to $5.2 million for the first quarter 2008. Total interest expense decreased primarily as a result of lower interest rates. Total interest expense capitalized for the first quarter 2009 and 2008 was zero and $0.4 million, respectively.

Other Financing Costs. Other financing costs were $0.3 million for the first quarter 2009 compared with $0.4 million for the first quarter 2008. These expenses are comprised primarily of the amortization of capitalized costs associated with our credit facilities and to commitment fees related to the unused portion of the credit facilities.

Unrealized Gain (Loss) on Derivative Instruments. Unrealized gain or loss on derivative instruments is the change in the mark-to-market exposure under our commodity price hedging contracts and our interest rate swaps. This non-cash unrealized gain for the first quarter 2009 was $9.6 million compared with a non-cash unrealized loss of $28.5 million for the first quarter 2008. Unrealized gain or loss will vary period to period, and will be a function of the hedges in place, the strike prices of those hedges and the forward curve pricing of the commodities and interest rates being hedged.

Income Taxes. Our net income before taxes was $7.9 million for the first quarter 2009 compared to $1.3 million in the first quarter 2008. After adjusting for permanent tax differences, we recorded income tax expense of $2.9 million for the first quarter 2009, compared to $0.7 million for the first quarter 2008.

Dividends on Preferred Stock. Dividends on preferred stock were $1.1 million for the first quarter 2009 compared with $1.0 million in the first quarter 2008. Dividends in the first quarter 2009 included approximately $1.1 million on the Series G Preferred Stock and $4,375 on the Series H Preferred Stock. Dividends in the first quarter 2008 included $1.0 million on the Series G Preferred Stock, and $21,000 on the Series H Preferred Stock. Until such time as the Board of Directors declares and pays dividends on our Series G Preferred Stock, dividends shall continue to accumulate. Dividends on our Series H Preferred Stock are declared quarterly by our Board of Directors, and as such, are paid out in Common Stock, the following period.

Liquidity and Capital Resources

Our primary cash requirements are for capital expenditures, working capital, operating expenses, acquisitions and principal and interest payments on indebtedness. Our primary sources of liquidity are cash generated by operations and amounts available to be drawn under our credit facilities. To the extent our cash requirements exceed our sources of liquidity, we will be required to fund our cash requirements through other means, such as through debt and equity financing activities, or we will be required to curtail our expenditures.

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Liquidity and cash flow

In recent months there has been extreme volatility and disruption in the equity and debt markets. The volatility and disruptions have created conditions that may adversely affect the financial condition of the lenders in our senior revolving credit facility, the counterparties to our derivative instruments, our insurers and our oil and natural gas purchasers. While these market conditions persist, our ability to access the equity and debt markets may be adversely affected. In addition, while a substantialportion of our production is hedged, we are still subject to commodity price risk and our liquidity may be adversely affected if commodity prices continue to decline.

Our working capital deficit was $0.9 million as of March 31, 2009, compared to a working capital deficit of $37.6 million as of December 31, 2008. Current assets increased $6.5 million, primarily due to the increase in the fair value of our derivatives. Current liabilities, primarily accounts payable and accrued liabilities, decreased $30.2 million due to the reduced capital expenditure activity for the 2009 quarter compared to the last two quarters of 2008.

Net cash used in operating activities was $18.9 million for the first quarter 2009, compared to net cash provided by operating activities of $23.3 million for the first quarter 2008, a change resulting primarily from the reduction in revenues, accounts payable and accrued liabilities during the first quarter 2009. During the first quarter 2009, the net cash provided by operating activities, before changes in working capital, was $12.7 million. Net cash provided by operating activities, before changes in working capital, was $27.6 million for the 2008 quarter.

Net cash used in investing activities was $10.9 million for the first quarter 2009 compared to net cash provided by investing activities of $7.8 million for the first quarter 2008. Net cash flows from investing activities during the first quarter 2009 were primarily for capital expenditures from development of our proved reserves. Net cash flows from investing activities during the first quarter 2008 resulted from the proceeds of the sale of our interest in the Barnett Shale Play, offset by capital expenditures primarily for the development of our Southeast Texas properties.

Net cash provided by financing activities was $29.8 million for the first quarter 2009 compared to net cash used in financing activities of $25.0 million for the first quarter 2008. Net cash provided by financing activities during the first quarter 2009 was primarily the result of net borrowings under our revolver to satisfy the fourth quarter 2008 balance in current liabilities related to the active drilling program in 2008. Net cash used in financing activities for the first quarter 2008 was primarily the result of repayments of debt from the sale proceeds of our interest in the Barnett Shale Play and internally generated cash flow from operations.

See the Consolidated Statements of Cash Flows for further details.

Capital resources

We maintain a senior secured revolving credit facility with Wells Fargo Bank, National Association, as agent (the “Senior Credit Agreement”), to provide for acquisitions of oil and gas properties and for general corporate purposes. The Senior Credit Agreement provides for aggregate borrowings of up to $400.0 million, with a borrowing base of $200.0 million decreasing to $172.5 million effective April 1, 2009, subject to semi-annual redeterminations, and maturing on May 8, 2011. The borrowing base will be further reduced to $170.0 million effective May 1, 2009 and further reduced by $5.0 million on the first day of each subsequent month, beginning June 1, 2009, until the next borrowing base redetermination scheduled for October 1, 2009. As of March 31, 2009, we had an outstanding loan balance of $156.5 million under our Senior Credit Agreement.

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On May 13, 2009, we entered into a second amendment to our second lien credit agreement dated May 8, 2007 (the “Second Lien Credit Agreement”) with our lenders, including an affiliate of OCM GW Holdings, LLC, our majority stockholder. The Second Lien Credit Agreement provides for term loans to be made to us in a single draw in an aggregate principal amount of $150.0 million, with a term of five years with all principal amounts, together with all accrued and unpaid interest, due and payable in full on May 8, 2012. This second amendment amends the Second Lien Credit Agreement by, among other things, (i) modifying the leverage ratio to not be greater than the ratio equal to the sum of the leverage ratio for the Senior Credit Agreement and 0.25 to 1.00 , (ii) modifying the PV-10 ratio beginning with the fiscal quarter ending June 30, 2009, to be less than 1.2x, beginning with the fiscal quarter ending December 31, 2009, to be less than 1.25x and beginning with the fiscal quarter ending December 31, 2010 and thereafter, to be less than 1.5x, (iii) increasing the applicable margin to 8.0% for loans bearing interest at the LIBO Rate and 7.0% for loans bearing interest at the alternate base rate, unless we meet certain leverage and PV-10 ratios, in which case the applicable margin will be 7.0% and 6.0%, respectively, (iv) setting a minimum LIBO Rate of 3.0%, and (v) including certain fee acreage in calculations of our borrowing base after we have granted a lien on such fee acreage. In connection with the second amendment to the Second Lien Credit Agreement, a waiver was obtained for non-compliance related to historical financial and proved reserve covenants. As of March 31, 2009, we had an outstanding loan balance of $150.0 million under our Second Lien Credit Agreement.

The Senior Credit Agreement and the Second Lien Credit Agreement (the “Credit Agreements”) are secured by a lien on substantially all of our assets, as well as a security interest in the stock of our subsidiaries. The obligations under the Second Lien Credit Agreement are subordinate and junior to those under the Senior Credit Agreement. Interest is payable on the Credit Agreements as borrowings mature and renew.

The Credit Agreements include usual and customary affirmative covenants for credit facilities of the respective types and sizes, as well as customary negative covenants, including, among others, limitations on liens, hedging, mergers, asset sales or dispositions, payments of dividends, incurrence of additional indebtedness, certain leases and investments outside of the ordinary course of business, as well as events of default. The Credit Agreements also contain certain financial and proved reserve covenants. See Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources” and Note 10 of our consolidated financial statements included in our 2008 Annual Report on Form 10-K for a more detailed description of our covenants under the Credit Agreements, other than those revised above. At March 31, 2009, we were in compliance with the aforementioned covenants, or waivers have been obtained for non-compliance.

At May 11, 2009, we had $157.5 million outstanding under the Senior Credit Agreement and $150.0 million outstanding under the Second Lien Credit Agreement, with availability under the Senior Credit Agreement of $12.5 million as of May 1, 2009.

Future capital requirements

We anticipate that acquisitions of oil and natural gas producing properties will continue to play an important role in our business strategy. Another important component of our growth strategy is the addition to proved reserves through exploitation drilling for probable and possible reserves on acquired properties and lower risk exploration drilling in our core areas of focus. While there are currently no unannounced agreements, or ongoing negotiations for the acquisition of any material businesses or assets other than those discussed herein, such transactions can be effected quickly and may occur at any time. Our ability to consummate any transaction in the future will be determined, in large part, by the availability of debt and equity capital at that time. If we are unable to obtain additional capital on acceptable terms, we may be unable to grow through acquisitions.

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We believe that our internally generated cash flow, combined with access to our Senior Credit Agreement will be sufficient to meet the liquidity requirements necessary to fund our daily operations, planned capital development and debt service requirements for at least the next twelve months. However, our ability to maintain our Senior Credit Agreement and our internally generated cash flow can be impacted by economic conditions outside of our control such as the current disruption in the capital and credit markets as well as continued commodity price volatility.

We believe that we have sufficient liquidity through our cash from operations and borrowing capacity under our credit facilities to meet our short-term and long-term normal recurring operating needs, derivative obligations, debt service obligations, contingencies and anticipated capital expenditures.

Recent Accounting Pronouncements

FSP FAS 157-4. In April 2009, the Financial Accounting Standards Board (“FASB”) issued FASB Staff Position (“FSP”) 157-4 “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (‘FSP FAS 157-4”). FSP FAS 157-4 provides guidelines for a broad interpretation of when to apply market-based fair value measures. It reaffirms management’s need to use judgment to determine when a market that was once active has become inactive and in determining fair values in markets that are no longer active. FSP FAS 157-4 is effective for interim and annual periods ending after June 15, 2009, but may be adopted early for interim and annual periods ending after March 15, 2009. We are currently evaluating the provisions of FSP FAS 157-4 and assessing the impact it may have on our financial statements.

FSP FAS 107-1 and APB 28-1. Also in April 2009, the FASB issued FSP FAS 107-1 and APB 28-1 “Interim Disclosures about Fair Value of Financial Instruments” (“FSP FAS 107-1 and APB 28-1”). This FSP increases the frequency of fair value disclosures to a quarterly instead of annual basis. The guidance relates to fair value disclosures for any financial instruments that are not currently reflected on the balance sheet at fair value. FSP FAS 107-1 and APB 28-1 are effective for interim and annual periods ending after June 15, 2009, but may be adopted early for interim and annual periods ending after March 15, 2009. We are currently evaluating the provisions of 107-1 and APB 28-1 and assessing the impact it may have on our financial reporting disclosures.

FSP FAS 141(R)-1. Also in April 2009, the FASB issued FSP FAS 141(R)-1 “Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise From Contingencies” (FSP FAS 141(R)-1”). FSP FAS 141(R)-1 deals with the initial recognition and measurement of an asset acquired or a liability assumed in a business combination that arises from a contingency provided the asset or liability’s fair value on the date of acquisition can be determined. FSP FAS 141(R)-1 is effective for assets or liabilities from contingencies in business combinations that occur following the start of the first fiscal year that begins on or after December 15, 2008. We are currently evaluating the provisions of FSP FAS 141(R)-1 and assessing the impact it may have on our financial statements when an applicable acquisition is consummated.

ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The following market rate disclosures should be read in conjunction with our financial statements and notes thereto beginning on Page F-1 of our 2008 Annual Report on Form 10-K, as well as with the consolidated financial statements and notes thereto included in this Quarterly Report on Form 10-Q. All of our financial instruments are for purposes other than trading. Hypothetical changes in interest rates and prices chosen for the following stimulated sensitivity effects are considered to be reasonably possible near-term changes generally based on consideration of past fluctuations for each risk category. It is not possible to accurately predict future changes in interest rates and product prices. Accordingly, these

22

hypothetical changes may not be an indicator of probable future fluctuations. See Note 5 to our consolidated financial statements included herein (Derivative Instruments) for further information.

Interest Rate Risk

We are exposed to interest rate risk on debt with variable interest rates. To manage this risk, we have entered into interest rate swap agreements with a total notional amount of $200.0 million related to our Senior Credit Agreement. As of March 31, 2009, the interest rate swaps had an estimated net fair value liability of $6.1 million. Under these agreements, we receive interest at a floating rate equal to one-month LIBOR and pay interest at a fixed rate of 1.50% on $50.0 million in outstanding debt and pay interest at 2.90% on $150.0 million in outstanding debt, effectively setting our base LIBOR rate at 2.6%. Assuming our current level of borrowings and considering the effect of the interest rate swap agreements, a 100 basis point increase in the interest rate we pay under our Senior Credit Agreement would not have had a material impact on our interest expense for the first quarter 2009.

Commodity Price Risk

In the past we have entered into, and may in the future enter into, certain derivative arrangements with respect to portions of our natural gas, crude oil and natural gas liquids production, to reduce our sensitivity to volatile commodity prices and with respect to portions of our debt, to reduce our sensitivity to volatile interest rates. We believe that these derivative arrangements, although not free of risk, allow us to achieve a more predictable cash flow and to reduce exposure to commodity price and interest rate fluctuations. However, derivative arrangements limit the benefit of increases in the prices of natural gas, crude oil and natural gas liquids sales and limit the benefit of decreases in interest rates. Moreover, our derivative arrangements apply only to a portion of our production and provide only partial protection against declines in commodity prices. Such arrangements may expose us to risk of financial loss in certain circumstances. We expect that the monthly volume of derivative arrangements will vary from time to time. We continuously reevaluate our price hedging program in light of increases in production, market conditions, commodity price forecasts, capital spending and debt service requirements.

Counterparty Risk

We have exposure to financial institutions in the form of derivative transactions in connection with our hedges. These transactions are with counterparties in the financial services industry specifically with members of our bank group. These transactions could expose us to credit risk in the event of default of our counterparties. In addition, if any lender under our credit facility is unable to fund its commitment, our liquidity could be reduced by an amount up to the aggregate amount of such lender’s commitment under our credit facility. We believe our risk is low because of the offsetting relationship we have with each of our counterparties.

ITEM 4T. CONTROLS AND PROCEDURES

Our President and Chief Executive Officer and our Chief Financial Officer have concluded, based on their evaluation as of the end of the period covered by this Form 10-Q, that our disclosure controls and procedures, as defined under Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended, are effective to ensure that information we are required to disclose in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that our disclosure controls and procedures are effective to ensure that information we are required to disclose in such reports is accumulated and communicated to management, including our President and Chief Executive Officer and our Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

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During the period covered by this report, there has been no change to our internal controls over financial reporting that materially affected, or is reasonably likely to materially affect, these controls.

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PART II.OTHER INFORMATION

ITEM 5. OTHER INFORMATION

See Item 2. "Management's Discussion and Analysis of Financial Condition and Results of Operations" for a discussion of the May 13, 2009 second amendment to our Second Lien Credit Agreement.

ITEM 6. EXHIBITS.

Number	Description
*10.1	Long Term Incentive Performance Plan Form of Restricted Stock Award Agreement for Employees.
*10.2	Long Term Incentive Performance Plan Form of Stock Option Agreement for Employees.
*10.3	Long Term Incentive Performance Plan Form of Restricted Stock Award Agreement for Executive Officers.
*10.4	Long Term Incentive Performance Plan Form of Stock Option Agreement for Executive Officers.
*10.5	Amendment No. 2, dated as of May 13, 2009, to the Second Lien Credit Agreement, dated as of May 8, 2007, among Crimson Exploration Inc., as borrower, Credit Suisse, as agent, and each lender from time to time party thereto.
*31.1	Certification of Chief Executive Officer pursuant to Exchange Rule13a-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
*31.2	Certification of Chief Financial Officer pursuant to Exchange Rule 13a-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
*32.1	Certification of Chief Executive Officer pursuant to 18.U.S.C Section 1350 pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
*32.2	Certification of Chief Financial Officer pursuant to 18.U.S.C Section 1350 pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
	*Filed herewith.

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SIGNATURES

Pursuant to the requirements of Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

CRIMSON EXPLORATION INC.

(Registrant)

Date:	May 15, 2009	By:	/s/ Allan D. Keel
			Allan D. Keel
			President and Chief Executive Officer
Date:	May 15, 2009	By:	/s/ E. Joseph Grady
			E. Joseph Grady
			Senior Vice President and Chief Financial Officer

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EX-10

Executive Officer Agreement

EXHIBIT 10.3

CRIMSON EXPLORATION INC.

2005 STOCK INCENTIVE PLAN

RESTRICTED STOCK AWARD AGREEMENT

This Restricted Stock Award Agreement (the “Agreement”) is made and entered into as of the Date of Grant set forth below by and between Crimson Exploration Inc., a Delaware corporation (the “Company”), and Participant named below. This Agreement represents a distribution to Participant pursuant to the Company’s Long Term Incentive Performance Plan for the fiscal year ending December 31, 2008. Capitalized terms not defined shall have the meaning ascribed to them in the Company’s 2005 Stock Incentive Plan, as amended and restated effective as of August 15, 2008 (the “Plan”).

Participant:

Social Security Number: _____ - ___ - ______

Address:

Total Restricted Shares:

Fair Market Value per Share: $_____

Fair Market Value Aggregate: $ ___________

Purchase Price/Consideration: Granted as compensation for services rendered as an employee of the Company.

Date of Grant: _______________

1.         Grant of Restricted Shares. The Company hereby grants to Participant the total number of unvested restricted shares of Common Stock of the Company set forth above as Total Restricted Shares (the “Shares”), subject to all of the terms and conditions of this Agreement and the Plan. This grant of restricted shares is being issued pursuant to Section 7.1 of the Plan.

2. Vesting Period.

2.1       Regular Vesting. Provided Participant continues to provide Continuous Service to the Company or any Affiliate, the Shares will vest as follows:

First anniversary of Date of Grant 25%

Second anniversary of Date of Grant 25%

Third anniversary of Date of Grant 25%

Fourth anniversary of Date of Grant 25%

When issued, the certificates evidencing the Shares will be held by the Company until the applicable tranche of Shares is fully vested, at which time a certificate representing such vested Shares will be released to Participant. Such Certificate shall be delivered to Participant not later

Executive Officer Agreement

than the date that is 2½ months after the end of Participant’s taxable year in which the applicable tranche of Shares has vested.

2.2       Change of Control. In the event of a Change of Control (as such term is defined in an employment agreement between Participant and the Company, the terms of which have been approved by the Administrator, or, otherwise, by the Plan), vesting shall be accelerated and the Shares shall become immediately vested with respect to one hundred percent (100%) of the Shares without regard to Participant’s number of years of Continuous Service.

2.3       Termination for Cause or Participant’s Voluntary Resignation. Unless otherwise provided in an employment agreement between Participant and the Company, the terms of which have been approved by the Administrator, if Participant’s Continuous Service is terminated by the Company for Cause or by Participant’s voluntary resignation, the Company may exercise its Right of Repurchase or otherwise reacquire, or Participant shall forfeit unvested shares, and any or all of the Shares which have not vested as of the date of termination shall be forfeited and Participant shall have no further rights with respect to such Shares.

2.4       Termination without Cause. In the event Participant’s Continuous Service is terminated by the Company without Cause, vesting shall be accelerated and the Shares shall become immediately vested with respect to one hundred percent (100%) of the Shares without regard to Participant’s number of years of Continuous Service.

2.5       Death or Disability. Unless otherwise provided in an employment agreement between Participant and the Company, the terms of which have been approved by the Administrator, in the event Participant’s Continuous Service is terminated on account of death or Disability, for purposes of determining vesting under Section_2.1, Participant shall be deemed to continue Continuous Service through the date that is the anniversary of the Date of Grant coincident with or next following the date of such termination.

3.         Compliance with Laws and Regulations. The issuance and transfer of Shares shall be subject to compliance by the Company and Participant with all applicable requirements of federal and state securities laws and with all applicable requirements of any stock exchange on which the Company’s Common Stock may be listed at the time of such issuance or transfer. Participant understands that the Company is under no obligation to register or qualify the Shares with the SEC, any state securities commission or any stock exchange to effect such compliance.

4. General.

4.1       Interpretation. Any dispute regarding the interpretation of this Agreement shall be submitted by Participant or the Company to the Administrator for review. The resolution of such a dispute by the Administrator shall be final and binding on the Company and Participant.

4.2       Entire Agreement. The Plan is incorporated herein by reference. This Agreement, the Plan and any employment agreement between Participant and the Company, the terms of which have been approved by the Administrator, constitute the entire agreement of the parties and supersede all prior undertakings and agreements with respect to the subject matter hereof. If any inconsistency should exist between the nondiscretionary terms and conditions of

2

Executive Officer Agreement

this Agreement, the Plan and such employment agreement, if any, the Plan shall govern and control.

4.3       Notices. Any notice required to be given or delivered to the Company under the terms of this Agreement shall be in writing and addressed to the Corporate Secretary of the Company at its principal corporate offices. Any notice required to be given or delivered to Participant shall be in writing and addressed to Participant at the address indicated above or to such other address as such party may designate in writing from time to time to the Company. All notices shall be deemed to have been given or delivered upon: (a) personal delivery; (b) five (5) days after deposit in the United States mail by certified or registered mail (return receipt requested); (c) two (2) business days after deposit with any return receipt express courier (prepaid); or (d) one (1) business day after transmission by facsimile.

4.4       Successors and Assigns. The Company may assign any of its rights under this Agreement. This Agreement shall be binding upon and inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer set forth herein or in the Plan, this Agreement shall be binding upon Participant and Participant’s heirs, executors, administrators, legal representatives, successors and assigns.

4.5       Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Texas without giving effect to its conflict of law principles. If any provision of this Agreement is determined by a court of law to be illegal or unenforceable, then such provision will be enforced to the maximum extent possible and the other provisions will remain fully effective and enforceable.

5.         Acceptance. Participant hereby acknowledges receipt of a copy of the Plan and this Agreement. Participant has read and understands the terms and provisions thereof, and accepts the award of the Shares subject to all the terms and conditions of the Plan and this Agreement. Participant acknowledges that there may be adverse tax consequences upon disposition of the Shares and that Participant should consult a tax advisor prior to such disposition.

[SIGNATURE PAGE FOLLOWS]

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Executive Officer Agreement

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized representative and Participant has executed this Agreement, effective as of the Date of Grant.

	CRIMSON EXPLORATION INC.
By:
Name: Title:	_____________________________________ _____________________________________

PARTICIPANT

(Signature)

EX-10

Executive Officer Agreement

EXHIBIT 10.4

CRIMSON EXPLORATION INC.

2005 STOCK INCENTIVE PLAN

STOCK OPTION AGREEMENT

             This Stock Option Agreement (the “Agreement”) is made and entered into as of the Date of Grant set forth below by and between Crimson Exploration Inc., a Delaware corporation (the “Company”), and Participant named below. This Agreement represents a distribution to Participant pursuant to the Company’s Long Term Incentive Performance Plan for the fiscal year ending December 31, 2008. Unless otherwise indicated herein, capitalized terms not defined herein shall have the meaning ascribed to them in the Company’s 2005 Stock Incentive Plan, as amended and restated effective as of August 15, 2008 (the “Plan”).

Participant:

Social Security Number: _____ - ____ - _______

Address:

Total Option Shares:

Exercise Price Per Share: $______

Date of Grant: ________________

Expiration Date: ________________

Type of Stock Option: o Incentive Stock Option

x Nonqualified Stock Option

1.         Grant of Option. The Company hereby grants to Participant an option (this “Option”) to purchase the total number of shares of Common Stock of the Company set forth above as Total Option Shares (the “Shares”) at the Exercise Price Per Share set forth above (the “Exercise Price”), subject to all of the terms and conditions of this Agreement and the Plan. If designated as an Incentive Stock Option above, the Option is intended to qualify as an incentive stock option (an “ISO”) within the meaning of Section 422 of the Code, although the Company makes no representation or guarantee that such Option will qualify as an ISO.

2. Exercise Period; Vesting.

2.1.      Regular Vesting. Unless expired as provided in Section 3 of this Agreement, this Option may be exercised from time to time after the Date of Grant set forth above to the extent the Option has vested in accordance with the vesting schedule set forth below. The Shares issued upon exercise of the Option will be subject to the restrictions on transfer set forth in Section 11 below. Provided Participant continues to provide Continuous Service to the Company or any Affiliate, the Option will become vested and exercisable with

Executive Officer Agreement

respect to Twenty-Five Percent (25%) of the Shares on the first anniversary of the Date of Grant set forth above and thereafter at the end of each full succeeding year from the Date of Grant the Option will become vested and exercisable as follows: Twenty-Five Percent (25%) on the second anniversary; an additional Twenty-Five Percent (25%) on the third anniversary; and Twenty-Five Percent (25%) on the fourth anniversary at which time the Option will be vested and exercisable with respect to one hundred percent (100%) of the Shares. A vested Option may not be exercised for less than a full share unless the currently exercisable portion of such Option is less than a whole share.

2.2.      Change of Control. In the event of a Change of Control (as such term is defined in an employment agreement between Participant and the Company, the terms of which have been approved by the Administrator, or, otherwise, by the Plan), vesting shall be accelerated and this Option shall become immediately vested and exercisable with respect to one hundred percent (100%) of the Shares without regard to Participant’s number of years of Continuous Service.

2.3.      Termination Without Cause or for Good Reason. If Participant is party to an employment agreement with the Company, the terms of which have been approved by the Administrator, in the event Participant’s Continuous Service is terminated by the Company without Cause or by Participant for Good Reason (as and if such term is defined in such employment agreement), this Option shall vest and become exercisable with respect to the Shares as provided by such employment agreement.

2.4.      Death or Disability. Unless otherwise provided in an employment agreement between Participant and the Company, the terms of which have been approved by the Administrator, in the event Participant’s Continuous Service is terminated on account of death or Disability, for purposes of determining vesting under Section 2.1, Participant shall be deemed to continue Continuous Service through the date that is the anniversary of the Date of Grant coincident with or next following the date of such termination.

3.         Expiration. The Option shall expire on the Expiration Date set forth above or earlier as provided in Section 4 below, or, if applicable, pursuant to Section 8 or 12 of the Plan.

4. Termination of Continuous Service.

4.1.      Termination for Cause or Participant’s Voluntary Resignation. Unless otherwise provided in an employment agreement between Participant and the Company, the terms of which have been approved by the Administrator, if Participant’s Continuous Service is terminated by Company for Cause or by the Participant’s voluntary resignation, the Option, to the extent (and only to the extent) that it would have been exercisable by Participant on the date of termination, may be exercised by Participant no later than 30 days after the date of termination, but in any event no later than the Expiration Date. Outstanding Options that are not exercisable at the time Participant’s Continuous Service terminates shall be forfeited and expire at the close of business on the date of such termination.

4.2.      Termination Because of Death or Disability. If Participant’s Continuous Service is terminated because of death or Disability of Participant, the Option, to the extent

2

Executive Officer Agreement

exercisable by Participant on the date of termination (subject to Section_2.4), may be exercised by Participant (or Participant’s legal representative) no later than the earlier to occur of (a) the date twelve months following the date Continuous Service is terminated or (b) the Expiration Date. Outstanding Options that are not exercisable at the time Participant’s Continuous Service terminates shall be forfeited and expire at the close of business on the date of such termination.

4.3.      Change of Control. If Participant’s Continuous Service is terminated by the Company without Cause or by Participant for Good Reason (if Participant is party to an employment agreement with the Company, the terms of which have been approved by the Administrator, that defines “Good Reason”) within one year following a Change of Control, the Option may be exercised by Participant (or Participant’s legal representative) no later than three years after the date of termination, but in any event no later than the Expiration Date.

4.4.      Termination Without Cause or for Good Reason. In the event Participant’s Continuous Service is terminated by the Company without Cause or by Participant for Good Reason (if Participant is party to an employment agreement with the Company, the terms of which have been approved by the Administrator, that defines “Good Reason”), the Option may be exercised by Participant (or Participant’s legal representative) no later than twelve months after the date of termination, but in any event no later than the Expiration Date.

4.5.      No Obligation to Employ. Nothing in the Plan or this Agreement shall confer on Participant any right to continue in the employ of, or other relationship with, the Company or any Affiliate, or limit in any way the right of the Company or any Affiliate to terminate Participant’s employment or other relationship at any time, with or without Cause.

5. Manner of Exercise.

5.1.      Stock Option Exercise Agreement. To exercise this Option, Participant (or in the case of exercise after Participant’s death or incapacity, Participant’s executor, administrator, heir or legatee, as the case may be) must deliver to the Company an executed stock option exercise agreement in the form attached hereto as Exhibit A, or in such other form as may be approved by the Administrator from time to time (the “Exercise Agreement”), which shall set forth, inter alia, (a) Participant’s election to exercise the Option, (b) the number of Shares being purchased, (c) any restrictions imposed on the Shares and (d) any representations warranties and agreements regarding Participant’s investment intent and access to information as may be required by the Company to comply with applicable securities laws. If someone other than Participant exercises the Option, then such person must submit documentation reasonably acceptable to the Company verifying that such person has the legal right to exercise the Option.

5.2.      Limitations on Exercise. The Option may not be exercised unless such exercise is in compliance with all applicable federal and state securities laws, as they are in effect on the date of exercise. The Option may not be exercised for fewer than 1 Share unless it is exercised as to all Shares as to which the Option is then exercisable.

5.3.      Payment. The entire Exercise Price of this Option to purchase Shares shall be payable in full by cash or check for an amount equal to the aggregate exercise price for the number of Shares being purchased. Alternatively, in the sole discretion of the Plan

3

Executive Officer Agreement

Administrator and upon such terms as the Plan Administrator shall approve, the Exercise Price may be paid by:

(a)       paying all or a portion of the aggregate exercise price for the number of Shares being purchased by delivery to the Company of other shares of Common Stock, duly endorsed for transfer to the Company, with a Fair Market Value on the date of delivery equal to the exercise price (or portion thereof) due for the number of Shares being acquired, or by means of attestation whereby the Participant identifies for delivery specific shares of Common Stock where such shares have a Fair Market Value on the date of attestation equal to the exercise price (or portion thereof) and receives a number of shares of Common Stock equal to the difference between the number of Shares thereby purchased and the number of identified attestation shares of Common Stock (collectively a “Stock For Stock Exercise”); provided, however, that the shares of Common Stock used in such Stock for Stock Exercise (i) have either (1) been held for more than six (6) months (or such longer or shorter period of time required to avoid a charge to earnings for financial accounting purposes) and have been paid for within the meaning of SEC Rule 144 (and, if such shares were purchased from the Company by use of a promissory note, such note has been fully paid with respect to such shares); or (2) were obtained by Participant in the open public market; and (ii) are clear of all liens, claims, encumbrances or security interests.

(b)       during any period for which the Common Stock is publicly traded i.e., the Common Stock is listed on any established stock exchange or a national market system, or if the Common Stock is quoted on the Nasdaq System or any similar system whereby the Common Stock is regularly quoted by a recognized securities dealer but closing sale prices are not reported, (i) a copy of instructions to a broker-dealer that is a member of the Financial Industry Regulatory Authority (a “FINRA Dealer”) directing such broker to sell the Shares for which this option is exercised, and to remit to the Company the aggregate Exercise Price of such option or (ii) through a “margin” commitment from Participant and a FINRA Dealer whereby Participant irrevocably elects to exercise the Option and to pledge the Shares so purchased to the FINRA Dealer in a margin account as security for a loan from such FINRA Dealer in the amount of the total Exercise Price, and whereby the FINRA Dealer irrevocably commits upon receipt of such Shares to forward the total Exercise Price directly to the Company (collectively referred to as a “Cashless Exercise”); provided, however, a Cashless Exercise by a Director or executive officer that involves or may involve a direct or indirect extension of credit or arrangement of an extension of credit by the Company, a Parent or Subsidiary in violation of Section 402(a) of the Sarbanes Oxley Act (codified as Section 13(k) of the Securities Exchange Act of 1934, 15 U.S.C. § 78m(k)) shall be prohibited;

(c)       by cancellation of indebtedness of the Company to the Participant;

(d)       by waiver of compensation due or accrued to Participant for services rendered;

(e)       by any other form of legal consideration that may be acceptable to the Administrator, including without limitation, a full-recourse promissory note. However, if there is a stated par value of the Shares and applicable law requires, the par value of the Shares, if newly issued, shall be paid in cash or cash equivalents. The Shares shall be pledged as

4

Executive Officer Agreement

security for payment of the principal amount of the promissory note and interest thereon. The interest rate payable under the terms of the promissory note shall not be less than the minimum rate (if any) required to avoid the imputation of additional interest under the Code. Subject to the foregoing, the Administrator (in its sole discretion) shall specify the term, interest rate, amortization requirements (if any) and other provisions of such note. Unless the Administrator determines otherwise, shares of Common Stock having a Fair Market Value at least equal to the principal amount of the loan shall be pledged by the holder to the Company as security for payment of the unpaid balance of the loan and such pledge shall be evidenced by a pledge agreement, the terms of which shall be determined by the Administrator, in its discretion; provided, however, that each loan shall comply with all applicable laws, regulations and rules of the Board of Governors of the Federal Reserve System and any other governmental agency having jurisdiction. Exercise with a promissory note or other transaction by a Director or executive officer that involves or may involve a direct or indirect extension of credit or arrangement of an extension of credit by the Company, or an Affiliate in violation of section 402(a) of the Sarbanes Oxley Act (codified as Section 13(k) of the Securities Exchange Act of 1934, 15 U.S.C. § 78m(k)) shall be prohibited; or

(f) by any combination of the foregoing.

5.4.      Tax Withholding. Prior to the issuance of the Shares upon exercise of the Option, Participant must pay or provide for any applicable federal, state and local withholding obligations of the Company. If the Administrator permits, Participant may provide for payment of withholding taxes upon exercise of the Option by requesting that the Company retain Shares with a Fair Market Value that does not exceed the minimum statutory amount of taxes required to be withheld. In such case, the Company shall issue the net number of Shares to Participant by deducting the Shares retained from the Shares issuable upon exercise.

5.5.      Issuance of Shares. Provided that the Exercise Agreement and payment are in form and substance satisfactory to counsel for the Company, the Company shall issue the Shares registered in the name of Participant, Participant’s authorized assignee, or Participant’s legal representative, and shall deliver certificates representing the Shares with the appropriate legends affixed thereto.

6.         Notice of Disqualifying Disposition of ISO Shares. If the Option is an ISO, and if Participant sells or otherwise disposes of any of the Shares acquired pursuant to the ISO on or before the later of (a) the date two (2) years after the Date of Grant, and (b) the date one (1) year after transfer of such Shares to Participant upon exercise of the Option, Participant shall immediately notify the Company in writing of such disposition. Participant agrees that Participant will satisfy any obligation in the event any such disposition causes Participant to be subject to income tax withholding by the Company on the compensation income recognized by Participant from the early disposition by payment in cash or out of the current wages or other compensation payable to Participant.

7.         Compliance with Laws and Regulations. The exercise of the Option and the issuance and transfer of Shares shall be subject to compliance by the Company and Participant with all applicable requirements of federal and state securities laws and with all applicable requirements of any stock exchange on which the Company’s Common Stock may be listed at

5

Executive Officer Agreement

the time of such issuance or transfer. Participant understands that the Company is under no obligation to register or qualify the Shares with the SEC, any state securities commission or any stock exchange to effect such compliance.

8.         Nontransferability of Option. If the Option is an ISO, the Option may not be transferred in any manner other than by will or by the laws of descent and distribution and may be exercised during the lifetime of Participant only by Participant or in the event of Participant’s incapacity, by Participant’s legal representative. The terms of the Option shall be binding upon the executors, administrators, successors and assigns of Participant. If the Option is not an ISO, upon written approval by the Administrator, it may be transferred by gift or domestic relations order to a member of Participant’s immediate family (child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships, any person sharing Participant’s household (other than a tenant or employee), a trust in which these persons have more than 50% of the beneficial interest, a foundation in which these persons (or Participant) control the management of assets, and any other entity in which these persons (or Participant) own more than 50% of the voting interests.

9.         Privileges of Stock Ownership. Participant shall not have any of the rights of a Stockholder with respect to any Shares until the Shares are issued to Participant.

10.       Obligation To Sell. Notwithstanding anything herein to the contrary, if at any time following Participant’s acquisition of Shares hereunder, stockholders of the Company owning 51% or more of the shares of the Company (on a fully diluted basis) (the “Control Sellers”) enter into an agreement (including any agreement in principal) to transfer all of their shares to any person or group of persons who are not affiliated with the Control Sellers, such Control Sellers may require each stockholder who is not a Control Seller (a “Non-Control Seller”) to sell all of their shares to such person or group of persons at a price and on terms and conditions the same as those on which such Control Sellers have agreed to sell their shares, other than terms and conditions relating to the performance or non-performance of services. For the purposes of the preceding sentence, an affiliate of a Control Seller is a person who controls, which is controlled by, or which is under common control with, the Control Seller.

11. Restrictions On Transfer.

11.1.    Securities Law Restrictions. Regardless of whether the offering and sale of shares of Common Stock under the Plan have been registered under the Securities Act or have been registered or qualified under the securities laws of any state, the Company at its discretion may impose restrictions upon the sale, pledge or other transfer of such shares of Common Stock (including the placement of appropriate legends on stock certificates or the imposition of stop-transfer instructions) if, in the judgment of the Company, such restrictions are necessary or desirable in order to achieve compliance with the Securities Act, the securities laws of any state or any other law.

11.2.    Market Stand-Off. If an underwritten public offering by the Company of its equity securities pursuant to an effective registration statement filed under the Securities Act, Participant shall not sell, make any short sale of, loan, hypothecate, pledge, grant any option for

6

Executive Officer Agreement

the repurchase of, transfer the economic consequences of ownership or otherwise dispose or transfer for value or otherwise agree to engage in any of the foregoing transactions with respect to any Common Stock without the prior written consent of the Company or its underwriters, for such period of time from and after the effective date of such registration statement as may be requested by the Company or such underwriters (the “Market Stand-Off”). In order to enforce the Market Stand-Off, the Company may impose stop-transfer instructions with respect to the Shares acquired under this Agreement until the end of the applicable stand-off period. If there is any change in the number of outstanding shares of Common Stock by reason of a stock split, reverse stock split, stock dividend, recapitalization, combination, reclassification, dissolution or liquidation of the Company, any corporate separation or division (including, but not limited to, a split-up, a split-off or a spin-off), a merger or consolidation; a reverse merger or similar transaction, then any new, substituted or additional securities which are by reason of such transaction distributed with respect to any shares of Common Stock subject to the Market Stand-Off, or into which such shares of Common Stock thereby become convertible, shall immediately be subject to the Market Stand-Off.

11.3.    Transfer of Common Stock Acquired Under Plan. Notwithstanding anything to the contrary herein, if the Shares acquired upon exercise of this Option are not readily tradable on an established securities market, Participant may not transfer Shares acquired under this Plan within six months after the purchase of such Shares, other than, if permitted by the Administrator in its discretion: (a) to satisfy minimum tax withholding requirements, or (b) to a Permitted Transferee.

11.4.    Investment Intent at Grant. If the grant of this Option under the Plan is not registered under federal or state securities laws, but an exemption is available which requires an investment representation or other representation, Participant shall represent and agree, at the time of grant of this Option, that the security being acquired upon the grant of this Option is being acquired for investment, and not with a view to the sale or distribution thereof, and shall make such other representations as are deemed necessary or appropriate by the Company and its counsel.

11.5.    Investment Intent at Exercise. If the sale of shares of Common Stock under the Plan is not registered under federal or state securities laws, but an exemption is available which requires an investment representation or other representation, Participant shall represent and agree at the time of exercise that the Shares being acquired upon exercise of this Option are being acquired for investment, and not with a view to the sale or distribution thereof, and shall make such other representations as are deemed necessary or appropriate by the Company and its counsel.

11.6.    Legends. All certificates evidencing shares of Common Stock purchased under this Agreement in an unregistered transaction shall bear the following legend (and such other restrictive legends as are required or deemed advisable under the provisions of any applicable law):

“THE SHARES OF COMMON STOCK EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO AND TRANSFERABLE ONLY IN ACCORDANCE WITH THAT CERTAIN CRIMSON EXPLORATION INC. 2005 STOCK INCENTIVE PLAN AS AMENDED AND

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Executive Officer Agreement

RESTATED, THE OPTION AGREEMENT AND THE EXERCISE AGREEMENT PURSUANT TO WHICH THE SHARES EVIDENCED BY THIS CERTIFICATE WERE ISSUED, COPIES OF WHICH ARE ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY. NO TRANSFER OR PLEDGE OF THE SHARES EVIDENCED HEREBY MAY BE MADE EXCEPT IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF SAID PLAN AND OPTION AGREEMENT AND THE TERMS OF THE EXERCISE AGREEMENT.”

11.7.    Removal of Legends. If, in the opinion of the Company and its counsel, any legend placed on a stock certificate representing shares of Common Stock sold under this Agreement no longer is required, the holder of such certificate shall be entitled to exchange such certificate for a certificate representing the same number of shares of Common Stock but without such legend.

11.8.    Administration. Any determination by the Company and its counsel in connection with any of the matters set forth in this Section 11 shall be conclusive and binding on Participant and all other persons.

12. General.

12.1.    Interpretation. Any dispute regarding the interpretation of this Agreement shall be submitted by Participant or the Company to the Administrator for review. The resolution of such a dispute by the Administrator shall be final and binding on the Company and Participant.

12.2.    Entire Agreement. The Plan is incorporated herein by reference. This Agreement, the Plan and any employment agreement between Participant and the Company, the terms of which have been approved by the Administrator, constitute the entire agreement of the parties and supersede all prior undertakings and agreements with respect to the subject matter hereof. If any inconsistency should exist between the nondiscretionary terms and conditions of this Agreement, the Plan and such employment agreement, if any, the Plan shall govern and control.

12.3.    Notices. Any notice required to be given or delivered to the Company under the terms of this Agreement shall be in writing and addressed to the Corporate Secretary of the Company at its principal corporate offices. Any notice required to be given or delivered to Participant shall be in writing and addressed to Participant at the address indicated above or to such other address as such party may designate in writing from time to time to the Company. All notices shall be deemed to have been given or delivered upon: (a) personal delivery; (b) five (5) days after deposit in the United States mail by certified or registered mail (return receipt requested); (c) two (2) business days after deposit with any return receipt express courier (prepaid); or (d) one (1) business day after transmission by facsimile.

12.4.    Successors and Assigns. The Company may assign any of its rights under this Agreement. This Agreement shall be binding upon and inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer set forth herein, this

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Executive Officer Agreement

Agreement shall be binding upon Participant and Participant’s heirs, executors, administrators, legal representatives, successors and assigns.

12.5.    Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Texas without giving effect to its conflict of law principles. If any provision of this Agreement is determined by a court of law to be illegal or unenforceable, then such provision will be enforced to the maximum extent possible and the other provisions will remain fully effective and enforceable.

13.       Acceptance. Participant hereby acknowledges receipt of a copy of the Plan and this Agreement. Participant has read and understands the terms and provisions thereof, and accepts the Option subject to all the terms and conditions of the Plan and this Agreement. Participant acknowledges that there may be adverse tax consequences upon exercise of the Option or disposition of the Shares and that Participant should consult a tax advisor prior to such exercise or disposition.

14.       Section 409A Limitation. In the event the Administrator determines at any time that this Option has been granted with an Exercise Price less than Fair Market Value of the Common Stock subject to the Option on the date the Option is granted (regardless of whether or not such Exercise Price is intentionally or unintentionally priced at less than Fair Market Value, or is materially modified at a time when the Fair Market Value exceeds the Exercise Price), or is otherwise determined to constitute “nonqualified deferred compensation” within the meaning of Section 409A of the Code, notwithstanding any provision of the Plan or this Option Agreement to the contrary, the Option shall satisfy the additional conditions applicable to nonqualified deferred compensation under Section 409A of the Code, in accordance with Section 8 of the Plan. The specified exercise date and term shall be the default date and term specified in Section 8 of the Plan. Notwithstanding the foregoing, the Company shall have no liability to any Participant or any other person if an Option designated as an ISO fails to qualify as such at any time or if an Option is determined to constitute “nonqualified deferred compensation” within the meaning of Section 409A of the Code and the terms of such Option do not satisfy the additional conditions applicable to nonqualified deferred compensation under Section 409A of the Code and the regulations thereunder.

[SIGNATURE PAGE FOLLOWS]

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Executive Officer Agreement

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized representative and Participant has executed this Agreement, effective as of the Date of Grant.

	CRIMSON EXPLORATION INC.
By:
Name: Title:	_____________________________________ _____________________________________

PARTICIPANT

(Signature)

Printed Name:

EXHIBIT A

CRIMSON EXPLORATION INC.

2005 STOCK INCENTIVE PLAN

STOCK OPTION EXERCISE AGREEMENT

This Stock Option Exercise Agreement (the “Exercise Agreement”) is made and entered into as of _________________ (the “Effective Date”), by and between Crimson Exploration Inc., a Delaware corporation (the “Company”), and the purchaser named below (the “Purchaser”). Capitalized terms not defined herein shall have the meanings ascribed to them in the Company’s2005 Stock Incentive Plan, as amended and restated effective as of August 15, 2008 (the “Plan”) or the Stock Option Agreement.

Participant: ______________________________

Social Security Number: ______________________________

Address: ______________________________

______________________________

Option Shares Being Purchased: ______________________________

Exercise Price Per Share: $______

Date of Grant: ________________

Expiration Date: ________________

Type of Stock Option: o Incentive Stock Option

x Nonqualified Stock Option

1. Exercise of Option.

1.1.      Exercise. Pursuant to exercise of that certain option (the “Option”) granted to Purchaser under the Plan and the Stock Option Agreement and subject to the terms and conditions of this Exercise Agreement, Purchaser hereby purchases from the Company, and the Company hereby sells to Purchaser, the Option Shares Being Purchased set forth above (the “Shares”) of the Company’s Common Stock at the Exercise Price Per Share set forth above (the “Exercise Price”). As used in this Exercise Agreement, the term “Shares” refers to the Shares purchased under this Exercise Agreement and includes all securities received (a) in replacement of the Shares, (b) as a result of stock dividends or stock splits with respect to the Shares, and (c) all securities received in replacement of the Shares in a merger, recapitalization, reorganization or similar corporate transaction.

1.2.      Title to Shares. The exact spelling of the name(s) under which Purchaser will take title to the Shares is: _____________________________________________________

Purchaser desires to take title to the Shares as follows:

o Individual, as separate property

o Husband and wife, as community property

o Joint Tenants

o      Other; please specify:__________________________________________

1.3.      Payment. Purchaser hereby delivers payment of the Exercise Price, together with any applicable tax obligations, as follows:

o      in cash (by check) in the amount of $_________, receipt of which is acknowledged by the Company;

o      by a broker assisted cashless exercise procedure that has been approved by the Company;

o      by tender of _______ shares of the Company’s Common Stock that has been owned for at least six months in a Stock-for-Stock exercise;

o      by delivery of a full recourse promissory note payable to the Company, having such term, interest rate and other provisions as are specified by the Administrator, in the amount of $_________ (“Note”); or

o      other method or form of consideration that is acceptable to the Administrator in its sole discretion.

Payment of the Exercise Price in any form other than cash is subject to the advance approval of the Administrator in its sole discretion.

2. Delivery.

2.1.      Deliveries by Purchaser. Purchaser hereby delivers to the Company (a) this Exercise Agreement, (b) if Purchaser is married, a consent of spouse in the form of Exhibit_A attached hereto executed by Purchaser’s spouse, (c) the Exercise Price and payment or other provision for any applicable tax obligations in the form specified in Section 1.3 above and (d) if the Purchaser has provided a Note for exercise of the Shares, a stock pledge agreement executed by Purchaser (“PledgeAgreement”) and two (2) copies of a blank stock power (“StockPower”), both executed by Purchaser (and Purchaser’s spouse, if any).

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2.2.      Deliveries by the Company. Upon its receipt of the Exercise Price, payment or other provision for any applicable tax obligations and all the documents to be executed and delivered by Purchaser to the Company under Section 2.1 hereof, the Company will issue a duly executed stock certificate evidencing the Shares in the name of Purchaser, provided, however, if the Purchaser has provided a Note for exercise of the Shares, such stock certificate shall be placed in escrow as provided in Section 6 hereof to secure payment of Purchaser’s obligation under the Note.

3.         Representations and Warranties of Purchaser. Purchaser represents and warrants to the Company that:

3.1.      Agrees to Terms of the Plan. Purchaser has received a copy of the Plan and the Stock Option Agreement, has read and understands the terms of the Plan, the Stock Option Agreement and this Exercise Agreement, and agrees to be bound by their terms and conditions. Purchaser acknowledges that there may be adverse tax consequences upon exercise of the Option or disposition of the Shares, and that Purchaser should consult a tax advisor prior to such exercise or disposition.

3.2.      SEC Rule 144. Purchaser understands that Rule 144 promulgated under the Securities Act may indefinitely restrict transfer of the Shares so long as Purchaser remains an “affiliate” of the Company or if “current public information” about the Company (as defined in Rule 144) is not publicly available.

4.         CompliancewithSecuritiesLaws. Purchaser understands and acknowledges that, notwithstanding any other provision of the Stock Option Agreement to the contrary, the exercise of any rights to purchase any Shares is expressly conditioned upon compliance with the Securities Act and all applicable state securities laws. Purchaser agrees to cooperate with the Company to ensure compliance with such laws.

5.         Rights as a Stockholder. Subject to the terms and conditions of this Exercise Agreement, Purchaser will have all of the rights of a stockholder of the Company with respect to the Shares from and after the date that Shares are issued to Purchaser until such time as Purchaser disposes of the Shares.

6.         Escrow. If the Purchaser has provided a Note for exercise of the Shares, as security for Purchaser’s faithful performance of this Exercise Agreement, Purchaser agrees, immediately upon receipt of the stock certificate(s) evidencing the Shares, to deliver such certificate(s), together with the Stock Powers executed by Purchaser and by Purchaser’s spouse, if any (with the date and number of Shares left blank), to the Secretary of the Company or other designee of the Company (the “EscrowHolder”), who is hereby appointed to hold such certificate(s) and Stock Powers in escrow and to take all such actions and to effectuate all such transfers and/or releases of such Shares as are in accordance with the terms of this Exercise Agreement. Purchaser and the Company agree that Escrow Holder will not be liable to any party to this Exercise Agreement (or to any other party) for any actions or omissions unless Escrow Holder is grossly negligent or intentionally fraudulent in carrying out the duties of Escrow Holder under this Exercise Agreement. Escrow Holder may rely upon any letter, notice or other document executed with any signature purported to be genuine and may rely on the advice of

3

counsel and obey any order of any court with respect to the transactions contemplated by this Exercise Agreement. The Shares will remain in escrow so long as they are subject to the Pledge Agreement.

7.         Tax Consequences. Purchaser understands that Purchaser may suffer adverse tax consequences as a result of Purchaser’s purchase or disposition of the Shares. Purchaser represents: (a) that Purchaser has consulted with any tax advisor that Purchaser deems advisable in connection with the purchase or disposition of the Shares and (b) that Purchaser is not relying on the Company for any tax advice. In addition to the foregoing, the Company shall have no liability to Purchaser or any other person if an option designated as an Incentive Stock Option fails to qualify at such at any time or if an option is determined to constitute “nonqualified deferred compensation” within the meaning of Section 409A of the Code and the terms of such Option do not satisfy the additional conditions applicable to nonqualified deferred compensation under Section 409A of the Code and Section 8 of the Plan.

8.         Compliance with Laws and Regulations. The issuance and transfer of the Shares will be subject to and conditioned upon compliance by the Company and Purchaser with all applicable state, local and U.S. Federal laws and regulations and with all applicable requirements of any stock exchange or automated quotation system on which the Company’s Common Stock may be listed or quoted at the time of such issuance or transfer.

9.Obligation To Sell. Notwithstanding anything herein to the contrary, if at any time following Purchaser’s acquisition of Shares hereunder, stockholders of the Company owning 51% or more of the shares of the Company (on a fully diluted basis) (the “Control Sellers”) enter into an agreement (including any agreement in principal) to transfer all of their shares to any person or group of persons who are not affiliated with the Control Sellers, such Control Sellers may require each stockholder who is not a Control Seller (a “Non-Control Seller”) to sell all of their shares to such person or group of persons at a price and on terms and conditions the same as those on which such Control Sellers have agreed to sell their shares, other than terms and conditions relating to the performance or non-performance of services. For the purposes of the preceding sentence, an affiliate of a Control Seller is a person who controls, which is controlled by, or which is under common control with, the Control Seller.

10.       Successors and Assigns. The Company may assign any of its rights under this Exercise Agreement. This Exercise Agreement shall be binding upon and inure to the benefit of the successors and assigns of the Company. This exercise Agreement will be binding upon Purchaser and Purchaser’s heirs, executors, administrators, legal representatives, successors and assigns.

11.       Governing Law; Severability. This Exercise Agreement shall be governed by and construed in accordance with the laws of the State of Delaware without giving effect to its conflict of law principles. If any provision of this Exercise Agreement is determined by a court of law to be illegal or unenforceable, then such provision will be enforced to the maximum extent possible and the other provisions will remain fully effective and enforceable.

12.       Notices. Any notice required to be given or delivered to the Company shall be in writing and addressed to the Corporate Secretary of the Company at its principal corporate

4

offices. Any notice required to be given or delivered to Purchaser shall be in writing and addressed to Purchaser at the address indicated above or to such other address as Purchaser may designate in writing from time to time to the Company. All notices shall be deemed effectively given upon personal delivery, (a) five (5) days after deposit in the United States mail by certified or registered mail (return receipt requested), (b) two (2) business days after its deposit with any return receipt express courier (prepaid), or (c) one (1) business day after transmission by facsimile.

13.       Further Instruments. The parties agree to execute such further instruments and to take such further action as may be reasonably necessary to carry out the purposes and intent of this Exercise Agreement.

14.       Headings. The captions and headings of this Exercise Agreement are included for ease of reference only and will be disregarded in interpreting or construing this Exercise Agreement.

15.       Entire Agreement. The Plan, the Stock Option Agreement, this Exercise Agreement, together with all Exhibits thereto constitute the entire agreement and understanding of the parties with respect to the subject matter of this Exercise Agreement, and supersede all prior understandings and agreements, whether oral or written, between the parties hereto with respect to the specific subject matter hereof. If there is any inconsistency between the terms of this Exercise Agreement and the terms of the Plan and Stock Option Agreement, the terms of the Plan and Stock Option Agreement shall govern and control.

[SIGNATURE PAGE FOLLOWS]

5

IN WITNESS WHEREOF, the Company has caused this Exercise Agreement to be executed in triplicate by its duly authorized representative and Purchaser has executed this Exercise Agreement in triplicate as of the Effective Date, indicated above.

	CRIMSON EXPLORATION INC.
By:
Name:
Title:

PURCHASER

(Signature)

Printed Name:

EXHIBIT A

SPOUSE CONSENT

The undersigned spouse of ____________________________ (the “Purchaser”) has read, understands, and hereby approves the exercise of the Stock Option Exercise Agreement (the “Agreement”) between Purchaser and Crimson Exploration Inc., a Delaware corporation (the “Company”). In consideration of the Company’s granting my spouse the right to purchase the Shares as set forth in the Agreement, the undersigned hereby agrees to be irrevocably bound by the Agreement and further agrees that any community property interest I may have in the Shares shall similarly be bound by the Agreement. The undersigned hereby appoints Purchaser as my attorney-in-fact with respect to any amendment or exercise of any rights under the Agreement.

Dated:
	SPOUSE
	(Signature)
	Printed Name
	Address:

EX-10

EXHIBIT 10.5

AMENDMENT NO. 2 AND LIMITED WAIVER

TO

SECOND LIEN CREDIT AGREEMENT

This AMENDMENT NO. 2 TO SECOND LIEN CREDIT AGREEMENT, dated as of May 13, 2009 (this “Amendment”), is by and among CRIMSON EXPLORATION INC., a Delaware corporation (the “Borrower”), CRIMSON EXPLORATION OPERATING, INC. a Delaware corporation (“CEOI”), SOUTHERN G HOLDINGS, LLC, a Delaware limited liability company (together with the Borrower and CEOI, the “Loan Parties”), the lenders party hereto (the “Lenders”).

WHEREAS, the Borrower, the Lenders and Credit Suisse, as administrative agent (in such capacity, the “Agent”) and as collateral agent for the Lenders are parties to that certain Second Lien Credit Agreement, dated as of May 8, 2007, and amended by that certain Amendment No. 1 dated as of June 5, 2007 (as amended, the “Credit Agreement”), pursuant to which the Lenders have made loans to the Borrower;

WHEREAS, the Borrower and the Lenders have agreed to amend the Credit Agreement on the terms, and subject to the conditions, set forth herein; and

NOW, THEREFORE, in consideration of the mutual agreements herein contained and other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the parties hereto agree as follows:

Section 1.Definitions. Capitalized terms used but not defined herein shall have the meanings assigned to them in the Credit Agreement.

Section 2. Amendments to Credit Agreement.

(a)       Section 1.02 of the Credit Agreement is hereby amended by inserting therein the following term:

“‘Covenant Compliance Period’ shall mean any fiscal quarter of the Borrower immediately following a fiscal quarter for which the Borrower (a) had a Leverage Ratio as of the end of such fiscal quarter equal to or less than 3:00 to 1.00 and (b) had a PV-10 Ratio as of such fiscal quarter of equal to or greater than 1.50x.

‘Haynesville Exchange’ shall mean any sale, assignment, transfer, conveyance, contribution or other disposition or series of related sales, transfers or other dispositions of any Haynesville Properties (i) pursuant to an acreage-swap (or similar) agreement, provided that such acreage-swap agreement provides for receipt of good and defensible title to acreage that has reasonably equivalent value, (ii) pursuant to or in connection with a farmout transaction (including a sale or other disposition of undeveloped acreage or depth(s) and assignments in connection with such farmout transaction), (iii) in connection with any

1

joint venture, joint operating agreement, area of mutual interest or other agreement for the development of such Haynesville Properties and (iv) for cash provided that the aggregate amount of all such cash sales shall not exceed $5,000,000.

‘Haynesville Property’ shall mean any Oil and Gas Property constituting undeveloped acreage owned by the Borrower or any Guarantor in the Haynesville Shale play in east Texas and for which there were no proved reserves attributed in the most recent Reserve Reports delivered pursuant hereto.”

(b)       Section 1.02 of the Credit Agreement hereby is further amended amending and restating in their entirety the following terms:

“‘Alternate Base Rate’ shall mean, for any day, a rate per annum equal to the greater of (a) the Prime Rate in effect on such day, (b) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1%, and (c) the LIBO Rate for a one month Interest Period on such day (or if such day is not a Business Day, the immediately preceding Business Day) plus 1.50%. If the Administrative Agent shall have determined (which determination shall be conclusive absent manifest error) that it is unable to ascertain the Federal Funds Effective Rate for any reason, including the inability or failure of the Administrative Agent to obtain sufficient quotations in accordance with the terms of the definition thereof, the Alternate Base Rate shall be determined without regard to clause (b) of the preceding sentence until the circumstances giving rise to such inability no longer exist. Any change in the Alternate Base Rate due to a change in the Prime Rate, the Federal Funds Effective Rate or the LIBO Rate shall be effective on the effective date of such change in the Prime Rate, the Federal Funds Effective Rate, or the LIBO Rate, as the case may be.

‘Applicable Percentage’ shall mean (a) for any day during any fiscal quarter of Borrower that constitutes a Covenant Compliance Period, with respect to any Eurodollar Loan, 7.00% per annum, and with respect to any ABR Loan, 6.00% per annum, and (b) for any day during any fiscal quarter of Borrower that does not constitute a Covenant Compliance Period, with respect to any Eurodollar Loan, 8.00% per annum, and with respect to any ABR Loan, 7.00% per annum; provided, that for purposes of this definition, the PV-10 Ratios as at the last day of the fourth and second fiscal quarters shall be used for purposes of determining the Applicable Margin as at the end of the first and third fiscal quarters, respectively.

‘Asset Sale’ shall mean the sale, transfer or other disposition (by way of merger, casualty, condemnation or otherwise) by the Borrower or any of the Guarantors to any Person other than the Borrower or any Guarantor of (a) any Equity Interests of any of the Guarantors (other than directors’

2

qualifying shares) or (b) any other assets of the Borrower or any of the Guarantors (other than (i) any sale, transfer or other disposition of inventory, damaged, obsolete or worn out assets, scrap and Permitted Investments, in each case disposed of in the ordinary course of business, (ii) any sale, transfer or other disposition or series of related sales, transfers or other dispositions having a value not in excess of $250,000, and (iii) any sale, transfer or other disposition or series of related sales, transfers or other dispositions constituting a Haynesville Exchange).

‘LIBO Rate’ shall mean, with respect to any Eurodollar Borrowing for any Interest Period, the greater of (i) 3.0% per annum and (ii) the rate per annum determined by the Administrative Agent at approximately 11:00 a.m. (London time) on the date that is two Business Days prior to the commencement of such Interest Period by reference to the British Bankers’ Association Interest Settlement Rates for deposits in Dollars (as set forth by any service selected by the Administrative Agent that has been nominated by the British Bankers’ Association as an authorized information vendor for the purpose of displaying such rates) for a period equal to such Interest Period; provided, however, that, to the extent that an interest rate under clause (ii) of this definition is not ascertainable pursuant to the foregoing provisions of this definition, the “LIBO Rate” shall be the interest rate per annum determined by the Administrative Agent to be the average of the rates per annum at which deposits in Dollars are offered for such relevant Interest Period to major banks in the London interbank market in London, England by the Administrative Agent at approximately 11:00 a.m. (London time) on the date that is two Business Days prior to the beginning of such Interest Period.

‘PV-10 Ratio’ shall mean, on any date of determination, the ratio of PV-10 Value on such date to Total Net Debt on such date; provided that if the PV-10 Value calculated using only the estimated future revenues to be generated from proved developed reserves (the “PD Component”) is less than 60% of the otherwise calculated total PV-10 Value, then for purposes of calculating the PV-10 Ratio, PV-10 Value shall be deemed to be the quotient of the PD Component divided by 0.60.

‘PV-10 Value’ shall mean, as of any date of determination, the present value of estimated future revenues less severance and ad valorem taxes, operating, gathering, transportation and marketing expenses and capital expenditures from the production of proved reserves on the Borrower’s and the Guarantors’ Oil and Gas Properties as set forth in the most recent Reserve Reports delivered pursuant hereto, calculated in accordance with the Securities and Exchange Commission guidelines and using the Three-Year Strip Price for crude oil (WTI Cushing) and natural gas (Henry Hub), quoted on the New York Mercantile Exchange (or its successor) on such date of determination, adjusted for any basis differential, quality and gravity, using prices and costs as of the date of estimation without future

3

escalation, without giving effect to non-property related expenses such as general and administrative expenses, debt service, future income tax expense and depreciation, depletion and amortization, and discounted using an annual discount rate of 10%. PV-10 Value shall be adjusted to give effect to the Hedging Agreements of the Borrower and the Guarantors then in effect. Notwithstanding the foregoing, as of any date of determination of PV-10 Value on or prior to December 31, 2010, the present value of the estimated future reserves less severance and ad valorem taxes, operating, gathering, transportation and marketing expenses and capital expenditures from the production of proved reserves from undeveloped acreage owned by the Borrower or any Guarantor in the Haynesville Shale play in east Texas shall be deemed to be $1,000 per acre on and after any date that the Borrower has granted to the Agent as security for the Obligations a first-priority Lien interest (subject only to Excepted Liens or Liens otherwise permitted by Section 9.02 and to the Lien priorities set forth in the Intercreditor Agreement) on such undeveloped acreage owned by the Borrower or any Guarantor in the Haynesville Shale.”

(c)       Section 1.02 of the Credit Agreement hereby is further amended amending and restating clauses (x) and (y) of the definition of “Net Cash Proceeds” in their entirety as following:

“(x) the Borrower shall deliver a certificate of its chief financial officer to the Administrative Agent at the time of receipt thereof setting forth the Borrower’s intent to reinvest such proceeds to acquire, maintain, explore, develop, construct, improve, upgrade or repair assets useful in the business of the Borrower and the Subsidiaries within 180 days of receipt of such proceeds (or 365 days in the case of proceeds from any Asset Sale of Haynesville Properties) and (y) no Default or Event of Default shall have occurred and shall be continuing at the time of such certificate or at the proposed time of the application of such proceeds, such proceeds shall not constitute Net Cash Proceeds except to the extent not so used at the end of such 180-day period (or 365-day period in the case of proceeds from any Asset Sale of Haynesville Properties), at which time such proceeds shall be deemed to be Net Cash Proceeds; and”

(d)       Section 5.07(a)(i) of the Credit Agreement hereby is amended and restated as follows:

“(i) on each March 15 and September 15, which reports shall be determined as of each January 1 and June 30, respectively”

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(e)       The first sentence of Section 6.13 of the Credit Agreement is hereby amended and restated in its entirety as follows:

“The Borrower will not permit its Leverage Ratio as of the end of any fiscal quarter of the Borrower (calculated quarterly at the end of each fiscal quarter) to be greater than the ratio equal to (i) the sum of the leverage ratio for such fiscal quarter set forth in the First Lien Loan Agreement and 0.25 to (ii) 1.0, provided, that for the avoidance of doubt, no waiver of the leverage ratio covenant under the First Lien Loan Agreement by the lenders under the First Lien Loan Agreement shall constitute a waiver of, change to, or suspension of the covenant in this Section 6.13.”

(f)        Section 6.14 of the Credit Agreement hereby is amended and restated as follows:

“Section 6.14.  PV-10 Ratio. The Borrower will not permit the PV-10 Ratio (calculated semi-annually as at the last day of each second and fourth fiscal quarters based on the most recently delivered Reserve Report) as at the end of each second and fourth fiscal quarter, (i) beginning with the fiscal quarter ending June 30, 2009, to be less than 1.2x, (ii) beginning with the fiscal quarter ending December 31, 2009, to be less than 1.25x, (iii) beginning with the fiscal quarter ending December 31, 2010 and thereafter, to be less than 1.5x.”

(g)       Section 6.15 of the Credit Agreement hereby is amended and restated as follows:

“Section 6.15. Sale of Mortgaged Properties. The Borrower will not, and will not permit any Subsidiary to, sell, assign, convey or otherwise transfer any Mortgaged Property or any interest in any Mortgaged Property except for Mortgaged Property (a) constituting Haynesville Property or (b) for which (i) the Borrower has given the Agent at least thirty (30) days prior written notice of the proposed transfer, (ii) the consideration is at least 75% cash, (iii) the consideration is at least equal to the fair market value of the assets being sold, transferred, leased or disposed of; provided, that in each case, (1) the aggregate fair market value of all assets sold, assigned, conveyed or otherwise transferred pursuant to this Section 6.15 and Section 6.16 during any fiscal year shall not exceed an amount equal to 10.0% of the PV-10 Value as at the end of the fiscal year most recently ended prior to the date of such sale, assignment, conveyance or other transfer which a Reserve Report has been delivered, calculated on a pro forma basis for acquisitions consummated since the end of such fiscal year as if such acquisitions had been consummated prior to such year end, and (2) upon consummation of such sale, assignment, conveyance or other transfer, the Borrower would be in

5

compliance with Section 6.14 determined on a pro forma basis as if such sale, assignment, conveyance or other transfer had been consummated prior to the end of the most recent semi-annual period for which the PV 10 Ratio is measured.”

(h)       Section 6.28(a) of the Credit Agreement hereby is amended by amending and restating the first sentence thereof in its entirety as follows:

“The Borrower agrees that it will not, and will not permit any Subsidiary to, grant a Lien on any Property to secure the indebtedness under the First Lien Loan Documents without concurrently therewith granting to the Agent to secure the Obligations a first priority, perfected Lien (subject to the priorities set forth in the Intercreditor Agreement) on this same Property pursuant to Security Instruments in form and substance reasonably satisfactory to the Agent.”

(i)        Article IX of the Credit Agreement hereby is amended by inserting therein a new Section 9.18 as follows:

“Section 9.18 Collateral Matters.Notwithstanding anything to the contrary contained herein or in any other Loan Document, upon request of the Borrower in connection with any sale, assignment, conveyance or other transfer of Property permitted by the Loan Documents, the Agent shall (without notice to, or vote or consent of, any Lender or other Person) take such actions as shall be required as promptly as reasonably practicable to release (i) its Liens on such Property being sold, assigned, conveyed or otherwise transferred and (ii) any Person being sold, assigned, conveyed or otherwise transferred in such transaction from its guaranty obligations under any Loan Document, and (iii) its Liens on any Property owned by any Person being sold, assigned, conveyed or otherwise transferred, in each case to the extent necessary to permit consummation of such sale, assignment, conveyance or other transfer in accordance with the Loan Documents.”

Section 3.Limited Waiver. In reliance on the representations and warranties set forth in Section 4 below and subject to the satisfaction of the conditions set forth in Section 5 below, the Required Lenders hereby waive the Borrower’s non-compliance, if any, with Section 6.14 (PV-10 Ratio), for any fiscal quarter ending prior to the date of this Amendment.

Section 4.Representations and Warranties. To induce the Lenders to enter into this Amendment, the Loan Parties, jointly and severally, represent and warrant to the Lenders party hereto as of the Amendment Effective Date that:

(a)       Each of the Loan Parties has all necessary corporate power and authority to execute, deliver and perform its obligations under the Loan Documents to which it is a party; and the execution, delivery and performance by the Loan Parties of this

6

Amendment has been duly authorized by all necessary corporate action on its part; and this Amendment constitutes the legal, valid and binding obligations of the Loan Parties enforceable in accordance with its terms;

(b)       No authorizations, approvals or consents of, and no filings or registrations with, any Governmental Authority or any Person are necessary for the execution, delivery or performance by the Loan Parties of this Amendment or for the validity or enforceability thereof; and

(c)       Neither the execution and delivery of this Amendment, nor compliance with the terms and provisions hereof will conflict with or result in a breach of, or require any consent which has not been obtained as of the date hereof under, the respective charter, by-laws, or limited liability company agreement of Loan Parties, or any Governmental Requirement or any Material Agreement, or constitute a default under any such agreement, or result in the creation or imposition of any Lien upon any of the revenues or assets of the Loan Parties pursuant to the terms of any such agreement or instrument.

Section 5.Conditions to Effectiveness. This Amendment shall become effective on and as of the date on which each of the following conditions is satisfied (the “Amendment Effective Date”):

(a)       The Agent shall have received this Amendment, duly executed and delivered by a duly authorized officer of the Borrower and the Required Lenders; and

(b)       The Borrower has paid the fee required by, and in accordance with, Section 6 below.

Section 6.Amendment Fee. In the event that the Required Lenders and the Borrower execute and deliver this Amendment, the Borrower shall pay to the Agent, for the ratable benefit of each Lender that has executed and delivered to the Borrower this Amendment on or prior to 5:00 p.m. (New York time) on May 13, 2009, the fee set forth on Schedule I hereto.

Section 7.Post-Closing Covenant. No later than sixty days after the Amendment Effective Date, the Borrower shall have granted, or shall have caused to be granted, to the Agent as security for the Obligations a security interest in and perfected Lien on (subject only to Excepted Liens or Liens otherwise permitted by Section 9.02 and to the Lien priorities set forth in the Intercreditor Agreement) on its Haynesville Properties, which Lien will be created and perfected by and in accordance with the provisions of mortgages, deeds of trust, security agreements and financing statements, or other Security Instruments, all in form and substance reasonably satisfactory to the Agent and in sufficient executed (and acknowledged where necessary or appropriate) counterparts for recording purposes.

Section 8.Confirmation of Loan Documents by Loan Parties. This Amendment shall constitute a Loan Document, as such term is defined in the Credit Agreement. The amendments contained herein shall not be construed as a waiver or amendment of any other provision of the Credit Agreement or the other Loan Documents or for any purpose except as

7

expressly set forth herein or a consent to any further or future action on the part of any Loan Party that would require the waiver or consent of the Agent or the Lenders.

(a)       This Amendment is not intended to nor shall it be construed to create a novation or accord and satisfaction with respect to any of the Obligations.

(b)       Each of the Loan Parties hereby reaffirms its obligations under the Credit Agreement and each of the other Loan Documents to which it is a party, as the same are amended hereby, and agrees and acknowledges that each such document and all of such obligations thereunder, remain in full force and effect after giving effect to this Amendment.

Section 9.Counterparts. This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same contract. Delivery of an executed counterpart of a signature page of this Amendment by facsimile transmission or email in portable document format (.pdf) shall be as effective as delivery of a manually executed counterpart hereof.

Section 10.Applicable Law. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (OTHER THAN AS EXPRESSLY SET FORTH IN OTHER LOAN DOCUMENTS) SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.

Section 11.Headings. Section headings used herein are for convenience of reference only, are not part of this Amendment and are not to affect the construction of, or to be taken into consideration in interpreting, this Amendment.

[Signature pages follow.]

8

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their duly authorized officers, all as of the date and year first above written.

	CRIMSON EXPLORATION INC.
By:	/s/ E. Joseph Grady
	E. Joseph Grady Senior Vice President and Chief Financial Officer

9

	OCM Principal Opportunities Fund III, L.P.,
	as a Lender
By:	OCM Principal Opportunities Fund III GP, L.P.
Its:	General Partner
By:	Oaktree Fund GP I, L.P.
Its:	General Partner
By:	/s/ B. James Ford
Name:	B. James Ford
Title:	Authorized Signatory
By:	/s/ Adam C. Pierce
Name:	Adam C. Pierce
Title:	Authorized Signatory

	OCM Principal Opportunities Fund IIIA, L.P.,
	as a Lender
By:	OCM Principal Opportunities Fund III GP, L.P.
Its:	General Partner
By:	Oaktree Fund GP I, L.P.
Its:	General Partner
By:	/s/ B. James Ford
Name:	B. James Ford
Title:	Authorized Signatory
By:	/s/ Adam C. Pierce
Name:	Adam C. Pierce
Title:	Authorized Signatory

10

	Wells Fargo Energy Capital, Inc.,
	as a Lender
By:	/s/ Chris Carter
Name:	Chris Carter
Title:	Vice President

	BLT II LLC,
	as a Lender
By:	/s/ Robert Healey
Name:	Robert Healey
Title:	Authorized Signatory

	Sankaty Advisors, LLC as Collateral Manager for Prospect Funding I, LLC as Term Lender,
	as a Lender
By:	/s/ Alan K. Halfenger
Name:	Alan K. Halfenger
Title:	Chief Compliance Officer Assistant Secretary

	Credit Suisse Loan Funding LLC,
	as a Lender
By:	/s/ Robert Healey
Name:	Robert Healey
Title:	Director
By:	/s/ Michael Wotanowski
Name:	Michael Wotanowski
Title:	Director

[Amendment No. 2 and Limited Waiver – Signature Page]

	505 CLO I, LTD,
	as a Lender
By:	CIT Asset Management LLC
By:	/s/ David Harnisch
Name:	David Harnisch
Title:	Managing Director

	Sands Point Funding LTD,
	as a Lender
By:	Guggenheim Investment Management, LLC, as its Collateral Manager
By:	/s/ Michael Damasco
Name:	Michael Damasco
Title:	Senior Managing Director

	Cooper River CLO LTD,
	as a Lender
By:	Guggenheim Investment Management, LLC, as its Collateral Manager
By:	/s/ Michael Damasco
Name:	Michael Damasco
Title:	Senior Managing Director

	Kennecott Funding LTD,
	as a Lender
By:	Guggenheim Investment Management, LLC, as its Collateral Manager
By:	/s/ Michael Damasco
Name:	Michael Damasco
Title:	Senior Managing Director

[Amendment No. 2 and Limited Waiver – Signature Page]

	NZC Opportunities (Funding) II Limited,
	as a Lender
By:	Guggenheim Investment Management, LLC, as its Collateral Manager
By:	/s/ Michael Damasco
Name:	Michael Damasco
Title:	Senior Managing Director

	Energy Components SPC – Up-and-Midstream Segregated Portfolio,
	as a Lender
By:	/s/ Warren Keens
Name:	Warren Keens
Title:	Director

	Sankaty Credit Opportunities III, L.P.,
	as a Lender
By:	/s/ Alan K. Halfenger
Name:	Alan K. Halfenger
Title:	Chief Compliance Officer Assistant Secretary

	Baltic Funding LLC,
	as a Lender
By:	/s/ Tara E. Kenny
Name:	Tara E. Kenny
Title:	Assistant Vice President

[Amendment No. 2 and Limited Waiver – Signature Page]

	Sankaty High Yield Partners II, L.P.,
	as a Lender
By:	/s/ Alan K. Halfenger
Name:	Alan K. Halfenger
Title:	Chief Compliance Officer Assistant Secretary

	Sankaty Advisors, LLC as Collateral Manager for Nash Point CLO, Limited, as Collateral Manager,
	as a Lender
By:	/s/ Alan K. Halfenger
Name:	Alan K. Halfenger
Title:	Chief Compliance Officer Assistant Secretary

	Nash Point II CLO,
	as a Lender
By:	Sankaty Advisors LLC, as Collateral Manager
By:	/s/ Alan K. Halfenger
Name:	Alan K. Halfenger
Title:	Chief Compliance Officer Assistant Secretary

	Sankaty High Yield Partners III, L.P.,
	as a Lender
By:	/s/ Alan K. Halfenger
Name:	Alan K. Halfenger
Title:	Chief Compliance Officer Assistant Secretary

[Amendment No. 2 and Limited Waiver – Signature Page]

	Sankaty Advisors, LLC as Collateral Manager for Loan Funding XI LLC,
	as a Lender
By:	/s/ Alan K. Halfenger
Name:	Alan K. Halfenger
Title:	Chief Compliance Officer Assistant Secretary

	Sankaty Advisors, LLC as Collateral Manager for Race Point III CLO, Limited, Term Lender,
	as a Lender
By:	/s/ Alan K. Halfenger
Name:	Alan K. Halfenger
Title:	Chief Compliance Officer Assistant Secretary

	Race Point IV CLO, Ltd,
	as a Lender
By:	Sankaty Advisors, LLC as Collateral Manager
By:	/s/ Alan K. Halfenger
Name:	Alan K. Halfenger
Title:	Chief Compliance Officer Assistant Secretary

	Chatham Light II CLO, Limited, by Sankaty Advisors LLC, as Collateral Manager,
	as a Lender
By:	/s/ Alan K. Halfenger
Name:	Alan K. Halfenger
Title:	Chief Compliance Officer Assistant Secretary

[Amendment No. 2 and Limited Waiver – Signature Page]

	Sankaty Advisors, LLC as Collateral Manager for Race Point II CLO, Limited, as Term Lender,
	as a Lender
By:	/s/ Alan K. Halfenger
Name:	Alan K. Halfenger
Title:	Chief Compliance Officer Assistant Secretary

	Katonah IV, Ltd. by Sankaty Advisors, LLC as Sub-Advisors,
	as a Lender
By:	/s/ Alan K. Halfenger
Name:	Alan K. Halfenger
Title:	Chief Compliance Officer Assistant Secretary

	Avery Point CLO, Ltd,
	as a Lender
By:	Sankaty Advisors, LLC as Collateral Manager
By:	/s/ Alan K. Halfenger
Name:	Alan K. Halfenger
Title:	Chief Compliance Officer Assistant Secretary

	Katonah III, Ltd. by Sankaty Advisors LLC as Sub-Advisors,
	as a Lender
By:	/s/ Alan K. Halfenger
Name:	Alan K. Halfenger
Title:	Chief Compliance Officer Assistant Secretary

[Amendment No. 2 and Limited Waiver – Signature Page]

Schedule I

Amendment Fee: 1.0% of the aggregate outstanding principal balance of the Loans of such Lender.

[Amendment No. 2 and Limited Waiver – Signature Page]

EX-31

EXHIBIT 31.1

Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Allan D. Keel, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Crimson Exploration Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	May 15, 2009
	/s/ Allan D. Keel
Name:	Allan D. Keel
Title:	President and Chief Executive Officer

EX-31

EXHIBIT 31.2

Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, E. Joseph Grady, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Crimson Exploration Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	May 15, 2009
	/s/ E. Joseph Grady
Name:	E. Joseph Grady
Title:	Chief Financial Officer

EX-32

EXHIBIT 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

This certification is provided pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and accompanies the Quarterly Report on Form 10-Q (the “Form 10-Q”) for the quarter ended March 31, 2009 of Crimson Exploration Inc. (the “Issuer”). The undersigned hereby certifies that the Form 10-Q fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)) and that the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Issuer.

Date:	May 15, 2009
	/s/ Allan D. Keel
Name:	Allan D. Keel
Title:	President and Chief Executive Officer

A signed original of this written statement required by Section 906 has been provided to the Issuer and will be furnished to the Securities and Exchange Commission, or its staff, upon request.

EX-32

EXHIBIT 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

This certification is provided pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and accompanies the Quarterly Report on Form 10-Q (the “Form 10-Q”) for the quarter ended March 31, 2009 of Crimson Exploration Inc. (the “Issuer”). The undersigned hereby certifies that the Form 10-Q fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)) and that the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Issuer.

Date:	May 15, 2009
	/s/ E. Joseph Grady
Name:	E. Joseph Grady
Title:	Chief Financial Officer

A signed original of this written statement required by Section 906 has been provided to the Issuer and will be furnished to the Securities and Exchange Commission, or its staff, upon request.