CONCENTRATIONS

12 Months Ended

Dec. 31, 2012

CONCENTRATIONS

NOTE 4 — CONCENTRATIONS:

Sales to Major Customers

Our production is sold on month-to-month contracts at prevailing prices. We obtain credit protections such as parental guarantees from certain of our purchasers. The following table identifies customers from whom we derived 10% or more of our total oil and gas revenue during the years ended:

	December 31,
	2012			2011			2010
Conoco, Inc.		13	%		28	%		26	%
Hess Corporation		(a	)		(a	)		11	%
Phillips 66 Company		18	%		(a	)		(a	)
Sequent Energy Management LP		(a	)		(a	)		10	%
Shell Trading (US) Company		41	%		46	%		40	%

(a) Less than 10 percent.

The maximum amount of credit risk exposure at December 31, 2012 relating to these customers amounted to $83,432.

We believe that the loss of any of these purchasers would not result in a material adverse effect on our ability to market future oil and gas production.

Production and Reserve Volumes

Approximately18% of our estimated proved reserves (unaudited) at December 31, 2012 and 56% of our production during 2012 were associated with our Gulf Coast Basin conventional shelf properties. Approximately 38% of our estimated proved reserves (unaudited) at December 31, 2012 and 27% of our production during 2012 were associated with our GOM deep water and deep shelf gas properties.

Cash and Cash Equivalents

A substantial portion of our cash balances are not federally insured.