The following is an analysis of the consolidated income tax provision:

The total change in the net non-current deferred liability from 2005 to 2006 was $95.7 million. Increases in the liability were attributable to deferred tax expense of $97.9 million, reclassification of a carryover item to current assets of $2.4 million and $0.2 million for other adjustments. Reductions were made to the net liability for the tax benefit of stock compensation deductions of $4.8 million, which are recorded as additions to paid-in-capital.

The primary non-current deferred tax asset is $55.2 million for foreign carryover items. This is attributable to cumulative New Zealand net operating losses of $167.3 million. New Zealand tax net operating losses do not expire.

Other non-current deferred tax assets include $2.7 million for unrealized stock compensation, $2.6 million for State of Louisiana net operating loss carryovers, $2.2 million for U.S. Federal alternative minimum tax credits, and $1.5 million for other items. The unrealized stock compensation is attributable to stock compensation expenses accrued for employee stock options and restricted stock that is not realized for income tax purposes until exercise (for stock options) or vesting (for restricted stock). The actual tax deduction realized may be significantly different than the accrued amounts depending on the market value of the stock on the date of exercise or vesting. The Louisiana net operating loss carryforwards are scheduled to expire between 2013 and 2019. The alternative minimum tax credits carryforward indefinitely. These credits are available to reduce future regular tax liability to the extent they exceed the alternative minimum tax otherwise due.

The Company has not recorded any valuation allowance against any of the non-current deferred tax assets as management estimates that it is more likely than not that these assets will be fully utilized in future periods before any applicable expiration dates. Significant changes in estimates caused by changes in oil and gas prices, production levels, capital expenditures, and other variables could impact the Company’s ability to utilize the carryover amounts.

The current deferred tax asset of $2.4 million is for capital loss carryforward assets of $6.1 million, offset by a valuation allowance of $3.7 million (an increase of $3.2 million in 2006). The increase in the valuation allowance is due to changes in the Company’s property disposition plans. Management expects to realize the net tax asset from a property disposition planned for 2007.