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Meridian Reports Moves on Growth Plan and Impact on Operational Activities for 2006 and 2007

Posted on: Monday, 7 August 2006, 18:00 CDT

The Meridian Resource Corporation (NYSE:TMR) provided an operational update for the first half of 2006 and ensuing periods as the Company continues to reposition and expand its asset base through a combination of newly formed joint ventures and acquisitions in six specific regions of the domestic United States. Below is a recapitulation of the joint ventures and acquisitions that have been concluded or are nearly complete.

Joint Ventures and Acquisitions Growth Steps:

1. East Texas Austin Chalk/Woodbine Play. A Joint Venture and Exploration Agreement was initially entered into during 2005 that originally comprised approximately 7,000 gross acres on which four wells were drilled during 2006. Currently, negotiations are under way to expand the Company's acreage position within this area to over 30,000 acres. Much of the acreage is offset to the Double A Wells Woodbine field and more recent wells that have been reported as testing the Austin Chalk section at rates as much as 18 million cubic feet ("Mmcf") of natural gas per day and as much as 2,000 barrels of condensate per day. Currently, the Company has one rig under contract that is drilling horizontal laterals on the first of three Austin Chalk wells. Meridian is currently working to secure a second rig before the end of the year to drill the horizontal Austin Chalk laterals needed for the completion of two previously drilled vertical wells. The fourth well, a Woodbine test, was recently brought online and is scheduled for fracture stimulation in September. Additionally, the Company is in negotiations for the possible construction and purchase of two rigs for its own account to accelerate the development of the Company's new acreage positions and other plays. Meridian owns working interest positions ranging between 25% and 100% and is the operator for the wells.

2. North Texas, Palo Duro Basin Play. A Joint Venture and Exploration Agreement and acquisition was closed during the first quarter 2006 giving the Company between 50% and 75% working interest positions in approximately 35,000 gross acres in Floyd and Motley Counties, Texas. The primary target formation is the Pennsylvanian Shale between 8,000 and 10,000 feet with average shale thickness approximating 1,000 feet. Several operators in the basin are in various stages of drilling and testing optimal completion techniques for wells in the area. The Company is currently developing its operational plan for the basin based on the results of offset operations and other intelligence gathered over time. Meridian is the operator.

3. New Albany, Illinois Basin Play. A Joint Venture and Exploration Agreement was entered into during March 2006 whereby the Company acquired approximately 16,000 gross acres. Since that time, the Company has been in the field acquiring leases and currently has agreements for an additional 9,000 acres for a total of approximately 25,000 acres. Depending on the level of success in the initial stages of drilling and testing in the area, the Company has plans to continue leasing activities to expand its position in this region to over 140,000 acres. Targeted formations are the New Albany Shale at depths generally between 2,000 feet and 5,000 feet with an average thickness of 300 feet. Plans are to initiate drilling activities during 2006 depending on rig availability. Working interest is anticipated to be between 75% and 100% with Meridian as operator.

4. Far West Texas, Delaware Basin. A Joint Venture and Exploration Agreement was entered into during April 2006, with the acquisition of a 50% working interest in approximately 75,000 gross acres in Culbertson and Hudspeth Counties, Texas. Targeted formations are the Barnett and Woodford Shale sections which range between 5,500 and 8,500 feet. Current plans are to acquire several 2-D seismic lines over portions of the acreage and to initiate drilling operations during late 2006 or early 2007. Meridian's joint venture partner will operate the project.

5. North Central Oklahoma, Sooner Trend, Hunton/Woodford Play. Exploration/exploitation acreage was recently purchased in the producing trend of the Hunton/Woodford formations play. Depths in this play range between 7,000 and 8,000 feet. The Company owns approximately 7,000 acres with plans to expand its position. The Company currently owns a 100% working interest and will operate the field. It is anticipated that the initial drilling operations will begin prior to year-end.

6. Gulf Coast Regions of Texas and South Louisiana. Acquisition and purchase agreements in principal are in final and other stages of closing to expand the Company's acreage holdings and joint venture participation positions in numerous plays and prospects in the Company's core exploration and producing regions. Four wells are being readied for drilling in the regions during the last half of 2006. Subject to rig availability, additional prospects could also be drilled before the end of the year.

Update on Current Operations:

Weeks Island Field

The Company recently brought online production from the previously announced Goodrich-Cocke No. 4 development well located in Iberia Parish, Louisiana. The well was drilled to approximately 8,100 feet MD and logged approximately 91 feet of gross gas pay in the Miocene "BF4" sand section. The well was tested through a total of 24 feet of perforations in three separate intervals. The well is currently producing at a gross rate of 5.3 Mmcfe/d (2.7 net).

The Company is currently drilling the J.A. Smith well on the Y-Not prospect located in the Weeks Island field in Iberia Parish, Louisiana. The well is being drilled to a total depth of approximately 16,000 feet to reach the targeted sand which is the Lower Miocene Planulina Sand (also known as the "Y" sand). The well, which had to be sidetracked, is currently at a depth of approximately 14,000 feet MD.

Ramos Complex Area

The Company recently re-completed the CL&F E-1 well on its Turtle Shell prospect in the Cib Op 3 sand interval. The 10 feet of perforations were made between 14,020 and 14,030 feet in the sand. Flowing tubing pressure was measured at 4,200 pounds per square inch ("psi") through a 13/64ths-inch choke. The well is currently producing at a rate of 5.4 Mmcfe/d (3.2 net).

Biloxi Marshland

The Biloxi Marshland ("BML") 28-1 well was brought back online after repairs were completed to the well head damaged by Hurricane Katrina. Repairs were delayed due to potential well control issues and procurement of proper equipment to handle such issues. The well is currently producing at a rate of 1.4 Mmcfe/d (0.9 net).

The Apache La. Minerals No. 1 well on its Bayou Gentilly prospect located on the southern edge of the Biloxi Marshland area was completed in August of last year. The well was tested from the Cris "I" sand interval at a gross daily flow rate as high as 5.9 Mmcf/d and 654 barrels of condensate (6.4 Mmcfe/d net). A new line and production facilities have recently been completed. The Company is currently waiting for the pipeline operator to conduct a hot tap, shortly after which the well will be flowing into sales. The Company expects this to take place in the third quarter. The Company owns a 92% working interest in this well.

Other Outside Operated Activity

Gibson-Humphreys Field

As previously announced the Westervelt No. 2 well on the Gumbo prospect was drilled to a target depth of 19,400 feet and encountered pay in the Rob L sand interval. Meridian owns a 2.7% ORRI in the well by virtue of land positions. Denbury Resources is the operator of the well and is now in the process of completing the well.

Thornwell Field

The previously announced Abshire No. 33-1 well was drilled by Denbury Resources to a total depth of 11,350 feet and logged pay in the Bol Perc sands. The operator has completed the well and is currently producing at a gross rate of 5.1 Mmcfe/d. Meridian owns a 12.3% non-operated working interest in the well (7.9% net).

Production Data and Hedging Update

Average daily production for the Company for the second quarter 2006 was approximately 64 Mmcfe/d. The Company recently entered into several new hedging contracts to hedge a portion of its expected oil production for 2006 and 2007. The additional oil hedge contracts were completed in the form of costless collars, and ranged between a floor price of $60 and a ceiling price of $96.10 with monthly volumes ranging between 3,000 and 5,000 barrels between September 2006 and July 2007. The costless collars provide the Company with a lower limit "floor" price and an upper limit "ceiling" price on the hedged volumes. The floor price represents the lowest price the Company will receive for the hedged volumes while the ceiling price represents the highest price the Company will receive for the hedged volumes. The costless collars are settled monthly based on the NYMEX futures contract during each respective month. A schedule showing the Company's complete hedging position is located below.

Chairman and CEO Joseph A. Reeves, Jr. commented, "The growth steps taken during the first half of 2006 set the stage for Meridian's exploration and development program for the next 18 months and following. With the convergence of opportunities captured, solid cash flow, low debt, liquidity and new projects on the horizon, the company has well positioned itself for future low risk drilling activities for its near and long term future. We are pleased with the results of our staff's efforts toward these goals in such a short period of time."

Re-cap of Data

Below is a re-capitulation of the operations affecting production discussed in this press release:

-- East Texas - 4 wells drilled, expanding lease position to

30,000 acres

-- BSM No. 1 - first Austin Chalk horizontal lateral completed,

second under way

-- BSM No. 2 brought online, preparing to frac well

-- BSM No. 3 & Leary No. 1 wells waiting on rigs

-- Possible purchase of 2 land drilling rigs

-- Palo Duro - 35,000 acres, studying/watching for optimal

completion techniques

-- New Albany Shale - total of 25,000 acres, could increase to

140,000, first activity by year-end

-- Delaware Basin - 75,000 acres, 50% JV, need some seismic,

first activity by year-end

-- Hunton/Woodford Play - Exploration/exploitation acreage, 100%

WI, first activity by year-end

-- Texas & Louisiana Gulf Coast - 4 wells by year-end, others

possible

-- Goodrich-Cocke No. 4 well brought online at 5.3 Mmcfe/d (2.7

net)

-- J.A. Smith well drilling on Y-Not prospect, sidetracked, going

to 16,000 feet

-- CL&F E-1 well re-completed in CibOp 3 sand, 5.4 Mmcfe/d (3.2

net)

-- BML 28-1 wellhead repaired, back online at 1.4 Mmcfe/d (0.9

net)

-- Pipeline and facilities for Bayou Gentilly well nearly

complete

-- Westervelt No. 2 well now in process of being completed

-- Abshire No. 33 well completed and on line

-- Average daily production for Q2 at 64.3 Mmcf/d

-- Added hedges, see detail above

The Meridian Resource Corporation is an independent oil and natural gas company engaged in the exploration for and development of oil and natural gas in Louisiana, Texas, and the Gulf of Mexico. Meridian has access to an extensive inventory of seismic data and, among independent producers, is a leader in using 3-D seismic and other technologies to analyze prospects, define risk, target and complete high-potential wells for exploration and development. Meridian is headquartered in Houston, Texas, and has offices in Tulsa, Oklahoma as well as a field office in Weeks Island, Louisiana. Meridian stock is traded on the New York Stock Exchange under the symbol "TMR."

Safe Harbor Statement and Disclaimer

Statements identified by the words "expects,""projects,""plans," and certain of the other foregoing statements may be deemed "forward-looking statements." Although Meridian believes that the expectations reflected in such forward-looking statements are reasonable, these statements involve risks and uncertainties that may cause actual future activities and results to be materially different from those suggested or described in this press release. These include risks inherent in the drilling of oil and natural gas wells, including risks of fire, explosion, blowout, pipe failure, casing collapse, unusual or unexpected formation pressures, environmental hazards, and other operating and production risks inherent in oil and natural gas drilling and production activities, which may temporarily or permanently reduce production or cause initial production or test results to not be indicative of future well performance or delay the timing of sales or completion of drilling operations; risks with respect to oil and natural gas prices, a material decline in which could cause the Company to delay or suspend planned drilling operations or reduce production levels; and risks relating to the availability of capital to fund drilling operations that can be adversely affected by adverse drilling results, production declines and declines in oil and gas prices. These and other risks are described in the Company's documents and reports, available from the U.S. Securities and Exchange Commission, including the report filed on Form 10-K for the year ended December 31, 2005. The Meridian Resource Corporation Summary of Natural Gas and Crude Oil Hedge Positions Natural Gas Costless Collars ---------------------------- Contracted Floor Ceiling Contract Volume Price Price . Period . (Mmbtu/Qtr.) ($ / Mmbtu) ($ / Mmbtu) ---------------- ---------------- ---------------- ---------------- Q2 - '06 930,000 $8.00 $12.82 Q3 - '06 1,660,000 $8.00 $11.68 Q4 - '06 1,340,000 $8.00 $11.01 Q1 - '07 1,200,000 $8.00 $10.60 Q2 - '07 800,000 $8.00 $10.60 Crude Oil Costless Collars -------------------------- Contracted Floor Ceiling Contract Volume Price Price . Period . (Bbls./Qtr.) ($ / Bbl.) ($ / Bbl.) ---------------- ---------------- ---------------- ---------------- Q2 - '06 58,000 $38.06 $48.06 Q3 - '06 56,000 $47.05 $67.63 Q4 - '06 58,000 $52.07 $78.57 Q1 - '07 53,000 $52.26 $79.00 Q2 - '07 48,000 $52.50 $79.53 Q3 - '07 27,000 $55.56 $80.01 Q4 - '07 18,000 $60.00 $82.00 Q1 - '08 18,000 $60.00 $82.00 Q2 - '08 16,000 $60.00 $82.00 Q3 - '08 5,000 $60.00 $82.00

Source: Business Wire

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