Production:

Net production volumes from continuing operations in the quarter raised by about 31% to 6.8 billion cubic feet equivalent (Bcfe), or about 75,800 Mcfe per day, against 5.3 Bcfe, or about 57,900 Mcfe per day in the year-ago quarter. Net daily production volumes for the first quarter raised consecutively by about 7.5% against the fourth quarter of 2008. Practically all of the net production volumes for the quarter came from Cotton Valley trend wells in East Texas and North Louisiana, including initial production from Goodrich Petroleum’s horizontal Haynesville Shale drilling program.

Goodrich Petroleum at present anticipates net daily production volumes will average between 78,000 and 81,000 Mcfe per day for the second quarter of 2009, a 3% – 7% sequential raise over the first quarter of 2009.

Net Income:

Results for the first quarter of 2009 included a $37 million gain on derivatives not designated as hedges (comprised of a $21 million realized gain and a $16 million non-cash, unrealized gain), whereas the comparable period in 2008 comprised a $24.5 million loss on derivatives not designated as hedges, all but $0.4 million of which was unrealized. Besides to the $21 million in realized gains during the quarter, Goodrich Petroleum’s mark to market asset position regarding these commodity derivative contracts as of March 31, 2009 was about $71.3 million, all of which is considered a existing asset due to the contracts all maturing prior to December 31, 2009.

Cash Flow

Earnings before interest, taxes, DD&A, non-cash general and administrative expenses and exploration (EBITDAX), was down slightly from the previous year period to about $31 million for the first quarter of 2009, compared to $32.3 million in the year-ago quarter. For the quarter, EBITDAX was up consecutively by 15% over the fourth quarter of 2008.

Discretionary cash flow (DCF), defined as net cash provided by operating activities before changes in working capital, declined slightly from the previous year period to $27.7 million in the first quarter of 2009 against $28.9 million in the year-ago quarter. Net cash provided by operating activities was $36.3 million for the quarter, up considerably from the previous year period’s $17.2 million, as the fourth quarter 2007 prepay transaction Goodrich Petroleum entered into decreased the company’s net cash provided by operating activities in the first quarter of 2008 by $12.5 million. Both EBITDAX and DCF were positively impacted by $21 million in realized gains on commodity derivative contracts during the quarter.

Revenues:

Total revenues, which are exclusive of the $21 million in realized gains on commodity derivative contracts, for the quarter declined considerably to $28.5 million, against $46.4 million for the previous year period, because of an about 52% decline in the average realized sales price per Mcfe received by Goodrich Petroleum during the quarter. Average prices received during the first quarter of 2009 before realized gains on commodity derivative contracts were $4.11 per Mcf of gas and $33.50 per barrel of liquids.

Operating Income

Operating income, defined as revenues minus operating expenses, before the impact of any hedging gains or losses, was a negative $27.5 million for the first quarter of 2009, as compared to operating income of $3.6 million in the year-ago quarter. This decrease was due largely to the afore-mentioned decline in revenues, coupled with a higher DD&A rate in the first quarter of this year of $4.94 per Mcfe against year-ago quarter of $4.76 per Mcfe. The DD&A rate for the first quarter of 2009 also raised consecutively from the $4.11 per Mcfe in the fourth quarter of 2008, with the vast majority of the increase (about 70%) due to negative revisions of proved developed reserves resulting from lower prices used in the year end 2008 reserve report compared to those used in the mid-year 2008 reserve report.

Operating Expenses:

While total operating expenses for the first quarter of 2009 were $56 million against $42.8 million during year-ago quarter, on a unit of production basis total operating expenses were up by only 1%. When excluding DD&A expenses from this computation, operating expenses per Mcfe were down slightly to $3.29 per Mcfe in the first quarter of 2009 from $3.36 per Mcfe during the year-ago quarter, due mainly to the company’s ongoing expense decrease efforts. While basically flat on a per Mcfe unit of production basis, G&A expense was up by 30% in the first quarter of 2009 to $7.1 million from $5.4 million in the year-ago quarter. In addition to the non-cash portion of G&A being up to $1.6 million in the existing quarter, overall compensation costs were up because of a 28% higher headcount year over year, most of which occurred in the second and third quarters of 2008.

Interest Expense:

Interest expense was down slightly to $5.2 million in the first quarter of 2009 from $5.4 million in the year-ago quarter due mainly to lower floating interest rate levels in the current quarter. Both quarters were negatively impacted by the retrospective adoption of FSP APB 14-1, which resulted in incremental non-cash interest expense of $1.8 million in the current quarter and $1.6 million of non-cash interest expense in last year’s first quarter, as adjusted.

Capital Expenditures:

Capital expenditures for the quarter totaled $87.2 million, compared to $85.6 million in the year-ago quarter. Goodrich Petroleum had a 100% success rate on the wells concluded during the existing quarter. The company started the first quarter of 2009 with six operated rigs under contract and about five non-operated rigs working. The company exited the first quarter of 2009 with five operated rigs under contract and three non-operated rigs. In light of existing market conditions Goodrich Petroleum intends to carry on reducing both its operated and non-operated rig count, expecting to average two operated and two non-operated rigs in the last half of the year.

Liquidity:

Goodrich Petroleum exited the first quarter of 2009 with no outstanding borrowings under its bank revolving credit facility and about $78 million in cash and short term bank deposits. While first quarter capital expenditures exceeded cash flow (DCF) by about $60 million, an further $10 million of cash was used to pay drilling and completion costs incurred in 2008 but not invoiced until 2009 (which costs were included in the full year 2008 capital expenditure total of $380 million previously reported). Although additional amounts have been expended in the second quarter of 2009 related to similar third party billings, Goodrich Petroleum fully anticipates the remaining $78 million in cash and short term bank deposits at March 31, 2009 to be adequate, when combined with its regular cash flow, to fund remaining 2009 capital expenditures without needing to draw on Goodrich Petroleum revolving credit facility, which was recently expanded with a current borrowing base of $175 million.