- Full-Year Operating Cash Flow up 32%

- Full-Year Production up 11%

- Quarterly Production Record of 22,674 BOE/d

- Pro Forma Reserve Replacement of 161%

DENVER, March 5 /PRNewswire-FirstCall/ -- Venoco, Inc. (NYSE: VQ) today reported financial and operational results for the fourth quarter and full-year 2008. Highlights for 2008 included the following:

    --  Operating cash flow of $212 million, up 32% from $161 million in 2007.
    --  Production of 7.9 million barrels of oil equivalent (MMBOE) for the year
        or 21,674 BOE per day (BOE/d), up 11% from 7.1 MMBOE or 19,535 BOE/d for
        2007.
    --  Proved Reserves of 97.5 MMBOE as of December 31, 2008.  Pro forma for
        the sale of the Hastings Complex in early February 2009, Proved Reserves
        were 89.8 MMBOE (a 13% increase from December 31, 2007 pro forma
        reserves).
    --  Adjusted EBITDA of $300 million, up 43% from $210 million for 2007.
    --  Adjusted Earnings of $55 million, up 176% from $20 million for 2007.

The company reported a net loss of $391 million primarily as a result of a previously announced, non-cash ceiling test write down of $641 million due to lower commodity prices on December 31, 2008.

Adjusted Earnings were $55 million, up from $20 million for 2007. Adjusted Earnings adjusts the net loss of $391 million in 2008 and the net loss of $73 million in 2007 for the effects of unrealized commodity and interest derivatives gains / losses in both years, a loss on early extinguishment of debt in 2007, the write-off of costs associated with the terminated MLP offering and the ceiling impairment in 2008. Please see the end of this release for definitions of Adjusted Earnings and Adjusted EBITDA and a reconciliation of those measures to net loss.

"Our operating teams have remained focused on efficiently developing and producing our assets," said Tim Marquez, Venoco's Chairman and CEO. "We are very pleased with our performance in 2008 in generating record Adjusted Earnings, and in beating our guidance on daily production. We are well-served by our hedges, and our low decline-rate oil properties, which contribute to the stability of our cash flow during these economic times."

Fourth Quarter

Production in the fourth quarter of 2008 reached an all-time high of 22,674 BOE/d, an increase of 3.3% over the third quarter of 2008 of 21,949 BOE/d and a 13% increase over the fourth quarter of 2007 of 20,100 BOE/d.

The following table details the company's quarterly daily production by region (BOE/d):



    Region                            4Q 2007   3Q 2008    4Q 2008
    Sacramento Basin                   7,887     9,363      9,668
    Southern California                8,273     8,606      8,903
    Texas (and other)                  3,940     3,980      4,103
         Total                        20,100    21,949     22,674
                                      ======    ======     ======
         Total excluding Hastings     17,578    19,551     20,110
                                      ======    ======     ======

Adjusted Earnings were $5 million for the fourth quarter of 2008, down from $11 million for the third quarter of 2008 and up from $3.3 million in the fourth quarter of 2007.

Adjusted EBITDA was $69 million for the fourth quarter, down 3% from $71 million for the third quarter of 2008 and up 28% from $54 million for the fourth quarter of 2007.

Full Cost Ceiling Write-down

Based on year-end 2008 commodity prices, the company recorded a non-cash, full-cost ceiling write-down of $641 million in the fourth quarter of 2008. As a result of the write-down, the company's 2009 guidance on DD&A will fall to $12.00 per BOE. The company has hedged 101% of its 2009 production guidance, more than 90% of its anticipated 2010 production, and more than 60% of its anticipated 2011 production. Because Venoco does not utilize cash flow hedge accounting for its derivative instruments, the value of these contracts (which approximated $90 million at December 31, 2008) was not included in the ceiling test calculation.

Hastings Sale

The company closed the sale of its Hastings Complex in Texas to Denbury Resources in early February 2009 for aggregate proceeds of $201 million. Venoco retains a 2% override and a reversionary interest of 22.3% following payout, as defined in the option agreement. Production from the Hastings Complex averaged approximately 2,500 BOE/d during 2008, net to the interest sold, with conventional proven reserves of 7.7 MMBOE using year-end 2008 SEC prices. The company's year-end 2007 reserves for the Hastings Complex were 14.4 MMBOE. Under terms of the option agreement, Denbury is obligated to take certain actions to complete a carbon dioxide (CO2) flood of the Hastings Complex. However, Denbury has indicated that it does not plan to commence the CO2 flood until 2011, after completion of its Green CO2 pipeline currently under construction. Venoco does not currently have any reserves booked related to the CO2 flood or its reversionary interest in the Hastings Complex.

Reserves Review

Total proved oil and gas reserves as of December 31, 2008 were 97.5 MMBOE at SEC pricing. The company added 5.7 MMBOE of proved reserves in its Southern California assets with the majority of the additions coming from the West Montalvo field. In the Sacramento Basin the company added 7.8 MMBOE of proved reserves. In Texas, where pricing had a significant negative impact, reserves declined a total of 8.0 MMBOE, primarily as a result of a decrease in reserves from the Hastings Complex of 5.8 MMBOE.

Price related revisions between year-end 2007 and year-end 2008 reduced reserves by 11.0 MMBOE, while performance related revisions added 5.0 MMBOE, for net negative revisions of 6.0 MMBOE.

The pre-tax PV-10 of the company's reserves using year-end SEC pricing of $44.60 per barrel for oil and $5.62 per MMBTU for gas is $616.7 million. The company's estimate of reserves using a year-end NYMEX 5-year strip pricing is 108.2 MMBOE. The pre-tax PV-10 using that NYMEX 5-year strip pricing is $1.6 billion. See the end of this release for a reconciliation of PV-10 to a standardized measure of discounted future net cash flows.

Pro forma for the early February 2009 sale of the Hastings Complex, Venoco's December 31, 2008 total proved reserves are 89.8 MMBOE, which, net of production, represents a 13% increase from pro forma December 31, 2007 reserves of 85.5 MMBOE and replacement of 161% of pro forma production. Production in 2008, pro forma for the Hastings sale, was 7.0 MMBOE. Pro forma for the Hastings sale, the company's 2008 all-in finding and development costs, net of future asset retirement obligations, were $25.49 per BOE. Excluding price-related revisions, pro forma F&D costs were $19.62 per BOE. Pro forma organic F&D costs, which excludes proved and unevaluated property acquisitions and leasehold costs, were $22.66 per BOE (excluding price-related revisions, they were $17.26 per BOE).

Capital Investment 2008

Venoco's 2008 capital expenditures for development and other spending on its properties (including amounts accrued at year end) was $301 million, including $211 million for drilling and rework activities, and $51 million for facilities. In addition, the company also spent $14 million for acquisitions in its core areas. Total costs incurred for the company's E&P operations, including drilling, completion, acquisition, seismic, leasehold, capitalized G&A costs and asset retirement obligations, were $340 million for 2008.

In 2008 the company spent $167 million or 56% of its development and other capital expenditures in the Sacramento Basin. Drilling in the Basin has been cut back from five rigs in 2008 to three currently. The company plans to drill more than 70 wells and complete more than 100 workovers / recompletions in the Basin in 2009.

"We have been very pleased with our Sacramento Basin drilling over the years, but have scaled back our drilling activity for 2009 in response to current commodity pricing and economic conditions," Mr. Marquez said. "We will continue to be active, drilling 70+ new wells this year. We will also continue our workover program that has been so successful over the years at adding production and stemming overall decline in the basin."

In Southern California, the company spent $70 million or 23% of the its 2008 capital expenditures , focused on further infill development drilling and substantial facility upgrades to improve offshore processing and operating efficiency.

In Texas, the company spent $43 million or 14% of its 2008 capital expenditures, with about $18 million for facilities, including those in the Hastings Complex to upgrade its fluid handling capacity.

"We scaled back our planned 2009 capital expenditures dramatically from 2008 levels, but we expect to maintain the company's production flat pro forma for the sale of Hastings," Mr. Marquez commented.

Liquidity

In connection with the sale of the Hastings Complex, Venoco proactively requested a re-determination of the borrowing base under its revolving credit facility. As a result, the borrowing base under the facility was reduced to $125 million and paid down to a zero balance with proceeds from the sale. Subsequently, $5.6 million was drawn on the facility solely to maintain a balance of variable rate debt equivalent to the notional amount of the company's $500 million interest rate swap. Except for acquisitions, the company anticipates having only a small percentage of the revolver drawn at year-end 2009.

Venoco has reduced its debt position from $800 million on December 31, 2008 to a current level of $665 million. The company's remaining debt consists of a $494 million Second Lien Term Loan facility (due September 2011), $150 million of 8¾% bonds (due December 2011), and $15 million in deferred derivative premiums. Debt levels are offset by cash of $37 million, for net debt of $628 million. The Term Loan has no maintenance covenants and provides a mechanism whereby the maturity date will be extended to May 2014, if the company's bonds are refinanced by September 2011.

"We have been very deliberate in managing the positive impact of the Hastings sale on our financial position. As a result of our lower net debt position, we have no looming maturities and we benefit from approximately $150 million of liquidity," said Tim Ficker, Venoco's CFO.

2009 Guidance

The following summarizes the company's 2009 guidance:

    --  Production: 19,000 BOE/d
    --  Capital Budget: $150 million
    --  Lease Operating Expenses: $15.00 per BOE
    --  G&A Expenses (excluding stock-based compensation): $4.50 per BOE
    --  DD&A: $12.00 per BOE

Earnings Conference Call

Venoco will host a conference call to discuss results today, Thursday, March 5, 2009 at 11:00 a.m. Eastern time (9 a.m. Mountain). The conference call will be webcast and those wanting to listen may do so by using a link on the Investor Relations page of the company's website at http://www.venocoinc.com. Those wanting to participate in the Q & A portion can call (866) 730-5768 and use conference code 92777677. International participants can call (857) 350-1592 and use the same conference code.

A replay of the conference call will be available for one week by calling (888) 286-8010 or, for international callers, (617) 801-6888, and using passcode 51550711. The replay will also be available on the Venoco website for 30 days.

Annual Stockholders Meeting

The location for the Annual Stockholders meeting on Wednesday, May 20, 2009 has changed to the Sheraton Hotel, 1550 Court Place, Denver, Colorado.

About the Company

Venoco is an independent energy company primarily engaged in the acquisition, exploitation and development of oil and natural gas properties in California and Texas. Venoco operates three offshore platforms in the Santa Barbara Channel, has non-operated interests in three other platforms, operates four onshore properties in Southern California, has extensive operations in Northern California's Sacramento Basin and operates fifteen fields in Texas.

Forward-looking Statements

Statements made in this news release relating to Venoco's future production and expenses, and all other statements except statements of historical fact, are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements are based on assumptions and estimates that management believes are reasonable based on currently available information; however, management's assumptions and the company's future performance are both subject to a wide range of business risks and uncertainties and there is no assurance that these goals and projections can or will be met. Any number of factors could cause actual results to differ materially from those in the forward-looking statements, including, but not limited to, the timing and extent of changes in oil and gas prices, the timing and results of drilling and other development activities, the availability and cost of obtaining drilling equipment and technical personnel, risks associated with the availability of acceptable transportation arrangements and the possibility of unanticipated operational problems, delays in completing production, treatment and transportation facilities, higher than expected production costs and other expenses, and pipeline curtailments by third parties. All forward-looking statements are made only as of the date hereof and the company undertakes no obligation to update any such statement. Further information on risks and uncertainties that may affect the Company's operations and financial performance, and the forward-looking statements made herein, is available in the company's filings with the Securities and Exchange Commission, which are incorporated by this reference as though fully set forth herein.



                         OIL AND NATURAL GAS PRODUCTION AND PRICES
                                Quarter Ended            Quarter Ended
    UNAUDITED          9/30/08  12/31/08  % Change 12/31/07 12/31/08 % Change
    Production Volume:
    Oil (MBbls) (1)      1,036     1,096      6%     1,021     1,096      7%
    Natural
     Gas (MMcf)          5,900     5,940      1%     4,969     5,940     20%
    MBOE                 2,019     2,086      3%     1,849     2,086     13%
    Daily Average
     Production
     Volume:
    Oil (Bbls/d)        11,261    11,913      6%    11,098    11,913      7%
    Natural Gas
     (Mcf/d)            64,130    64,565      1%    54,011    64,565     20%
    BOE/d               21,949    22,674      3%    20,100    22,674     13%
    Oil Price per
     Barrel Produced
     (in dollars):
    Realized price
     before hedging    $109.08    $48.36    -56%    $81.64    $48.36    -41%
    Realized hedging
     gain (loss)        (32.08)     3.83    112%    (14.10)     3.83    127%
    Net realized
     price              $77.00    $52.19    -32%    $67.54    $52.19    -23%
    Natural Gas
     Price per Mcf
     (in dollars):
    Realized price
     before hedging      $8.92     $5.76    -35%     $6.74     $5.76    -15%
    Realized hedging
     gain (loss)         (0.15)     0.51    440%      0.16      0.51    219%
    Net realized
     price               $8.77     $6.27    -29%     $6.90     $6.27     -9%
    Average Sale
     Price per BOE (2)  $63.53    $45.91    -28%    $55.45    $45.91    -17%
    Expense per BOE:
    Lease operating
     expenses (3)       $17.89    $19.21      7%    $18.34    $19.21      5%
    Production and
     property taxes (3)  $3.12     $0.89    -71%     $3.24     $0.89    -73%
    Transportation
     expenses            $0.82     $0.78     -5%     $0.88     $0.78    -11%
    Depreciation,
     depletion and
     amortization       $16.31    $19.38     19%    $15.84    $19.38     22%
    General and
     administrative (4)  $5.07     $5.58     10%     $3.85     $5.58     45%
    Interest expense     $6.59     $6.23     -5%     $8.39     $6.23    -26%



    (1)  Amount shown are oil production volumes for offshore properties
         and sales volumes for onshore properties (differences between
         onshore production and sales volumes are minimal).  Revenue
         accruals are adjusted for actual sales volumes since offshore oil
         inventories  can vary significantly from month to month based on
         the timing of barge deliveries, oil in tank and pipeline
         inventories, and oil pipeline sales nominations.

    (2)  Amounts shown are based on oil and natural gas sales, net of
         inventory changes, realized commodity derivative gains (losses),
         and amortization of commodity derivative premiums, divided by sales
         volumes.

    (3)  Lease operating expense and property and production taxes are
         combined to comprise oil and natural gas production expenses on the
         consolidated statements of operations.

    (4)  Net of amounts capitalized.



                                                                            
                                       Year Ended
    UNAUDITED                                    12/31/07  12/31/08  % Change
    Production Volume:
    Oil (MBbls) (1)                                  3,981     4,091      3%
    Natural Gas (MMcf)                              18,895    23,050     22%
    MBOE                                             7,130     7,933     11%
    Daily Average Production Volume:
    Oil (Bbls/d)                                    10,907    11,178      3%
    Natural Gas (Mcf/d)                             51,767    62,978     22%
    BOE/d                                           19,535    21,674     11%
    Oil Price per Barrel Produced (in dollars):
    Realized price before hedging                   $64.06    $89.69     40%
    Realized hedging gain (loss)                     (4.35)   (20.71)  -376%
    Net realized price                              $59.71    $68.98     16%
    Natural Gas Price per Mcf (in dollars):
    Realized price before hedging                    $6.61     $8.21     24%
    Realized hedging gain (loss)                      0.23      0.08    -65%
    Net realized price                               $6.84     $8.29     21%
    Average Sale Price per BOE (2)                  $50.24    $58.56     17%
    Expense per BOE:
    Lease operating expenses (3)                    $15.05    $16.86     12%
    Production and property taxes (3)                $1.69     $1.98     17%
    Transportation expenses                          $0.85     $0.75    -12%
    Depreciation, depletion and amortization        $13.86    $16.95     22%
    General and administrative (4)                   $4.46     $5.43     22%
    Interest expense                                 $8.43     $6.81    -19%



                   CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                       Quarter Ended         Quarter Ended
    UNAUDITED ($in thousands)       9/30/08    12/31/08  12/31/07    12/31/08
    REVENUES:
    Oil and natural gas sales     $158,041     $94,079  $114,116     $94,079
    Other                            1,112         791       776         791
    Total revenues                 159,153      94,870   114,892      94,870
    EXPENSES:
    Oil and natural gas
     production                     42,418      41,939    39,902      41,939
    Transportation expense           1,655       1,624     1,636       1,624
    Depletion, depreciation
     and amortization               32,931      40,436    29,280      40,436
    Impairment                           -     641,000         -     641,000
    Accretion of asset
     retirement obligation           1,044       1,138     1,402       1,138
    General and
     administrative                 10,235      11,635     7,112      11,635
    Total expenses                  88,283     737,772    79,332     737,772
    Income from operations          70,870    (642,902)   35,560    (642,902)
    FINANCING COSTS AND OTHER:
    Interest expense                13,305      12,986    15,520      12,986
    Interest rate derivative
     realized (gains) losses         3,371       3,136      (193)      3,136
    Interest rate derivative
     unrealized (gains)
     losses                           (626)     10,623     8,815      10,623
    Amortization of deferred
     loan costs                        735         721       986         721
    Loss on extinguishment of
     debt                                -           -         -           -
    Commodity derivative
     realized (gains) losses        34,095     (28,768)   13,595     (28,768)
    Commodity derivative
     unrealized (gains)
     losses and amortization
     of derivative premiums       (337,147)   (224,356)   93,002    (224,356)
    Total financing costs and
     other                        (286,267)   (225,658)  131,725    (225,658)
    Income (loss) before
     taxes                         357,137    (417,244)  (96,165)   (417,244)
    Income tax provision
     (benefit)                     136,200      (3,200)  (35,800)     (3,200)
    Net income (loss)             $220,937   $(414,044) $(60,365)  $(414,044)



                                                              Year Ended
    UNAUDITED ($in thousands)                          12/31/07    12/31/08
    REVENUES:
    Oil and natural gas sales                           $373,155    $555,917
    Other                                                  3,355       3,603
    Total revenues                                       376,510     559,520
    EXPENSES:
    Oil and natural gas production                       119,321     149,504
    Transportation expense                                 6,061       5,958
    Depletion, depreciation and
     amortization                                         98,814     134,483
    Impairment                                                 -     641,000
    Accretion of asset retirement
     obligation                                            3,914       4,203
    General and administrative                            31,770      43,101
    Total expenses                                       259,880     978,249
    Income from operations                               116,630    (418,729)
    FINANCING COSTS AND OTHER:
    Interest expense                                      60,115      54,049
    Interest rate derivative realized
     (gains) losses                                         (135)     10,231
    Interest rate derivative unrealized
     (gains) losses                                       17,312      10,336
    Amortization of deferred loan costs                    4,197       3,344
    Loss on extinguishment of debt                        12,063           -
    Commodity derivative realized
     (gains) losses                                       13,041      61,446
    Commodity derivative unrealized
     (gains) losses and amortization of
     derivative premiums                                 129,609    (178,203)
    Total financing costs and other                      236,202     (38,797)
    Income (loss) before taxes                          (119,572)   (379,932)
    Income tax provision (benefit)                       (46,200)     11,200
    Net income (loss)                                   $(73,372)  $(391,132)



    CONDENSED CONSOLIDATED BALANCE SHEET INFORMATION
    UNAUDITED ($in thousands)                       12/31/2007     12/31/2008
    ASSETS
     Cash and cash equivalents                        $9,735            $191
     Accounts receivable                              55,597          41,306
     Inventories                                      10,377          12,361
     Prepaid expenses and other current assets         4,391           4,314
     Income tax receivable                             6,725             546
     Deferred income taxes                            21,967               -
     Commodity derivatives                             7,780          57,247
       Total current assets                          116,572         115,965
       Net property, plant and equipment           1,131,032         702,734
       Total other assets                             17,881          45,555
    TOTAL ASSETS                                  $1,265,485        $864,254

    LIABILITIES AND STOCKHOLDERS' EQUITY
     Accounts payable and accrued liabilities        $82,094         $75,400
     Undistributed revenue payable                    11,298           8,277
     Interest payable                                  6,839           5,325
     Current maturities of long-term debt              3,449           2,598
     Commodity and interest derivatives               68,756          21,284
       Total current liabilities                     172,436         112,884
    LONG-TERM DEBT                                   691,896         797,670
    DEFERRED INCOME TAXES                             16,607               -
    COMMODITY AND INTEREST DERIVATIVES                87,224           9,363
    ASSET RETIREMENT OBLIGATIONS                      51,720          79,504
      Total liabilities                            1,019,883         999,421
      Total stockholders' equity                     245,602        (135,167)
    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY    $1,265,485        $864,254

GAAP RECONCILIATIONS

In addition to net income (loss) determined in accordance with GAAP, we have provided in this release our Adjusted Earnings and Adjusted EBITDA for recent periods. Both Adjusted Earnings and Adjusted EBITDA are non-GAAP financial measures that we use as supplemental measures of our performance.

We define Adjusted Earnings as net income (loss) before (i) the after-tax effects of unrealized commodity and interest rate derivative gains and losses, (ii) loss on the extinguishment of debt in 2007, (iii) costs associated with the cancellation of the MLP offering in 2008, and (iv) the non-cash, full-cost ceiling test impairment in the fourth quarter of 2008. We believe that Adjusted Earnings facilitates comparisons to earnings forecasts prepared by stock analysts and other third parties. Such forecasts generally exclude the effects of items that are difficult to predict or to measure in advance and are not directly related to our ongoing operations. Adjusted Earnings should not be considered a substitute for net income (loss) as reported in accordance with GAAP.

We define Adjusted EBITDA as net income (loss) before (i) net interest expense and realized interest rate derivative (gains) or losses, (ii) loss on extinguishment of debt, (iii) income tax provision (benefit), (iv) depreciation, depletion and amortization, (v) amortization of deferred loan costs, (vi) the cumulative effect of change in accounting principle, (vii) unrealized gains and losses on derivative instruments, (viii) non-cash expenses relating to the amortization of derivative premiums, (ix) non-cash expenses relating to share-based payments under FAS 123R, and (x) the non-cash, full-cost ceiling test impairment in the fourth quarter of 2008. Because the use of Adjusted EBITDA facilitates comparisons of our historical operating performance on a more consistent basis, we use this measure for business planning and analysis purposes, in assessing acquisition opportunities and in determining how potential external financing sources are likely to evaluate our business.

We present Adjusted Earnings and Adjusted EBITDA because we consider them to be important supplemental measures of our performance. Neither Adjusted Earnings nor Adjusted EBITDA is a measurement of our financial performance under GAAP and neither should be considered as an alternative to net income (loss), operating income or any other performance measure derived in accordance with GAAP, as an alternative to cash flow from operating activities or as a measure of our liquidity. You should not assume that the Adjusted Earnings or Adjusted EBITDA amounts shown are comparable to similarly named measures disclosed by other companies.



    UNAUDITED                      Quarter Ended            Year Ended
    ($in thousands)     12/31/2007 9/30/2008 12/31/2008 12/31/2007 12/31/2008
    Adjusted Earnings
     Reconciliation
      Net Income          $(60,365) $220,937 $(414,044) $(73,372) $(391,132)
      Plus:
      Unrealized commodity
       (gains) losses       91,351  (338,773) (225,457)  122,779   (184,459)
      Unrealized interest
       rate derivative
       (gains) losses        8,816      (626)   10,623    17,312     10,336
      Write-off of MLP
       offering costs            -         -       (50)        -      2,690
      Early Extinguishment
       of debt                   -         -         -    12,063          -
      Ceiling test
       Impairment                -         -   641,000         -    641,000

      Tax effects          (36,468)  129,435    (6,741)  (58,788)   (23,185)
      Adjusted Earnings     $3,334   $10,973    $5,331   $19,994    $55,250



    UNAUDITED                         Quarter Ended            Year Ended,
    ($in thousands)         12/31/2007 9/30/2008 12/31/2008  2007      2008
    EBITDA
     Reconciliations:
    Net income              $(60,365) $220,937 $(414,044) $(73,372)$(391,132)
    Plus: Interest
     expense                  15,520    13,305    12,986    60,115    54,049
    Interest rate
     derivative (gains)
     losses - realized          (193)    3,371     3,136      (135)   10,231
    Income taxes             (35,800)  136,200    (3,200)  (46,200)   11,200
    DD&A                      29,280    32,931    40,436    98,814   134,483
    Impairment                     -         -   641,000         -   641,000
    Amortization of
     deferred loan costs         986       735       721     4,197     3,344
    Loss on extinguishment
     of debt                       -         -         -    12,063         -
    Share-based payments         190       710       970     3,278     3,064
    Amortization of
     derivative premiums
     and other comprehensive
     loss                      3,986     2,046     1,505    11,546     7,694
    Unrealized commodity
     derivative (gains)
     losses                   91,350  (338,773) (225,457)  122,779  (184,459)
    Unrealized interest
     rate derivative (gains)
     losses                    8,815      (626)   10,623    17,312    10,336
    Adjusted EBITDA          $53,769   $70,836   $68,676  $210,397  $299,810

We also provide per BOE G&A expenses excluding costs associated with the terminated MLP offering and non-cash FAS 123R charges. We believe that these non-GAAP measures are useful in that the items excluded do not represent cash expenses directly related to our ongoing operations. These non-GAAP measures should not be viewed as an alternative to per BOE G&A expenses as determined in accordance with GAAP.



    UNAUDITED
    ($in thousands,       Quarter Ended                  Year Ended
    except per BOE   12/31/   9/30/   12/31/     12/31/    12/31/    12/31/
    amounts)          2007    2008     2008       2007      2008      2008
    G&A per BOE
     Reconciliation                                                    Excl.
                                                          Excluding    SFAS
                                                            SFAS       123R
                                                             123R    and MLP
      G&A Expense   $7,112   $10,235   $11,635   $31,770   $43,101   $43,101
      Less:
      SFAS 123R
       Expense         (80)     (550)     (710)   (2,978)   (2,384)   (2,384)
      MLP Write Off      -         -       (50)        -         -    (2,690)
      G&A Expense
       Excluding
       SFAS
       123R / MLP    7,032     9,685    10,875    28,792    40,717    38,027
      MBOE           1,849     2,019     2,086     7,130     7,933     7,933
    G&A Expense per
     BOE Excluding
     SFAS 123R /
     MLP             $3.80     $4.80     $5.21     $4.04     $5.13     $4.79

Reconciliation of PV-10 to Standardized Measure

The present value of future net cash flows (PV-10 value) is a non-GAAP measure because it excludes income tax effects. Management believes that before-tax cash flow amounts are useful for evaluative purposes since future income taxes, which are affected by a company's unique tax position and strategies, can make after-tax amounts less comparable. We derive PV-10 value based on the present value of estimated future revenues to be generated from the production of proved reserves, net of estimated production and future development costs and future plugging and abandonment costs, using prices and costs as of the date of estimate without future escalation, without giving effect to hedging activities, non-property related expenses such as general and administrative expenses, debt service and depreciation, depletion, amortization and impairment and income taxes, and discounted using an annual discount rate of 10%. Management also believes that the PV-10 based on the NYMEX 5-year strip pricing is useful for evaluative purposes since the use of a strip price provides a measure based on current market perception.

The following table reconciles the standardized measure of future net cash flows to PV-10 value (in thousands):


    UNAUDITED ($in thousands)                                     12/31/2008
    Standardized measure of discounted future net cash flows       $610,096
    Add: Present value of future income tax discounted at 10%         6,585
    PV-10 at year end SEC prices                                    616,681
    Add:  Effect of five year NYMEX strip at December 31, 2008      997,319
    PV-10 at five-year NYMEX strip at December 31, 2008          $1,614,000

SOURCE Venoco, Inc.