DENVER, Nov. 3 /PRNewswire-FirstCall/ -- Venoco, Inc. (NYSE: VQ) today reported financial and operational results for the third quarter of 2009. Highlights include the following:

    --  Daily production of 20,264 barrels of oil equivalent (BOE) compared to
        20,434 BOE for the second quarter of 2009 and 19,560 for the third
        quarter of 2008 (pro forma for the sale of Hastings).
    --  Third quarter lease operating expense (LOE) of $13.55 per BOE, up from
        $12.46 per BOE in the second quarter of 2009, and down 10% from $15.04
        per BOE in the third quarter of 2008 (pro forma for the sale of
        Hastings).

    --  Nine month LOE of $12.48 per BOE is down 9% compared to $13.68 per BOE
        through nine months of 2008 (both pro forma for the sale of Hastings).

The company reported a net loss of $5 million for the quarter on oil and gas revenues of $69 million and realized commodity derivative gains of $17 million. Adjusted EBITDA was $48 million in the third quarter of 2009, up 9% from $44 million in the second quarter of 2009 and down 32% from $71 million in the third quarter of 2008. Through nine months of 2009, the company reported Adjusted EBITDA of $145 million.

Adjusted Earnings were $6 million, up from $0.5 million for the second quarter of 2009 and down from $11 million in the third quarter of 2008. Through nine months of 2009, the company reported Adjusted Earnings of $13 million. Adjusted Earnings adjusts the net income (loss) for, among other things, the effects of unrealized commodity and interest derivatives gains and losses. Please see the end of this release for definitions of Adjusted Earnings and Adjusted EBITDA and a reconciliation of those measures to net income (loss).

"It's shaping up to be a nice year for Venoco," commented Tim Marquez, Venoco's Chairman and CEO. "We've paid down debt, extended the maturity of our two largest debt instruments, and barring an unexpected event occurring in the next 60 days, we will meet or beat our annual guidance."

2009 Production

Daily production in the third quarter of 2009 was down slightly from the second quarter of 2009, due in part to a planned shutdown at platform Holly in the South Ellwood field. The company has not scheduled additional downtime at any of its offshore platforms for the remainder of the year. Production in the third quarter of 2009 increased 4% over the third quarter of 2008 (pro forma for the sale of Hastings). Through nine months of 2009, production averaged 20,803 BOE per day, which is up 9% over the same period of 2008 (pro forma for the sale of Hastings).



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

                                        Quarter Ended
                                        -------------
                                                               Full-year
                                                                 2009
    Region                     9/30/08     6/30/09    9/30/09  Guidance
    ------                    ---------   --------- ---------- ---------
    Sacramento Basin             9,363       9,988     10,498
    Southern California          8,606       8,676      8,207
    Texas (and other)            3,980       1,770      1,559
                                 -----       -----      -----
      Total                     21,949      20,434     20,264    20,250
                                ======      ======     ======    ======

      Total excluding Hastings  19,560      20,434     20,264
                                ======      ======     ======

2009 Capital Investment

Total capital costs incurred for the company's E&P operations were $28 million for the third quarter, including $15 million for drilling and rework activities, $4 million for facilities, and $9 million for seismic, leasehold, capitalized G&A costs and asset retirement obligations.

The company spent $14 million or 52% of its third quarter capital expenditures in the Sacramento Basin. Through the first nine months of 2009, the company has spud 57 wells and completed 162 workovers / recompletions in the Basin. The company expects to operate the remainder of the year with one drilling rig and four workover / completion rigs in the Basin, and to have drilled over 60 wells and performed approximately 200 workovers / recompletions by the end of the year.

"As planned, our drilling activity in the Basin slowed in the second half of the year. We continue to pursue an aggressive workover and recompletion program in the Basin and plan to maintain that pace through year-end and into 2010," explained Mr. Marquez. "The workover program presents tremendous economics and we're encouraged to see production hold steady despite the slower drilling activity."

The company spent $8 million or 30% of the company's third quarter capital expenditures in Southern California. Drilling began in late September on the first of two West Montalvo wells planned for the second half of the year.

Approximately $2 million or 8% of the company's third quarter capital expenditures were spent in Texas, primarily for the drilling of a well in the South Liberty field that is currently being evaluated.

The company's proved reserves as of June 30th, 2009 were 94.3 MMBOE, up 9%, adjusted for first half production, from year-end 2008 reserves (pro forma for the sale of Hastings). The company realized reserve additions across its three business units during the first 6 months of 2009, with the most significant additions coming as a result of capital spent at West Montalvo and in the Sacramento Basin.

2010 Capital Expenditures

The company's 2010 exploration, exploitation and development capital expenditures are forecast to be $180 million. Approximately $73 million (41%) of the capital budget will be deployed in the Sacramento Basin, $72 million (40%) in Southern California, $9 million (5%) in Texas and the remaining $26 million (14%) going toward exploration activities related to the company's onshore Monterey shale development in Southern California.

"Our focus in 2010 will shift more toward development of our robust inventory of oil projects. Advancing our oil projects in Southern California requires more time for implementation than the natural gas projects we've pursued in the Sacramento Basin in recent years. As a result much of the production growth from next year's capital program will not be realized until after 2010," explained Mr. Marquez. "Our 2010 production guidance is the same as 2009 - 20,250 BOE per day."

Drilling and workover activity during 2010 in the Sacramento Basin will be similar to 2009 activity levels. In Southern California, the company plans to drill three onshore wells at West Montalvo, two wells at the Sockeye field, and perform five workovers and recompletions on wells at South Ellwood. In Texas, the company plans to participate in up to four new development wells and return five wells to production.

"Next year, we plan to perform our first hydraulic fractures of our offshore Monterey shale wells at Sockeye," commented Mr. Marquez. "We believe one of the Monterey shale zones producing at Sockeye is highly analogous to areas we've targeted with our onshore Monterey shale leasing. These wells appear to be ideal candidates for fracturing, but modern fracture technology has never been tested on them."

Venoco expects to drill five wells next year as part of the company's multi-year development plan for the onshore Monterey shale formation that is extensive in Southern California. The company has an onshore acreage position approaching 100,000 net acres with plans to increase that position to around 200,000 net acres by the end of next year.

"As a company we have been operating in Southern California for over 15 years, and have been producing from the offshore Monterey shale for 12 years. We know the formation can produce oil; our task next year is to advance the drilling and completion science that will enhance the productive capacity from the shale," said Mr. Marquez.

Costs and Expenses

Venoco's third quarter 2009 LOE of $13.55 per BOE remained substantially lower than 2008, down 24% from $17.89 per BOE in the third quarter of 2008. Compared to the previous quarter, third quarter LOE was up 9% from $12.46 per BOE. LOE of $12.59 per BOE for the first nine months of 2009 was down 21% from $16.03 per BOE for the same period of 2008. Unit operating costs have been lower compared to 2008 due to the sale of the Hastings Complex (which was one of the company's highest operating cost fields), and realized cost savings from vendors and service providers.



                                                        Nine Months     Full
                                    Quarter Ended          Ended        Year
                                    -------------       -----------     2009
    UNAUDITED (per BOE)       9/30/08 6/30/09 9/30/09 9/30/08 9/30/09 Guidance
    -------------------       ------- ------- ------- ------- ------- --------
    Lease Operating Expenses   $17.89   $12.46 $13.55  $16.03  $12.59   $13.50
    Production/Property Taxes    3.12     1.27   1.48    2.37    1.55     1.90
    DD&A Expense                16.31    11.08  11.79   16.09   11.49    12.00
    G&A Expense (1)              4.80     4.36   4.82    4.64    4.34     4.50
    Interest Expense (2)         8.62     8.41   7.97    8.69    8.16     9.20
                                 ----     ----   ----    ----    ----     ----
    Total                      $50.74   $37.58 $39.61  $47.82  $38.13   $41.10
                               ======   ====== ======  ======  ======   ======

    (1) Net of amounts capitalized and excluding share-based compensation and
        MLP write off costs in 2008. See the end of this release for a GAAP
        reconciliation of G&A per BOE to G&A.
    (2) Includes interest expense, realized (gain) loss on interest rate swap
        and amortization of deferred loan costs.

"Our LOE has been consistently below 2008 levels, so we reduced our annual guidance accordingly earlier this year. We expected per unit costs to increase in the third quarter partly due to the downtime offshore, but overall our annual guidance of $13.50 per BOE is still valid," added Mr. Marquez.

Senior Unsecured Notes

In October, the company issued $150 million in aggregate principal amount of senior unsecured notes due 2017. The net proceeds of the issuance, together with additional borrowings under the company's revolving credit facility and cash on hand, were used to satisfy and discharge all of the company's existing secured 8.75% senior notes due 2011. As a result of the refinancing, the maturity of the company's second lien term loan will be automatically extended to May 2014. Subsequent to the refinancing, the company entered into a revised interest rate swap agreement which extended the terms of the existing interest rate swap through the extended maturity date of the term loan.

"Issuance of the new senior unsecured notes enables us to achieve our stated goal of extending the maturity of our second-lien term loan from September 2011 to May 2014," explained Tim Ficker, CFO. "As a result, we have no maturities on any of our term debt for over 4 years and we further benefit from the flexibility of the unsecured structure of the new notes. In addition, amounts borrowed up to $500 million will effectively bear interest at a fixed rate of approximately 7.8% until May 2014."

Earnings Conference Call

Venoco will host a conference call to discuss results today, Tuesday, November 3, 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) 825-3209 and use conference code 87884704. International participants can call (617) 213-8061 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 44214984. The replay will also be available on the Venoco website for 30 days.

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 thirteen fields in Texas.

Forward-looking Statements

Statements made in this news release relating to Venoco's future production, expenses, capital expenditures and development projects, 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                 6/30/09 9/30/09 Change 9/30/08 9/30/09   Change
    ---------                 ------- ------- ------ ------- -------   ------
    Production Volume:
    Oil (MBbls) (1)              848     811    -4%   1,036     811     -22%
    Natural Gas (MMcf)         6,069   6,320     4%   5,900   6,320       7%
                               -----   -----   ---    -----   -----     ---
    MBOE                       1,860   1,864     0%   2,019   1,864      -8%
                               =====   =====   ===    =====   =====     ===
    Daily Average Production
     Volume:
    Oil (Bbls/d)               9,319   8,815    -5%  11,261   8,815     -22%
    Natural Gas (Mcf/d)       66,692  68,696     3%  64,130  68,696       7%
                              ------  ------   ---   ------  ------     ---
    BOE/d                     20,434  20,264    -1%  21,949  20,264      -8%
                              ======  ======   ===   ======  ======     ===
    Oil Price per Barrel
     Produced (in dollars):
    Realized price before
     hedging                  $49.67  $58.09    17% $109.08  $58.09     -47%
    Realized hedging gain
     (loss)                    (0.30)  (4.66) 1453%  (32.08)  (4.66)    -85%
                               -----  ------  ----   ------  ------     ---
    Net realized price        $49.37  $53.43     8%  $77.00  $53.43     -31%
                              ======  ======   ===   ======  ======     ===
    Natural Gas Price per Mcf
     (in dollars):
    Realized price before
     hedging                   $3.20   $3.17    -1%   $8.92   $3.17     -64%
    Realized hedging gain
     (loss)                     3.16    3.24     3%   (0.15)   3.24   -2260%
                                ----    ----   ---   ------    ----  ------
    Net realized price         $6.36   $6.41     1%   $8.77   $6.41     -27%
                               =====   =====   ===    =====   =====     ===
    Expense per BOE (in
     dollars):
    Lease operating
     expenses (2)             $12.46  $13.55     9%  $17.89  $13.55     -24%
    Production and property
     taxes (2)                 $1.27   $1.48    17%   $3.12   $1.48     -53%
    Transportation expenses    $0.41   $0.61    49%   $0.82   $0.61     -26%
    Depreciation, depletion
     and amortization         $11.08  $11.79     6%  $16.31  $11.79     -28%
    General and
     administrative (3)        $4.60   $5.15    12%   $5.07   $5.15       2%
    Interest expense           $5.26   $5.00    -5%   $6.59   $5.00     -24%


                                                Nine Months Ended
                                                -----------------
                                                                   %
    UNAUDITED                                 9/30/08  9/30/09  Change
    ---------                                 -------  -------  ------
    Production Volume:
    Oil (MBbls) (1)                            2,995    2,593     -13%
    Natural Gas (MMcf)                        17,110   18,518       8%
                                              ------   ------     ---
    MBOE                                       5,846    5,679      -3%
                                               =====    =====     ===
    Daily Average Production
     Volume:
    Oil (Bbls/d)                              10,931    9,498     -12%
    Natural Gas (Mcf/d)                       62,445   67,832       9%
                                              ------   ------     ---
    BOE/d                                     21,339   20,803      -3%
                                              ======   ======     ===
    Oil Price per Barrel Produced
     (in dollars):
    Realized price before hedging            $104.81   $46.80     -55%
    Realized hedging gain (loss)              (29.69)    1.90    -106%
                                              ------     ----    ----
    Net realized price                        $75.12   $48.70     -35%
                                              ======   ======     ===
    Natural Gas Price per Mcf (in
     dollars):
    Realized price before hedging              $9.07    $3.59     -60%
    Realized hedging gain (loss)               (0.08)    2.76   -3550%
                                              ------     ----  ------
    Net realized price                         $8.99    $6.35     -29%
                                               =====    =====     ===
    Expense per BOE (in dollars):
    Lease operating expenses (2)              $16.03   $12.59     -21%
    Production and property
     taxes (2)                                 $2.37    $1.55     -35%
    Transportation expenses                    $0.74    $0.52     -30%
    Depreciation, depletion and
     amortization                             $16.09   $11.49     -29%
    General and
     administrative (3)                        $5.38    $4.61     -14%
    Interest expense                           $7.02    $5.33     -24%

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


                  CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                                        Quarter Ended      Quarter Ended
    UNAUDITED ($ in thousands,          -------------      -------------
     except per share amounts)        6/30/09   9/30/09   9/30/08  9/30/09
                                      -------   -------   -------  -------
    REVENUES:
    Oil and natural gas sales         $62,011   $69,284  $158,041  $69,284
    Other                                 803       859     1,112      859
                                         ----      ----     -----     ----
    Total revenues                     62,814    70,143   159,153   70,143
                                       ------    ------   -------   ------
    EXPENSES:
    Oil and natural gas production     25,539    28,015    42,418   28,015
    Transportation expense                764     1,144     1,655    1,144
    Depletion, depreciation and
     amortization                      20,608    21,974    32,931   21,974
    Accretion of asset retirement
     obligation                         1,388     1,429     1,044    1,429
    General and administrative          8,559     9,607    10,235    9,607
                                        -----     -----    ------    -----
    Total expenses                     56,858    62,169    88,283   62,169
                                       ------    ------    ------   ------
    Income from operations              5,956     7,974    70,870    7,974
    FINANCING COSTS AND OTHER:
    Interest expense                    9,777     9,327    13,305    9,327
    Interest rate derivative
     realized (gains) losses            5,130     4,781     3,371    4,781
    Interest rate derivative
     unrealized (gains) losses          2,823        10      (626)      10
    Amortization of deferred loan
     costs                                738       751       735      751
    Loss on extinguishment of debt        582         -         -        -
    Commodity derivative realized
     (gains) losses                   (16,288)  (16,675)   34,095  (16,675)
    Commodity derivative unrealized
     (gains) losses and
     amortization of derivative
     premiums                          66,771    24,252  (337,147)  24,252
                                       ------    ------  --------   ------
    Total financing costs and other    69,533    22,446  (286,267)  22,446
                                       ------    ------  --------   ------
    Income (loss) before taxes        (63,577)  (14,472)  357,137  (14,472)
    Income tax provision (benefit)     (4,100)   (9,200)  136,200   (9,200)
                                       ------    ------   -------   ------
    Net income (loss)                $(59,477)  $(5,272) $220,937  $(5,272)
                                     ========   =======  ========  =======

    Weighted average common shares
     outstanding:
    Basic                              50,781    50,826    50,670   50,826
    Diluted                            50,781    50,826    51,839   50,826


                                                      Nine Months Ended
    UNAUDITED ($ in thousands, except                 -----------------
     per share amounts)                               9/30/08    9/30/09
    --------------------------------                 --------    -------
    REVENUES:
    Oil and natural gas sales                        $461,838   $188,726
    Other                                               2,812      2,547
                                                        -----      -----
    Total revenues                                    464,650    191,273
                                                      -------    -------
    EXPENSES:
    Oil and natural gas production                    107,565     80,280
    Transportation expense                              4,334      2,954
    Depletion, depreciation and
     amortization                                      94,047     65,265
    Accretion of asset retirement
     obligation                                         3,065      4,174
    General and administrative                         31,466     26,164
                                                       ------     ------
    Total expenses                                    240,477    178,837
                                                      -------    -------
    Income from operations                            224,173     12,436
    FINANCING COSTS AND OTHER:
    Interest expense                                   41,063     30,282
    Interest rate derivative realized
     (gains) losses                                     7,095     13,851
    Interest rate derivative unrealized
     (gains) losses                                      (287)      (160)
    Amortization of deferred loan costs                 2,623      2,224
    Loss on extinguishment of debt                          -        582
    Commodity derivative realized
     (gains) losses                                    90,214    (63,748)
    Commodity derivative unrealized
     (gains) losses and amortization of
     derivative premiums                               46,153     73,249
                                                       ------     ------
    Total financing costs and other                   186,861     56,280
                                                      -------     ------
    Income (loss) before taxes                         37,312    (43,844)
    Income tax provision (benefit)                     14,400     (4,300)
                                                       ------     ------
    Net income (loss)                                 $22,912   $(39,544)
                                                      =======  =========

    Weighted average common shares
     outstanding:
    Basic                                              50,416     50,770
    Diluted                                            51,641     50,770


       CONDENSED CONSOLIDATED BALANCE SHEET INFORMATION

    UNAUDITED ($ in thousands)            12/31/08     9/30/09
    ------------------------              --------     -------
    ASSETS
      Cash and cash equivalents              $191      $4,473
      Accounts receivable                  41,306      30,559
      Inventories                          12,361       4,886
      Prepaid expenses and other
       current assets                       4,314       4,730
      Income tax receivable                   546       5,462
      Commodity derivatives                57,247      29,017
                                           ------      ------
        Total current assets              115,965      79,127
        Net property, plant and
         equipment                        702,734     604,576
        Total other assets                 45,555      31,466
                                           ------      ------
    TOTAL ASSETS                         $864,254    $715,169
                                         ========    ========
    LIABILITIES AND STOCKHOLDERS'
     EQUITY
      Accounts payable and accrued
       liabilities                        $75,400     $43,389
      Undistributed revenue payable         8,277       7,530
      Interest payable                      5,325       4,844
      Current maturities of long-term
       debt                                 2,598           -
      Commodity and interest
       derivatives                         21,284      36,364
                                           ------      ------
        Total current liabilities         112,884      92,127
    LONG-TERM DEBT                        797,670     689,178
    COMMODITY AND INTEREST
     DERIVATIVES                            9,363      15,673
    ASSET RETIREMENT OBLIGATIONS           79,504      87,195
                                           ------      ------
        Total liabilities                 999,421     884,173
        Total stockholders' equity       (135,167)   (169,004)
                                         --------    --------
    TOTAL LIABILITIES AND
     STOCKHOLDERS' EQUITY                $864,254    $715,169
                                         ========    ========

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 the items listed in the Adjusted Earnings reconciliation set forth in the table below. 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.

We define Adjusted EBITDA as net income (loss) before the items listed in the Adjusted EBITDA reconciliation set forth in the table below. 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.



                                       Quarter Ended        Nine Months Ended
    UNAUDITED ($ in                    -------------        -----------------
     thousands)                 9/30/08   6/30/09   9/30/09 9/30/08   9/30/09
    ---------------             -------   -------   ------- -------   -------
    Adjusted Earnings
     Reconciliation
    Net Income                 $220,937  $(59,477) $(5,272) $22,912  $(39,544)
    Plus:
    Unrealized commodity
     (gains) losses            (338,773)   60,723   18,253   40,998    56,587
    Unrealized interest rate
     derivative (gains) losses     (626)    2,823       10     (287)     (160)
    Write-off of MLP offering
     costs                            -         -        -    2,695         -
    Early Extinguishment of
     debt                             -       582        -        -       582
    Tax effects                 129,435    (4,136)  (7,276) (16,445)   (4,733)
                                -------    ------   ------  -------    ------
    Adjusted Earnings           $10,973      $515   $5,715  $49,873   $12,732
                                =======      ====   ======  =======   =======


                                   Quarter Ended         Nine Months Ended
    UNAUDITED ($ in                -------------         -----------------
     thousands)             9/30/08   6/30/09   9/30/09  9/30/08   9/30/09
                            -------   -------   -------  -------   -------
    Adjusted EBITDA
     Reconciliations:
    Net income             $220,937  $(59,477) $(5,272)  $22,912  $(39,544)
    Interest expense         13,305     9,777    9,327    41,063    30,282
    Interest rate
     derivative (gains)
     losses - realized        3,371     5,130    4,781     7,095    13,851
    Income taxes            136,200    (4,100)  (9,200)   14,400    (4,300)
    DD&A                     32,931    20,608   21,974    94,047    65,265
    Amortization of
     deferred loan costs        735       738      751     2,623     2,224
    Loss on extinguishment
     of debt                      -       582        -         -       582
    Share-based payments        710       644      806     2,094     2,000
    Amortization of
     derivative premiums
     and other
     comprehensive loss       2,046     6,628    6,608     6,189    18,474
    Unrealized commodity
     derivative (gains)
     losses                (338,773)   60,723   18,253    40,998    56,587
    Unrealized interest
     rate derivative
     (gains) losses            (626)    2,823       10      (287)     (160)
                              -----     -----    -----     -----     -----
    Adjusted EBITDA         $70,836   $44,076  $48,038  $231,134  $145,261
                            =======   =======  =======  ========  ========

We also provide per BOE G&A expenses excluding costs associated with the terminated MLP offering and non-cash share-based compensation 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      Nine Months Ended
     except per BOE amounts)            -------------      -----------------
    G&A per BOE Reconciliation    9/30/08  6/30/09 9/30/09  9/30/08 9/30/09
                                  -------  ------- -------  ------- -------
    G&A Expense                   $10,235  $8,559  $9,607  $31,466  $26,164
    Less:
    Share-based Compensation
     Expense                         (550)   (454)   (616)  (1,674)  (1,490)
    MLP Write Off                       -       -       -   (2,695)       -
                                   ------   -----   -----   ------   ------
    G&A Expense Excluding
     Share-based Comp / MLP         9,685   8,105   8,991   27,097   24,674
    MBOE                            2,019   1,860   1,864    5,846    5,679
                                    -----   -----   -----    -----    -----
    G&A Expense per BOE Excluding
     Share-based Comp / MLP         $4.80   $4.36   $4.82    $4.64    $4.34
                                    =====   =====   =====    =====    =====

SOURCE Venoco, Inc.