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Use of Proceeds We estimate that the net proceeds from this offering, after deducting underwriting discounts and estimated offering expenses payable by us, will be approximately $148.4 million ($ million if the underwriters' option to purchase additional shares of our common stock is fully exercised), based on an assumed initial public offering price of $ per share. We intend to use the net proceeds of this offering: • to repay $25.6 million of indebtedness outstanding under our credit facility; • to repay in full approximately $38.5 million of principal and accrued interest outstanding under our senior notes; • to repay approximately $66.0 million of principal and accrued interest outstanding under our senior subordinated notes; • to refinance up to $15.0 million of our derivative arrangements; and • to pay approximately $3.3 million of cash bonuses to employees participating in the Incentive Issuance Changes in the estimated net proceeds of this offering to us will result in corresponding changes to the amount of principal and accrued interest under our senior subordinates notes that we repay in this offering. Changes in the estimated net proceeds of this offering to us resulting from changes in the initial public offering price per share will also result in corresponding changes in the amount of cash bonuses payable in connection with the Incentive Issuance. Immediately after the consummation of this offering, the Recapitalization and the Incentive Issuance, we will have outstanding a total of 14,450,000 shares of our common stock. A decrease (increase) in the amount of net proceeds from this offering will result in correspondingly more (or fewer) shares of our common stock being issued in the Debt Exchange and the Preferred Exchange. The value of the Incentive Issuance to management is based on our enterprise value at the time of the consummation of this offering; therefore, changes in the amount of net proceeds from this offering resulting from a change in the initial public offering price will also have an impact on the Incentive Issuance. A $1.00 change in the assumed initial public offering price of $ per share would increase (decrease) the net proceeds to us from this offering by approximately $ million, assuming no change in the number of shares offered by us as set forth on the cover page of this prospectus. The following two paragraphs describe the impact of a $1.00 change in the assumed initial public offering price of $ per share, assuming no change in the number of shares offered by us as set forth on the cover page of this prospectus, based on outstanding debt as of September 30, 2006, unless otherwise indicated. We will continue to accrue interest on our outstanding debt until the consummation of this offering, which will have an impact on the number of shares and the cash amounts set forth below. A $1.00 increase in the assumed initial public offering price to $ per share will increase by approximately $ million the amount of principal and accrued interest under our senior subordinated notes that we will repay in this offering and will increase by approximately $ million the amount of cash bonuses payable to employees participating in the Incentive Issuance. Any such increase in net proceeds will correspondingly decrease by approximately 597,900 shares the number of shares of our common stock issuable in the Debt Exchange, will increase by approximately 557,800 shares the number of shares of our common stock issuable in the Preferred Exchange and will increase by approximately 40,100 shares the number of shares of our common stock issuable in the Incentive Issuance. However, any such increase in net proceeds will not result in a change in the total number of shares of our common stock outstanding upon the consummation of this offering, the Recapitalization and the Incentive Issuance. A $1.00 decrease in the assumed initial public offering price to $ per share will decrease by approximately $ million the amount of principal and accrued interest under our senior subordinated notes that we will repay in this offering and will decrease by approximately $ million the amount of cash bonuses payable to employees participating in the Incentive Issuance. Any such decrease in net proceeds will correspondingly increase by approximately 672,600 shares the number of shares of our common stock issuable in the Debt Exchange, will decrease by approximately 627,500 shares the number of shares of our common stock issuable in the Preferred Exchange and will decrease by approximately 45,200 shares the number of shares of our common stock issuable in the Incentive Issuance. However, any such decrease in net proceeds will not result in a change in the total number of shares of our common stock outstanding upon the consummation of this offering, the Recapitalization and the Incentive Issuance. The Jefferies Investors, including Jefferies & Company, Inc., one of the underwriters in this offering, are holders of our senior notes and our senior subordinated notes and therefore are expected to receive a portion of the net proceeds of this offering and shares of common stock in connection with this offering and the Recapitalization. In addition, affiliates of certain of the underwriters in this offering are lenders under our credit facility and accordingly are expected to receive a portion of the net proceeds of this offering. As of September 30, 2006, we had approximately $79.6 million outstanding under our credit facility, including borrowings under our acquisition facility, and the interest rate on the outstanding borrowings as of September 30, 2006 was 8.70%. The borrowings outstanding under our credit facility mature in November 2010. As of September 30, 2006, we had outstanding approximately $38.5 million of principal and accrued but unpaid interest under our senior notes. The senior notes bear interest at a rate of 16% per annum, which is payable in the form of additional senior notes. The senior notes are due and payable on February 1, 2011 unless automatically extended in accordance with their terms, but in no event later than February 1, 2015. The indebtedness under the senior notes was incurred in November 2005 in exchange for other senior notes that had been issued in connection with our 2004 financial restructuring. Those senior notes were issued in exchange for certain promissory notes issued in 2003 for short term liquidity needs. As of September 30, 2006, we had outstanding approximately $110.3 million of principal and accrued but unpaid interest under our senior subordinated notes. The senior subordinated notes bear interest at a rate of 11 3/4% per annum, which is payable in the form of additional senior subordinated notes. The senior subordinated notes are due and payable on May 1, 2011 unless automatically extended in accordance with their terms, but in no event later than May 1, 2015. The indebtedness under the senior subordinated notes was incurred in November 2005 in exchange for other senior subordinated notes that had been issued in connection with our 2004 financial restructuring. Those senior subordinated notes were issued in exchange for certain senior notes issued in 2001 in connection with the acquisition of our south Texas properties. We have granted the underwriters an option to purchase up to an additional shares of common stock within 30 days following the date of this prospectus. If the underwriters exercise their option to purchase additional shares of our common stock, we will use the net proceeds to repay additional senior subordinated notes in lieu of issuing shares of our common stock in the Debt Exchange. To effectuate this aspect of the Debt Exchange, the holders of our senior subordinated notes have agreed that we may delay, until the 40th day after the consummation of this offering, the issuance in the Debt Exchange of a number of shares of our common stock that is equal to the net proceeds to us if the underwriters were to exercise in full their option divided by the initial public offering price per share. Based on an assumed initial public offering price of $ per share and shares subject to the underwriters' option, we will delay the issuance of shares of our common stock in connection with the Debt Exchange. An exercise in full by the underwriters of their option to purchase additional shares of our common stock will reduce the number of shares of common stock issuable in the Debt Exchange by shares assuming an initial public offering price of $ per share. As a result of such exercise, the total number of shares of our common stock outstanding upon consummation of this offering will increase from 14,450,000 to . Our executive officers have agreed to participate in the Incentive Issuance and therefore are expected to receive a portion of the net proceeds of this offering and shares of our common stock in connection with this offering and the Incentive Issuance.