Exhibit 99.1

                        For Information
                        Brent A. Collins
                        303-861-8140
FOR IMMEDIATE RELEASE
 
ST. MARY REPORTS RESULTS FOR THIRD QUARTER 2007
AND PROVIDES GUIDANCE UPDATE

DENVER, November 1, 2007– St. Mary Land & Exploration Company (NYSE: SM) today reports net income of $57.7 million, or $0.89 per diluted share, for the third quarter of 2007.

“The third quarter was a solid quarter for St. Mary.  We grew production for the seventh consecutive quarter and set a new quarterly production record for the Company.  The management team is focused on delivering solid results with an eye toward improving our capital efficiency and our operating cost structure.  We continued to make progress in a number of key resource areas and expanded our presence in the Olmos shallow gas play with an acquisition in South Texas which we closed in early October.  I am pleased with the Company’s pace and direction,” commented Tony Best, President and CEO.

THIRD QUARTER RESULTS

St. Mary announces third quarter 2007 earnings of $57.7 million or $0.89 per diluted share.  Third quarter 2006 earnings were $55.9 million or $0.88 per diluted share.  Adjusted net income, which adjusts for significant non-cash and non-recurring items, was $57.8 million or $0.89 per diluted share for the third quarter of 2007 compared to $53.0 million or $0.83 per diluted share for the comparable period in 2006.  Discretionary cash flow increased to $162.3 million in the third quarter of 2007 from $140.5 million in the same period of the preceding year, an increase of 16 percent.  Net cash provided by operating activities increased to $191.7 million in the third quarter of 2007 from $101.2 million in the third quarter of 2006.  Adjusted net income and discretionary cash flow are non-GAAP financial measures – please refer to the respective reconciliation for the nearest comparable GAAP financial measure in the Financial Highlights section at the end of this release, which contains explanations as to why the Company believes these non-GAAP measures are meaningful.

Revenues for the third quarter of 2007 were $246.7 million compared to $198.0 million in the comparable period of 2006.  Oil and gas production during the third quarter of 2007 averaged a quarterly record of 298.4 million cubic feet of gas equivalent per day (MMCFE/d), an increase of 19% from 251.7 MMCFE/d in the third quarter of 2006 period and 4% higher than the 286.1 MMCFE/d in the second quarter of 2007.  Average realized prices, inclusive of hedging activities, were $7.03 per Mcf and $67.56 per barrel during the third quarter of 2007.  These were 2% lower and 10% higher, respectively, than the realized prices in the third quarter of 2006.  Average prices, excluding hedging activities, were $5.98 per Mcf and $71.68 per barrel during the quarter, which were 7% lower and 10% higher, respectively, than the same quarter last year.  The Company’s natural gas realizations continue to benefit from high Btu gas in several of our regions, which is being processed to extract the natural gas liquids.  The prices for natural gas liquids have trended with crude oil prices, thus benefiting from the rise in oil prices in recent months.

Total lease operating and transportation expense was up slightly between the third quarters of 2007 and 2006 on a per MCFE basis.  A large unplanned workover at Judge Digby accounted for $0.03 per MCFE of this increase.   The increase in depletion and depreciation expense from the third quarter of 2006 to the third quarter of 2007 reflects the higher finding cost environment experienced by the industry in recent years to acquire and develop properties.  Exploration expense for the current quarter came in below guidance due to lower than expected geologic-related costs in the period.  Year over year, the overall increase in exploration expense is the result of increased levels of technical headcount, higher NPP payments, and 3D seismic work in the Mid-Continent region.  General and administrative expense for the third quarter of 2007 was slightly higher than guidance as a result of higher than budgeted cash and stock-based compensation costs associated with increased headcount and the fact that a portion of stock-based compensation expense moves directionally with the Company’s share price.  The variance between the 2007 and 2006 general and administrative expense predominately reflects the increase in personnel mentioned above as well as the incremental costs associated with supporting and providing office space for those individuals.
 
GUIDANCE UPDATE

The Company’s forecasts for the fourth quarter and the full year 2007 are shown below.
 
 
4th Quarter
  
Year
Oil and gas production
27.0 - 28.0 BCFE
  
106.0 – 107.0 BCFE
Lease operating expenses,
      
   including transportation
$1.35 - $1.39/MCFE
  
$1.41 - $1.43/MCFE
Production taxes
$0.69 - $0.72/MCFE
  
$0.58 - $0.60/MCFE
General and administrative exp
$0.47 - $0.51/MCFE
  
$0.47 - $0.49/MCFE
Depreciation, depletion & amort.
$2.10 - $2.20/MCFE
  
$2.06 - $2.11/MCFE

St. Mary estimates the basis differential (the difference between estimated realized oil and gas prices, before hedging, and the applicable NYMEX prices) for the fourth quarter of 2007 will be $5.50 to $6.50 per barrel of oil and $0.50 to $0.60 per Mcf of gas.
 

Below is an updated summary hedging schedule for the Company.  All the prices in the table below have been converted to a NYMEX equivalent for ease of comparison using current quality and transportation differentials.  The majority of the oil trades are settled against NYMEX.  The gas contracts have been executed to settle against regional delivery points that correspond with production areas of the Company, thereby reducing basis risk.  For detailed schedules on the Company’s hedging program, please refer to the Form 10-Q for the period ended September 30, 2007, which is expected to be filed with the Securities and Exchange Commission on or about November 2, 2007.
 

Oil Swaps - NYMEX Equivalent
Oil Collars - NYMEX Equivalent
  
                                 
                       
Floor
    
Ceiling
  
   
Bbls
    
$/Bbl
      
Bbls
    
$/Bbl
    
$/Bbl
  
2007
            
2007
                  
Q4
    
504,620
     $
65.36
  
Q4
    
689,000
     $
51.58
     $
72.81
  
2008
                
2008
                        
Q1
    
538,000
     $
70.39
  
Q1
    
415,000
     $
50.00
     $
69.83
  
Q2
    
504,000
     $
70.26
  
Q2
    
415,000
     $
50.00
     $
69.83
  
Q3
    
483,000
     $
70.44
  
Q3
    
419,000
     $
50.00
     $
69.82
  
Q4
    
420,000
     $
69.15
  
Q4
    
419,000
     $
50.00
     $
69.82
  
2009
    
1,363,000
     $
67.74
  
2009
    
1,526,000
     $
50.00
     $
67.31
  
2010
    
1,239,000
     $
66.47
  
2010
    
1,367,500
     $
50.00
     $
64.91
  
2011
    
1,032,000
     $
65.36
  
2011
    
1,236,000
     $
50.00
     $
63.70
  
                                           
Natural Gas Swaps - NYMEX Equivalent
Natural Gas Collars - NYMEX Equivalent
  
                                           
                             
Floor
    
Ceiling
  
   
MMBTU
    
$/MMBTU
      
MMBTU
    
$/MMBTU
    
$/MMBTU
  
2007
                
2007
                        
Q4
    
5,440,000
     $
9.11
  
Q4
    
3,000,000
     $
8.56
     $
10.51
  
2008
                
2008
                        
Q1
    
4,190,000
     $
9.65
  
Q1
    
2,722,500
     $
7.22
     $
10.36
  
Q2
    
4,120,000
     $
8.12
  
Q2
    
2,722,500
     $
7.27
     $
10.42
  
Q3
    
4,100,000
     $
8.22
  
Q3
    
2,737,500
     $
7.18
     $
10.33
  
Q4
    
4,290,000
     $
9.08
  
Q4
    
2,737,500
     $
7.46
     $
10.61
  
2009
    
13,470,000
     $
8.71
  
2009
    
9,110,000
     $
6.17
     $
10.17
  
2010
    
4,670,000
     $
8.29
  
2010
    
7,825,000
     $
6.10
     $
8.39
  
2011
    
880,000
     $
6.96
  
2011
    
6,625,000
     $
6.08
     $
7.32
  
                                           
Natural Gas Liquid Swaps - Mont. Belvieu
                          
                                           
   
Bbls
    
$/Bbl
                            
2007
                                          
Q4
    
132,888
     $
39.49
                            
2008
                                          
Q1
    
151,321
     $
39.54
                            
Q2
    
170,167
     $
39.49
                            
Q3
    
194,112
     $
39.25
                            
Q4
    
217,148
     $
38.63
                            
2009
    
627,179
     $
38.61
                            
 
CONFERENCE CALL
 
As previously announced, St. Mary’s teleconference call to discuss third quarter results is scheduled for November 2, 2007, at 8:00 am (MDT).  The call participation number is 888-424-5231.  A digital recording of the conference call will be available two hours after the completion of the call, 24 hours per day through November 16 at 800-642-1687, conference number 19138412.  International participants can dial 706-634-6088 to take part in the conference call and can access a replay of the call at 706-645-9291, conference number 19138412.  In addition, the call will be broadcast live at St. Mary’s website at www.stmaryland.com and the earnings press release and financial highlights attachment will be available before the call at www.stmaryland.com under “News-Press Releases.”  An audio recording of the conference call will be available at that site through November 16.


INFORMATION ABOUT FORWARD LOOKING STATEMENTS

This release contains forward looking statements within the meaning of securities laws, including forecasts and projections.  The words “will,” “believe,” ”budget,” “anticipate,” “intend,” “estimate,” “forecast,” ”plan” and “expect” and similar expressions are intended to identify forward looking statements.  Although St. Mary believes the expectations and forecasts reflected in these statements are reasonable, it can give no assurance that they will prove to be correct.  These statements involve known and unknown risks, which may cause St. Mary’s actual results to differ materially from results expressed or implied by the forward looking statements.  These risks include such factors as the volatility and level of oil and natural gas prices, the availability of economically attractive exploration and development and property acquisition opportunities and any necessary financing, the uncertain nature of the expected benefits from the acquisition of oil and gas properties and the ability to successfully integrate acquisitions, the pending nature of the announced divestiture of non-core oil and gas properties as well as the ability to complete the transaction, the uncertain nature of the expected benefits from the divestiture of oil and gas properties and the amount of expected proceeds to be received from the divestiture, lower prices realized on oil and gas sales resulting from our commodity price risk management activities, unsuccessful exploration and development drilling, the imprecise nature of estimating oil and natural gas reserves, uncertainties inherent in projecting future rates of production from drilling activities and acquisitions, drilling and operating service availability, uncertainties in cash flow, the financial strength of hedge contract counterparties, the negative impact that lower oil and natural gas prices could have on our ability to borrow, litigation, environmental matters, the potential impact of government regulations, and other such matters discussed in the “Risk Factors” section of St. Mary’s 2006 Annual Report on Form 10-K/A and subsequent Quarterly Reports on Form 10-Q filed with the SEC.  Although St. Mary may from time to time voluntarily update its prior forward looking statements, it disclaims any commitment to do so except as required by securities laws.

PR-07-21
###

ST. MARY LAND & EXPLORATION COMPANY                
FINANCIAL HIGHLIGHTS                  
September 30, 2007                  
(Unaudited)                  
                                     
Production Data
  
For the Three Months
          
For the Nine Months
        
   
Ended September 30,
          
Ended September 30,
        
   
2007
    
2006
    
Percent Change
    
2007
    
2006
    
Percent Change
  
                                     
Average realized sales price, before hedging:
                                    
    Oil (per Bbl)
   $
71.68
     $
65.02
       10 %   $
61.97
     $
61.83
       0 %
    Gas (per Mcf)
   $
5.98
     $
6.41
       -7 %   $
6.62
     $
6.70
       -1 %
                                                 
Average realized sales price, net of hedging:
                                                
    Oil (per Bbl)
   $
67.56
     $
61.28
       10 %   $
60.18
     $
58.41
       3 %
    Gas (per Mcf)
   $
7.03
     $
7.14
       -2 %   $
7.57
     $
7.44
       2 %
                                                 
Production:
                                                
    Oil (MBbls)
    
1,796
      
1,496
       20 %    
5,203
      
4,454
       17 %
    Gas (MMcf)
    
16,675
      
14,182
       18 %    
47,743
      
40,994
       16 %
    MMCFE (6:1)
    
27,453
      
23,160
       19 %    
78,962
      
67,717
       17 %
                                                 
Daily production:
                                                
    Oil (Bbls per day)
    
19,526
      
16,265
       20 %    
19,060
      
16,314
       17 %
    Gas (Mcf per day)
    
181,249
      
154,154
       18 %    
174,881
      
150,162
       16 %
    MCFE per day (6:1)
    
298,405
      
251,742
       19 %    
289,240
      
248,046
       17 %
                                                 
Margin analysis per MCFE:
                                                
    Average realized sales price, before hedging
   $
8.32
     $
8.12
       2 %   $
8.08
     $
8.12
       0 %
                                                 
    Average realized price, net of hedging
   $
8.69
     $
8.33
       4 %   $
8.54
     $
8.34
       2 %
    Lease operating expense and transportation
    
1.46
      
1.40
       4 %    
1.45
      
1.37
       6 %
    Production taxes
    
0.54
      
0.54
       0 %    
0.55
      
0.54
       2 %
    General and administrative
    
0.48
      
0.42
       14 %    
0.48
      
0.46
       4 %
        Operating margin
   $
6.21
     $
5.97
       4 %   $
6.06
     $
5.97
       2 %
    Depletion, depreciation, amortization, and
                                                
        asset retirement obligation liability accretion
   $
2.15
     $
1.72
       25 %   $
2.06
     $
1.63
       26 %
                                                 

ST. MARY LAND & EXPLORATION COMPANY       
FINANCIAL HIGHLIGHTS            
September 30, 2007            
(Unaudited)            
                         
Consolidated Statements of Operations
                        
(In thousands, except per share amounts)
  
For the Three Months
    
For the Nine Months
  
   
Ended September 30,
    
Ended September 30,
  
   
2007
    
2006
    
2007
    
2006
  
Operating revenues:
                        
    Oil and gas production revenue
   $
228,497
     $
188,159
     $
638,357
     $
550,181
  
    Realized oil and gas hedge gain
    
10,173
      
4,828
      
36,160
      
14,808
  
    Marketed gas system revenue
    
7,414
      
3,852
      
31,240
      
13,086
  
    Gain on sale of proved properties
    
-
      
801
      
-
      
7,233
  
    Other revenue
    
603
      
400
      
9,090
       (299 )
        Total operating revenues
    
246,687
      
198,040
      
714,847
      
585,009
  
                                 
Operating expenses:
                                
    Oil and gas production expense
    
54,970
      
44,998
      
157,618
      
129,490
  
    Depletion, depreciation, amortization,
                                
         and asset retirement obligation liability accretion
    
59,061
      
39,817
      
162,677
      
110,118
  
    Exploration
    
15,257
      
9,766
      
49,669
      
35,872
  
    Impairment of proved properties
    
-
      
5,259
      
-
      
6,548
  
    Abandonment and impairment of unproved properties
    
937
      
920
      
3,886
      
3,368
  
    General and administrative
    
13,110
      
9,725
      
37,948
      
30,940
  
    Change in Net Profits Plan liability
    
3,143
       (3,710 )    
6,948
      
17,370
  
    Marketed gas system expense
    
7,278
      
3,133
      
29,454
      
11,149
  
    Unrealized derivative loss (gain)
     (2,880 )    
68
      
2,224
      
5,329
  
    Other expense
    
460
      
842
      
1,577
      
1,832
  
        Total operating expenses
    
151,336
      
110,818
      
452,001
      
352,016
  
                                 
Income from operations
    
95,351
      
87,222
      
262,846
      
232,993
  
                                 
Nonoperating income (expense):
                                
    Interest income
    
355
      
90
      
612
      
1,454
  
    Interest expense
     (4,082 )     (2,170 )     (13,885 )     (5,098 )
                                 
Income before income taxes
    
91,624
      
85,142
      
249,573
      
229,349
  
    Income tax expense
     (33,971 )     (29,265 )     (92,735 )     (82,866 )
                                 
Net income
   $
57,653
     $
55,877
     $
156,838
     $
146,483
  
                                 
Basic weighted-average common shares outstanding
    
63,424
      
55,398
      
61,364
      
56,564
  
                                 
Diluted weighted-average common shares outstanding
    
64,727
      
64,926
      
64,917
      
66,332
  
                                 
Basic net income per common share
   $
0.91
     $
1.01
     $
2.56
     $
2.59
  
                                 
Diluted net income per common share
   $
0.89
     $
0.88
     $
2.43
     $
2.25
  
                                 
                                 

ST. MARY LAND & EXPLORATION COMPANY    
FINANCIAL HIGHLIGHTS      
September 30, 2007      
(Unaudited)      
             
Consolidated Balance Sheets
            
(In thousands)
  
September 30,
    
December 31,
  
ASSETS
  
2007
    
2006
  
Current assets:
            
    Cash and cash equivalents
   $
17,240
     $
1,464
  
    Short-term investments
    
1,158
      
1,450
  
    Accounts receivable
    
150,699
      
142,721
  
    Refundable income taxes
    
3,097
      
7,684
  
    Prepaid expenses and other
    
18,587
      
17,485
  
    Accrued derivative asset
    
32,045
      
56,136
  
    Deferred income taxes
    
4,186
      
-
  
        Total current assets
    
227,012
      
226,940
  
                 
Property and equipment (successful efforts method), at cost:
          
    Proved oil and gas properties
    
2,405,243
      
2,063,911
  
    Less - accumulated depletion, depreciation, and amortization
     (753,914 )     (630,051 )
    Unproved oil and gas properties, net of impairment allowance
          
        of $10,210 in 2007 and $9,425 in 2006
    
117,493
      
100,118
  
    Wells in progress
    
154,430
      
97,498
  
    Oil and gas properties held for sale less accumulated depletion,
          
        depreciation, and amortization
    
74,076
      
-
  
    Other property and equipment, net of accumulated depreciation
          
        of $11,298 in 2007 and $9,740 in 2006
    
9,074
      
6,988
  
     
2,006,402
      
1,638,464
  
                 
Noncurrent assets:
                
    Goodwill
    
9,452
      
9,452
  
    Accrued derivative asset
    
14,775
      
16,939
  
    Other noncurrent assets
    
28,360
      
7,302
  
        Total noncurrent assets
    
52,587
      
33,693
  
                 
Total Assets
   $
2,286,001
     $
1,899,097
  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
                
Current liabilities:
                
    Accounts payable and accrued expenses
   $
236,044
     $
171,834
  
    Short-term note payable
    
-
      
4,469
  
    Accrued derivative liability
    
43,796
      
13,100
  
    Deferred income taxes
    
-
      
14,667
  
        Total current liabilities
    
279,840
      
204,070
  
                 
Noncurrent liabilities:
                
    Long-term credit facility
    
155,000
      
334,000
  
    Senior convertible notes
    
287,500
      
99,980
  
    Asset retirement obligation
    
77,258
      
77,242
  
    Asset retirement obligation associated with oil and gas properties held for sale
    
7,827
      
-
  
    Net Profits Plan liability
    
167,531
      
160,583
  
    Deferred income taxes
    
281,250
      
224,518
  
    Accrued derivative liability
    
88,111
      
46,432
  
    Other noncurrent liabilities
    
8,490
      
8,898
  
        Total noncurrent liabilities
    
1,072,967
      
951,653
  
                 
Stockholders' equity:
                
    Common stock, $0.01 par value: authorized - 200,000,000 shares;
          
        issued: 63,733,590 shares in 2007 and 55,251,733 shares in 2006;
          
        outstanding, net of treasury shares: 62,725,278 shares in 2007
          
        and 55,001,733 shares in 2006
    
637
      
553
  
    Additional paid-in capital
    
163,080
      
38,940
  
    Treasury stock, at cost:  1,008,312 shares in 2007 and 250,000 shares in 2006
     (29,126 )     (4,272 )
    Retained earnings
    
845,786
      
695,224
  
    Accumulated other comprehensive income (loss)
     (47,183 )    
12,929
  
        Total stockholders' equity
    
933,194
      
743,374
  
                 
Total Liabilities and Stockholders' Equity
   $
2,286,001
     $
1,899,097
  
ST. MARY LAND & EXPLORATION COMPANY        
FINANCIAL HIGHLIGHTS          
September 30, 2007          
(Unaudited)          
                         
Consolidated Statements of Cash Flows
                        
(In thousands)
  
For the Three Months
    
For the Nine Months
  
   
Ended September 30,
    
Ended September 30,
  
   
2007
    
2006
    
2007
    
2006
  
Reconciliation of net income to net cash provided
                        
        by operating activities:
                        
Net income
   $
57,653
     $
55,877
     $
156,838
     $
146,483
  
Adjustments to reconcile net income to net cash
                                
        provided by operating activities:
                                
    Gain on insurance settlement
     (15 )    
-
       (6,340 )    
-
  
    Gain on sale of proved properties
    
-
       (801 )    
-
       (7,233 )
    Depletion, depreciation, amortization,
                                
        and asset retirement obligation liability accretion
    
59,061
      
39,817
      
162,677
      
110,118
  
    Exploratory dry hole expense
    
1,494
      
393
      
12,714
      
4,033
  
    Impairment of proved properties
    
-
       (1,289 )    
-
      
-
  
    Abandonment and impairment of unproved properties
    
937
      
7,467
      
3,886
      
9,915
  
    Unrealized derivative loss (gain)
     (2,880 )    
68
      
2,224
      
5,329
  
    Change in Net Profits Plan liability
    
3,143
       (3,710 )    
6,948
      
17,370
  
    Stock-based compensation expense
    
2,327
      
2,587
      
8,606
      
8,979
  
    Deferred income taxes
    
26,832
      
29,929
      
79,289
      
64,612
  
    Other
     (2,472 )    
1,001
       (5,168 )    
398
  
Changes in current assets and liabilities:
                                
    Accounts receivable
     (12,715 )     (18,871 )     (208 )    
30,810
  
    Refundable income taxes
    
3,812
       (3,163 )    
4,587
       (21,495 )
    Prepaid expenses and other
    
33,155
       (6,370 )    
28,035
       (15,048 )
    Accounts payable and accrued expenses
    
25,225
       (864 )    
27,552
       (21,612 )
    Income tax benefit from the exercise of stock options
     (3,896 )     (874 )     (7,658 )     (15,110 )
Net cash provided by operating activities
    
191,661
      
101,197
      
473,982
      
317,549
  
                                 
Cash flows from investing activities:
                                
    Proceeds from insurance settlement
    
15
      
-
      
7,064
      
-
  
    Proceeds from sale of oil and gas properties
    
-
      
1,001
      
324
      
1,183
  
    Capital expenditures
     (221,128 )     (112,412 )     (500,111 )     (293,977 )
    Acquisition of oil and gas properties
     (1,600 )     (5,162 )     (32,650 )     (9,933 )
    Deposits for acquisition of oil and gas assets     (15,310
)
             (15,310
)
        
    Deposits to short-term investments available-for-sale
     (15 )    
-
       (1,153 )    
-
  
    Receipts from short-term investments available-for-sale
    
-
      
-
      
1,450
      
-
  
    Other
    
12
      
57
      
29
      
79
  
Net cash used in investing activities
     (238,026 )     (116,516 )     (540,357 )     (302,648 )
                                 
Cash flows from financing activities:
                                
    Proceeds from credit facility
    
261,000
      
230,000
      
553,914
      
338,000
  
    Repayment of credit facility
     (202,000 )     (215,000 )     (732,914 )     (272,000 )
    Repayment of short-term note payable
    
-
      
-
       (4,469 )    
-
  
    Income tax benefit from the exercise of stock options
    
3,896
      
874
      
7,658
      
15,110
  
    Proceeds from issuance of convertible debt - net
     (530 )    
-
      
280,664
      
-
  
    Proceeds from sale of common stock
    
964
      
1,127
      
6,342
      
16,046
  
    Repurchase of common stock
     (25,904 )     (2,492 )     (25,904 )     (123,108 )
    Dividends paid
    
-
      
1
       (3,140 )     (2,858 )
Net cash provided by (used in) financing activities
    
37,426
      
14,510
      
82,151
       (28,810 )
                                 
Net change in cash and cash equivalents
     (8,939 )     (809 )    
15,776
       (13,909 )
Cash and cash equivalents at beginning of period
    
26,179
      
1,825
      
1,464
      
14,925
  
Cash and cash equivalents at end of period
   $
17,240
     $
1,016
     $
17,240
     $
1,016
  
                                 
ST. MARY LAND & EXPLORATION COMPANY          
FINANCIAL HIGHLIGHTS            
September 30, 2007            
(Unaudited)            
                         
Discretionary Cash Flow
                        
(In thousands)
                        
                         
Reconciliation of Net Cash Provided by Operating
 
For the Three Months
    
For the Nine Months
  
Activities (GAPP) to Discretionary Cash (Non-GAAP):
  
Ended September 30,
    
Ended September 30,
  
   
2007
    
2006
    
2007
    
2006
  
Net cash provided by operating activities (GAAP)
   $
191,661
     $
101,197
     $
473,982
     $
317,549
  
                                 
Gain on insurance settlement
     15       -       6,340       -  
Gain on sale of proved properties
    
-
       801      
-
       7,233  
Exploration expense, excluding exploratory
                                
    dry hole expense
     13,763       9,374       36,955       31,839  
Other
     2,472      
(1,001
 )     5,168      
(398
)
Changes in current assets and liabilities
    
(45,581
 )     30,142      
(52,308
 )     42,455  
Discretionary cash flow (Non-GAAP) (1)
   $
162,330
     $
140,513
     $
470,137
     $
398,678
  
                                 
                                 
(1) Discretionary cash flow is computed as net income plus depreciation, depletion, amortization, ARO liability accretion, impairments, deferred taxes,
exploration expense, stock-based compensation expense, and non-cash changes in the Net Profits Plan liability less the effect of unrealized
derivative (gain) loss. The non-GAAP measure of discretionary cash flow is presented since management believes that it provides useful additional
information to investors for analysis of St. Mary’s ability to internally generate funds for exploration, development, and acquisitions. In addition,
discretionary cash flow is widely used by professional research analysts and others in the valuation, comparison, and investment
recommendations of companies in the oil and gas exploration and production industry, and many investors use the published research of
industry research analysts in making investment decisions. Discretionary cash flow should not be considered in isolation or as a substitute for
net income, income from operations, net cash provided by operating activities or other income, profitability, cash flow, or liquidity measures
prepared under GAAP. Since discretionary cash flow excludes some, but not all, items that affect net income and net cash provided by
operating activities and may vary among companies, the discretionary cash flow amounts presented may not be comparable to similarly titled
measures of other companies. See the Consolidated Statements of Cash Flows herein for more detailed cash flow information.               
                                 
                                 
Adjusted Net Income
                                
(In thousands, except per share data)
                                
                                 
Reconciliation of Net Income (GAAP)
  
For the Three Months
    
For the Nine Months
  
to Adjusted Net Income (Non-GAAP):
  
Ended September 30,
    
Ended September 30,
  
   
2007
    
2006
    
2007
    
2006
  
                                 
Reported Net Income (GAAP)
   $
57,653
     $
55,877
     $
156,838
     $
146,483
  
                                 
Change in Net Profits Plan liability
    
3,143
       (3,710 )    
6,948
      
17,370
  
Unrealized derivative loss (gain)
     (2,880 )    
68
      
2,224
      
5,329
  
Gain on sale of proved properties
    
-
       (801 )    
-
       (7,233 )
Gain on insurance settlement (2)
     (15 )    
-
       (6,340 )    
-
  
                                 
    Total of Adjustments
    
248
       (4,443 )    
2,832
      
15,466
  
                                 
Benefit (expense) from tax effect on adjustments
     (92 )    
1,527
       (1,052 )     (5,588 )
                                 
Adjusted Net Income (Non-GAAP) (3)
   $
57,809
     $
52,961
     $
158,618
     $
156,361
  
                                 
Adjusted Net Income Per Share (Non-GAAP)
                                
    Basic
   $
0.91
     $
0.96
     $
2.58
     $
2.76
  
    Diluted
   $
0.89
     $
0.83
     $
2.46
     $
2.40
  
                                 
Average Number of Shares Outstanding
                                
    Basic
    
63,424
      
55,398
      
61,364
      
56,564
  
    Diluted
    
64,727
      
64,926
      
64,917
      
66,332
  
                                 
(2) Included within line item Other revenue on the Consolidated Statements of Operations.
                
                                 
(3) Adjusted net income is calculated as net income adjusted for significant non-cash and non-recurring items. Examples of non-cash charges include
non-cash gains or losses resulting from changes in the Net Profits Plan liability and unrealized derivative gains and losses. Examples of non-recurring
items include gains from sales of properties and insurance settlements. The non-GAAP measure of adjusted net income is presented because
management believes it provides useful additional information to investors for analysis of St. Mary’s fundamental business on a recurring basis. 
In addition, management believes that adjusted net income is widely used by professional research analysts and others in the valuation, comparison,
and investment recommendations of companies in the oil and gas exploration and production industry, and many investors use the published
 research of industry research analysts in making investment decisions. Adjusted net income should not be considered in isolation or as a
substitute for net income, income from operations, cash provided by operating activities or other income, profitability, cash flow, or liquidity
measures prepared under GAAP. Since adjusted net income excludes some, but not all, items that affect net income and may vary among companies,
the adjusted net income amounts presented may not be comparable to similarly titled measures of other companies.