Milagro Oil & Gas, Inc. declared financial results for the third quarter of 2011.

Financial and Operating Highlights:

Increased third quarter oil and natural gas revenues, including derivative settlements and unrealized gains, by approximately $17.3 million, or 43%, when compared to the same period in 2010.

Recorded net income of approximately $25.0 million for the third quarter of 2011, an approximately $28.1 million year-over-year increase from the third quarter of 2010.

Generated adjusted EBITDA of approximately $20.1 million in the third quarter of 2011 versus approximately $25.9 million for the same period of 2010.

Negotiated LLS crude differential for oil produced from our Magnet Withers Field.

Renegotiated the majority of our power purchase contracts.

Production

For the third quarter of 2011, net production of oil, natural gas, and natural gas liquids was 699,000 barrels of oil equivalent, a 15% decrease from the third quarter of 2010. The 2011 third quarter production consisted of 245,000 Boe of oil and NGLs, and 2,726 million cubic feet of natural gas. The Company's production volumes in 2011, as compared to 2010, decreased primarily due to natural decline in production and the shutting in of producing properties in Louisiana due to flooding from the Mississippi River from May 11, 2011 through August 9, 2011. Natural gas represented approximately 65% and 70% of the Company's total production in the three months ended September 30, 2011 and 2010, respectively.

Operations

The Company completed the purchase of certain South Texas producing assets during the third quarter of 2011. The assets acquired in the transaction include 77 wells in Starr and Hidalgo Counties, Texas, 60 of which are currently operated by Milagro Exploration, LLC, a wholly-owned subsidiary of the Company. The acquisition, which closed September 29, 2011, adds approximately 15.0 billion cubic feet of net proved reserves to the Company.

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