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7/29/2008 Avista Capital Partners and EnCap Investments Lead $350 Million Investment in Royal Offshore

New York, NY, July 29, 2008 – Royal Offshore today announced it has closed on a $350 million equity commitment from Avista Capital Partners, EnCap Investments and the Royal Group for the exploration and development of oil and natural gas resources in the Gulf of Mexico. Royal Offshore, led by Scott Smith and Bill Gregorcyk, controls interests in over 55 shallow and mid-water Gulf of Mexico leases which the company intends to aggressively develop over the next several years.

“Royal Offshore has been operating in the Gulf Coast region for over 30 years and in the Gulf of Mexico for over 10 years,” said J. Scott Smith, Chief Executive Officer of Royal Offshore, LLC. “We believe we have assembled an attractive portfolio of properties in the Gulf of Mexico in terms of exploration potential and scale. We are extremely excited to partner with Avista and EnCap, two of the most reputable and experienced energy private equity providers, as we explore and develop our Gulf of Mexico properties.”

The Royal Group is contributing over 55 leases in the Gulf of Mexico plus all seismic data and prospects to the venture. Avista and EnCap will each be contributing $122.5 million, with the Royal Group and management together contributing the remaining $105 million.

Steven WebsterCo-Managing Partner of Avista, said, “We are pleased to have the opportunity to partner with the Royal Offshore management team, who have a long and successful track record of developing oil and natural gas both onshore and offshore in the Gulf Coast region and the Gulf of Mexico. We continue to believe that the offshore Gulf of Mexico represents an attractive opportunity given the ongoing asset transition in the area and that the short reserve lives can generate high returns and quick payouts. Royal controls an attractive inventory of properties.”

Gary Petersen, Partner of EnCap, added, “Scott and Bill are proven operators and have assembled an experienced management team that is well equipped to handle the challenges of operating in the Gulf of Mexico. They have an impressive track record of creating shareholder value, and we are extremely pleased to support them in this new venture.”

Stephen R. Patchin, President and CEO of Royal Holding Company, Inc., the parent company of all Royal entities, said, “The Royal Group is pleased to enter in to a partnership with Avista and EnCap who we consider to be the premier providers of equity capital to the independent oil and gas industry. Their additional equity will allow our exploration program to dramatically accelerate our reserve growth.”

About Royal Offshore

Royal Offshore is a Corpus Christi-based company focused on the exploitation and development of oil and natural gas assets in the Gulf of Mexico. Royal Offshore’s properties currently consist of over 55 leases in the Gulf of Mexico. Royal Offshore is managed by various Royal entities which are a part of Royal Holding Company, Inc. The Royal entities have been active in oil and gas exploration since 1905 with the current management in place for thirty years.

About Avista Capital Partners

Founded in 2005, Avista Capital Partners is a leading private equity firm with offices in New York, NY and Houston, TX. Avista's strategy is to make controlling or influential minority investments primarily in growth-oriented energy, healthcare and media companies. Through its team of seasoned investment professionals and industry experts, Avista seeks to partner with exceptional management teams to invest in and add value to well-positioned businesses. For more information, visit www.avistacap.com.

About EnCap Investments, L.P.

Since 1988, EnCap has been a leading provider of private equity to the independent sector of the U.S. oil & gas industry, closing over $6.0 billion of principal investments and corporate finance transactions. The firm has established 13 oil and gas investment funds with aggregate capital commitments of approximately $6.5 billion and currently manages capital on behalf of over 150 prestigious U.S. and European institutions. For more information, visit www.encapinvestments.com.

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