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UNITED STATES ~~SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549~~

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

ý		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2015
Or
o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For ~~Commission~~the ~~File~~quarterly ~~Numbers: Denver~~period ~~Parent~~ended ~~Corporation 333-191602 Venoco,~~June ~~Inc.~~30, ~~001-33152~~ 2015

~~Denver Parent Corporation Venoco, Inc.~~ Or

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Numbers:

Denver Parent Corporation 333-191602

Venoco, Inc. 001-33152

Denver Parent Corporation

Venoco, Inc.

Delaware Delaware (State or other jurisdiction of incorporation or organization)		44-0821005 77-0323555 (I.R.S. Employer Identification Number)

370 17th Street, Suite 3900 Denver, Colorado (Address of principal executive offices)		80202-1370 (Zip Code)

Registrant'’s telephone number, including area code: (303) 626-8300

N/A ~~(Former name or former address, and former fiscal year, if changed since last report)~~

(Former name or former address, and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Venoco, Inc. YES o NO ýx Denver Parent Corporation YES o NO ýx

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Venoco, Inc. YES ýx NO o Denver Parent Corporation YES ýx NO o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "“large accelerated filer,"” "“accelerated filer"” and "“smaller reporting company"” in Rule 12b-2 of the Exchange Act.

Venoco, Inc. Large accelerated filer o Accelerated filer o Non-accelerated filer ýx (Do not check if a smaller reporting company) Smaller reporting company o Denver Parent Corporation Large accelerated filer o Accelerated filer o Non-accelerated filer ýx (Do not check if a smaller reporting company) Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Venoco, Inc. YES o NO ýx Denver Parent Corporation YES o NO ýx

As of ~~May~~August 1519, 2015, there were 30,297,459 shares of common stock of Denver Parent Corporation and 29,936,378 shares of common stock of Venoco, Inc. outstanding.

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This report on Form 10-Q contains forward-looking statements. The use of any statements containing the words "“anticipate,~~" "~~” “intend,"” "“believe,"” "“estimate,"” "“project,"” "“expect,"” "“plan,"” "“should"” or similar expressions are intended to identify such statements. Forward-looking statements included in this report relate to, among other things, expected future production, expenses and cash flows, the nature, timing and results of capital expenditure projects, amounts of future capital expenditures, our future debt levels and liquidity, ~~and~~ Venoco'’s future ability to pay cash dividends and ~~its~~Venoco’s and Denver Parent Corporation’s compliance with obligations under their respective debt agreements. The expectations reflected in such forward-looking statements may prove to be incorrect. Disclosure of important factors that could cause actual results to differ materially from our expectations, or cautionary statements, are included under the heading "“Risk Factors"” in this report and in the Venoco, Inc. / Denver Parent Corporation Annual Report on Form 10-K for the year ended December 31, 2014. Certain cautionary statements are also included elsewhere in this report, including, without limitation, in conjunction with the forward-looking statements. All forward-looking statements speak only as of the date made. All subsequent written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by the cautionary statements. We undertake no obligation to update any forward-looking statement. Factors that could cause actual results to differ materially from our expectations include, among others, those factors referenced in the "“Risk Factors" ” section of this report and the Venoco, Inc. / Denver Parent Corporation Annual Report on Form 10-K for the year ended December 31, 2014 and such things as:

· changes in oil and natural gas prices, including reductions in prices that would adversely affect our revenues, income, cash flow from operations, liquidity and reserves;

· adverse conditions in global credit markets and in economic conditions generally;

· risks relating to the concentration of our properties in a limited number of areas in California;

· risks related to our indebtedness and a potential inability to effect deleveraging transactions or otherwise reduce those risks;

· our ability to replace oil and natural gas reserves;

· risks arising out of our hedging transactions;

· our inability to access oil and natural gas markets due to operational impediments, including the shutdown of the pipeline that transports production from Platform Holly;

· uninsured or underinsured losses in, or operational problems affecting, our operations;

· variable nature and uncertainty in reserve estimates and expected production rates;

· risks associated with litigation, arbitration or other legal proceedings that we are involved in, including the costs of participating in those proceedings and the risk of adverse outcomes;

· exploitation, development and exploration results, which will depend on, among other things, our ability to identify productive intervals and drilling and completion techniques necessary to achieve commercial production from those intervals;

· the consequences of changes we have made, or may make from time to time in the future, to our capital expenditure budget, including the impact of those changes on our production levels, reserves, results of operations and liquidity;

· challenges and difficulties in managing expenses, including expenses associated with asset retirement obligations;

· a lack of available capital and financing;

· the potential unavailability of drilling rigs and other field equipment and services;

· the existence of unanticipated liabilities or problems relating to acquired businesses or properties;

· difficulties involved in the integration of operations we have acquired or may acquire in the future;

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~~Explanatory~~· the ~~Note~~ effect of any business combination, joint venture or other significant transaction we may pursue or have pursued, or the costs of litigation related thereto, and purchase price or other adjustments in connection with such transactions that may be unfavorable to us;

~~This~~· factors ~~Quarterly~~affecting ~~Report~~the onnature ~~Form 10-Q is a combined report being filed by Denver Parent Corporation ("DPC")~~ and ~~Venoco, Inc. ("Venoco"),~~timing ~~a direct 100% owned subsidiary~~ of DPC. DPC is a holding company formed to acquire all of the common stock of Venoco in a going private transaction that was completed in October 2012. Unless otherwise indicated or the context otherwise requires, (i) references to "DPC" refer only to DPC, (ii) references to the "Company," "we," "our" ~~and~~capital "us" refer, for periods following the going private transaction, to DPC and its subsidiaries, including Venoco and its subsidiaries, and for periods prior to the going private transaction, to Venoco and its subsidiaries and (iii) references to "Venoco" refer to Venoco and its subsidiaries. Each registrant included herein is filing on its own behalf all of the information contained in this quarterly report that pertains to such registrant. When appropriate, disclosures specific to DPC or Venoco are identified as such. Each registrant included herein is not filing any information that does not relate to such registrant, and therefore makes no representation as to any such information. Where the information provided is substantially the same for both companies, such information has been combined. Where information is not substantially the same for both companies, we have provided separate information. In addition, separate financial statements for each company are included in the Financial Statements section. expenditures;

· the impact and costs related to compliance with or changes in laws or regulations governing or affecting our operations, including changes resulting from the Deepwater Horizon well blowout in the Gulf of Mexico, from the Dodd-Frank Wall Street Reform and Consumer Protection Act or its implementing regulations, from regulations relating to greenhouse gas emissions and possible regulatory responses to the spill that resulted in the pipeline that transports Platform Holly production;

· delays, denials or other problems relating to our receipt of operational consents and approvals from governmental entities and other parties;

· environmental liabilities;

· loss of senior management or technical personnel;

· natural disasters, including severe weather;

· acquisitions and other business opportunities (or the lack thereof) that may be presented to and pursued by us;

· risk factors discussed in this report; and

· other factors, many of which are beyond our control.

EXPLANATORY NOTE

This Quarterly Report on Form 10-Q is a combined report being filed by Denver Parent Corporation (“DPC”) and Venoco, Inc. (“Venoco”), a direct 100% owned subsidiary of DPC. DPC is a holding company formed to acquire all of the common stock of Venoco in a going private transaction that was completed in October 2012. Unless otherwise indicated or the context otherwise requires, (i) references to “DPC” refer only to DPC, (ii) references to the “Company,” “we,” “our” and “us” refer, for periods following the going private transaction, to DPC and its subsidiaries, including Venoco and its subsidiaries, and for periods prior to the going private transaction, to Venoco and its subsidiaries and (iii) references to “Venoco” refer to Venoco and its subsidiaries. Each registrant included herein is filing on its own behalf all of the information contained in this quarterly report that pertains to such registrant. When appropriate, disclosures specific to DPC or Venoco are identified as such. Each registrant included herein is not filing any information that does not relate to such registrant, and therefore makes no representation as to any such information. Where the information provided is substantially the same for both companies, such information has been combined. Where information is not substantially the same for both companies, we have provided separate information. In addition, separate financial statements for each company are included in the Financial Statements section.

We operate DPC and Venoco as one business, with one management team. Management believes combining the Quarterly Reports on Form 10-Q of DPC and Venoco provides the following benefits:

· Enhances investors’ understanding of DPC and Venoco by enabling investors to view the business as a whole, the same manner in which management views and operates the business;

· Provides a more readable presentation of required disclosures with less duplication, since a substantial portion of the disclosures apply to both DPC and Venoco; and

· Creates time and cost efficiencies through the preparation of one combined report instead of two separate reports.

All of Venoco’s net assets are owned by DPC and all of DPC’s operations are conducted by Venoco.

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~~We operate DPC and Venoco as one business~~VENOCO, ~~with one management team~~ INC. ~~Management~~AND ~~believes~~SUBSIDIARIES ~~combining~~AND ~~the~~DENVER ~~Quarterly Reports on Form 10-Q of DPC and Venoco provides the following benefits:~~PARENT

~~All of~~CORPORATION ~~Venoco's~~AND ~~net assets are owned by DPC and all of DPC's operations are conducted by Venoco.~~ SUBSIDIARIES

Form 10-Q for the Quarterly Period Ended June 30, 2015

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PART I.	FINANCIAL INFORMATION	4
Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets at December 31, 2014 and June 30, 2015	4
	Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2014 and the Three and Six Months Ended June 30, 2015	5
	Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Six Months Ended June 30, 2015	6
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2014 and the Six Months Ended June 30, 2015	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	34
Item 4.	Controls and Procedures	35
PART II.	OTHER INFORMATION	36
Item 1.	Legal Proceedings	36
Item 1A.	Risk Factors	36
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	36
Item 3.	Defaults upon Senior Securities	36
Item 4.	Mine Safety Disclosures	36
Item 5.	Other Information	36
Item 6.	Exhibits	36
Signatures		37

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VENOCO, INC. AND SUBSIDIARIES AND DENVER PARENT CORPORATION AND SUBSIDIARIES Form 10-Q for the Quarterly Period Ended March 31, 2015

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PART I.	FINANCIAL INFORMATION	5
Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets at December 31, 2014 and March 31, 2015	5
	Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2014 and the Three Months Ended March 31, 2015	6
	Condensed Consolidated Statements of Changes in Stockholders' Equity for the Three Months Ended March 31, 2015	7
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2014 and the Three Months Ended March 31, 2015	8
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	30
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	41
Item 4.	Controls and Procedures	43
PART II.	OTHER INFORMATION	44
Item 1.	Legal Proceedings	44
Item 1A.	Risk Factors	44
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	44
Item 3.	Defaults upon Senior Securities	44
Item 4.	Mine Safety Disclosures	44
Item 5.	Other Information	44
Item 6.	Exhibits	44
Signatures		46

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PART I—FINANCIAL INFORMATION

VENOCO, INC. AND SUBSIDIARIES AND DENVER PARENT ~~CORPORATION AND SUBSIDIARIES~~

CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(In thousands, except share amounts)

	December 31, 2014			~~March~~June 3130, 2015			December 31, 2014			~~March~~June 3130, 2015
	Venoco, Inc.						Denver Parent Corporation
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	15,455		$	7114,~~921~~009		$	15,656		$	8114,~~054~~141
Accounts receivable		14,912			12,307			14,912			12,307
Restricted funds	—			79,595			—			79,595
Inventories		3,370			3,386			3,370			3,386
Accounts receivable	14,912			9,039			14,912			9,039
Other current assets		4,715			3,333			4,721			3,337
Inventories	3,370			3,299			3,370			3,299
Commodity derivatives		48,298			49,484			48,298			49,484
Other current assets	4,715			2,272			4,721			2,275

Commodity derivatives	48,298			30,545			48,298			30,545
Total current assets	86,750	~~86,750~~		238,759	~~76,431~~		86,957	~~86,957~~		238,894	~~76,568~~

PROPERTY, PLANT AND EQUIPMENT, AT COST:
Oil and gas properties, full cost method of accounting
Proved	1,866,415	~~1,866,415~~		1,874,582	~~1,868,441~~		1,866,415	~~1,866,415~~		1,874,582	~~1,868,441~~
Unproved	8,360	~~8,360~~		8,530	~~8,522~~		8,360	~~8,360~~		8,530	~~8,522~~
Accumulated depletion	(1,400,738	~~(1,400,738~~	)	(1,561,934	~~(1,409,110~~	)	(1,400,738	~~(1,400,738~~	)	(1,561,934	~~(1,409,110~~	)

Net oil and gas properties	474,037			321,178			474,037			321,178
Net oil and gas properties		474,037			467,853			474,037			467,853
Other property and equipment, net of accumulated depreciation and amortization of $14,566 and $15,454 at December 31, 2014 and June 30, 2015, respectively	14,477			13,707			14,477			13,707
Other property and equipment, net of accumulated depreciation and amortization of $14,566 and $15,015 at December 31, 2014 and March 31, 2015, respectively		14,477			14,071			14,477			14,071
Net property, plant and equipment	488,514			334,885			488,514			334,885

Net property, plant and equipment		488,514			481,924			488,514			481,924

OTHER ASSETS:
Commodity derivatives	29,793	~~29,793~~		8,653	~~26,647~~		29,793	~~29,793~~		8,653	~~26,647~~
Deferred loan costs	7,128	~~7,128~~		12,313	~~6,962~~		11,614	~~11,614~~		16,265	~~11,186~~
Other	4,069	~~4,069~~		4,279	~~4,082~~		4,069	~~4,069~~		4,279	~~4,082~~

Total other assets	40,990			25,245			45,476			29,197
Total other assets		40,990			37,691			45,476			41,915
TOTAL ASSETS	$	616,254		$	598,889		$	620,947		$	602,976

LIABILITIES AND STOCKHOLDERS’ EQUITY
TOTAL ASSETS	$	616,254		$	596,046		$	620,947		$	600,407



LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities	$	20,535		$	1815,~~073~~019		$	20,535		$	1815,~~073~~019
Interest payable	17,329	~~17,329~~		15,926	~~5,535~~		17,329	~~17,329~~		15,926	~~5,535~~
Share-based compensation	2,236	~~2,236~~		176	~~602~~		2,236	~~2,236~~		176	~~602~~

Total current liabilities	40,100			31,121			40,100			31,121
Total current liabilities		40,100			24,210			40,100			24,210
LONG-TERM DEBT	565,000			685,346			840,065			979,347
LONG-TERM DEBT		565,000			571,400			840,065			855,736
ASSET RETIREMENT OBLIGATIONS	30,351			33,150			30,351			33,150

SHARE-BASED COMPENSATION	648			235			648			235
ASSET RETIREMENT OBLIGATIONS		30,351			30,848			30,351			30,848
Total liabilities	636,099			749,852			911,164			1,043,853
SHARE-BASED COMPENSATION		648			731			648			731
COMMITMENTS AND CONTINGENCIES STOCKHOLDERS’ EQUITY(DEFICIT):

Common stock, $.01 par value (200,000,000 shares authorized for Venoco and 100,000,000 authorized for DPC; 29,936,378 Venoco shares issued and outstanding at December 31, 2014 and June 30, 2015; 30,297,459 DPC shares issued and outstanding at December 31, 2014 and June 30, 2015)	299			299			303			303
Total liabilities		636,099			627,189			911,164			911,525
Additional paid-in capital	285,120			285,616			73,902			74,398

Retained earnings (accumulated deficit)	(305,264		)	(436,878		)	(364,422		)	(515,578		)
COMMITMENTS AND CONTINGENCIES
Total stockholders’ equity(deficit)	(19,845		)	(150,963		)	(290,217		)	(440,877		)
STOCKHOLDERS' EQUITY(DEFICIT):
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY(DEFICIT)	$	616,254		$	598,889		$	620,947		$	602,976
Common stock, $.01 par value (200,000,000 shares authorized for Venoco and 100,000,000 authorized for DPC; 29,936,378 Venoco shares issued and outstanding at December 31, 2014 and March 31, 2015; 30,297,459 DPC shares issued and outstanding at December 31, 2014 and March 31, 2015)		299			299			303			303
Additional paid-in capital		285,120			285,616			73,902			74,398
Retained earnings (accumulated deficit)		(305,264	)		(317,058	)		(364,422	)		(385,819	)

Total stockholders' equity(deficit)		(19,845	)		(31,143	)		(290,217	)		(311,118	)

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY(DEFICIT)	$	616,254		$	596,046		$	620,947		$	600,407

See notes to condensed consolidated financial statements.

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VENOCO, INC. AND SUBSIDIARIES AND DENVER PARENT ~~CORPORATION AND SUBSIDIARIES~~

CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(In thousands)

	Three Months Ended March 31,						Three Months Ended March 31,
	Venoco, Inc.						~~Denver Parent Corporation~~						Denver Parent Corporation
	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2014			2015			2014			2015			2014			2015			2014			2015
REVENUES:
Oil and natural gas sales	$	6266,~~538~~563		$	19,~~749~~317		$	62129,~~538~~101		$	1939,~~749~~066		$	66,563		$	19,317		$	129,101		$	39,066
Other	476	~~459~~		553	~~669~~		935	~~459~~		1,222	~~669~~		476			553			935			1,222

Total revenues	67,039			19,870			130,036			40,288			67,039			19,870			130,036			40,288
Total revenues		62,997			20,418			62,997			20,418
EXPENSES:
EXPENSES:
Lease operating expense	18,185			13,206			37,653			28,138			18,185			13,206			37,653			28,138
Lease operating expense		19,468			14,932			19,468			14,932
Property and production taxes	2,270			2,027			4,006			4,159			2,270			2,027			4,006			4,159
Property and production taxes		1,736			2,132			1,736			2,132
Transportation expense	49			46			106			93			49			46			106			93
Transportation expense		57			47			57			47
Depletion, depreciation and amortization	11,794			7,234			22,970			16,055			11,794			7,234			22,970			16,055
Depletion, depreciation and amortization		11,176			8,821			11,176			8,821
Impairment of oil and natural gas properties	817			146,030			817			146,030			817			146,030			817			146,030
Accretion of asset retirement obligations	556	~~667~~		514	~~497~~		1,223	~~667~~		1,011	~~497~~		556			514			1,223			1,011
General and administrative, net of amounts capitalized	8,990	~~8,662~~		7,037	~~6,670~~		17,652	~~8,916~~		13,707	~~6,738~~		9,075			7,038			17,991			13,776

Total expenses	42,661			176,094			84,427			209,193			42,746			176,095			84,766			209,262
Total expenses		41,766			33,099			42,020			33,167
Income from operations	24,378			(156,224		)	45,609			(168,905		)	24,293			(156,225		)	45,270			(168,974		)

FINANCING COSTS AND OTHER:
Income (loss) from operations		21,231			(12,681	)		20,977			(12,749	)
Interest expense, net	13,351			19,926			26,291			31,337			21,766			29,590			42,889			50,272

Amortization of deferred loan costs	863			1,480			1,696			2,087			1,110			1,754			2,187			2,625
FINANCING COSTS AND OTHER:
Loss(gain) on extinguishment of debt	—			(67,515		)	—			(67,515		)	—			(67,515		)	—			(67,515		)
Interest expense, net		12,940			11,411			21,123			20,682
Commodity derivative losses (gains), net	18,910			9,705			16,815			(3,200		)	18,910			9,705			16,815			(3,200		)
Amortization of deferred loan costs		833			607			1,077			871
Total financing costs and other	33,124			(36,404		)	44,802			(37,291		)	41,786			(26,466		)	61,891			(17,818		)
Commodity derivative losses (gains), net		(2,095	)		(12,905	)		(2,095	)		(12,905	)
Income (loss) before income taxes	(8,746		)	(119,820		)	807			(131,614		)	(17,493		)	(129,759		)	(16,621		)	(151,156		)

Income tax provision (benefit)	—			—			—			—			—			—			—			—
Total financing costs and other		11,678			(887	)		20,105			8,648
Net income (loss)	$	(8,746	)	$	(119,820	)	$	807		$	(131,614	)	$	(17,493	)	$	(129,759	)	$	(16,621	)	$	(151,156	)

Income (loss) before income taxes		9,553			(11,794	)		872			(21,397	)

Income tax provision (benefit)		—			—			—			—

Net income (loss)	$	9,553		$	(11,794	)	$	872		$	(21,397	)

See notes to condensed consolidated financial statements.

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VENOCO, INC. AND SUBSIDIARIES AND DENVER PARENT ~~CORPORATION AND SUBSIDIARIES~~

CORPORATION ~~CONDENSED~~AND ~~CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY~~ SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(UNAUDITED)

(In thousands)

VENOCO, INC. AND SUBSIDIARIES

	Common Stock					Additional Paid-in			Retained Earnings (Accumulated	~~Retained Earnings (Accumulated Deficit)~~
							Additional Paid-in Capital
	Shares		Amount			Capital			Deficit)			Total
	Shares			Amount									Total
BALANCE AT DECEMBER 31, 2014	29,936		$	299		$	285,120		$	(305,264	)	$	(19,845	)
BALANCE AT DECEMBER 31, 2014		29,936		$	299		$	285,120		$	(305,264	)	$	(19,845	)
Excess of share-based compensation expense recognized over payments made	—		—			496			—			496
Excess of share-based compensation expense recognized over payments made		—			—			496			—			496
Net income (loss)	—		—			—			(131,614		)	(131,614		)
Net income (loss)		—			—			—			(11,794	)		(11,794	)
BALANCE AT JUNE 30, 2015	29,936		$	299		$	285,616		$	(436,878	)	$	(150,963	)

BALANCE AT MARCH 31, 2015		29,936		$	299		$	285,616		$	(317,058	)	$	(31,143	)

DENVER PARENT CORPORATION AND SUBSIDIARIES

	Common Stock					Additional Paid-in			Retained Earnings (Accumulated	~~Retained Earnings (Accumulated Deficit)~~
							Additional Paid-in Capital
	Shares		Amount			Capital			Deficit)			Total
	Shares			Amount									Total
BALANCE AT DECEMBER 31, 2014	30,297		$	303		$	73,902		$	(364,422	)	$	(290,217	)
BALANCE AT DECEMBER 31, 2014		30,297		$	303		$	73,902		$	(364,422	)	$	(290,217	)
Excess of share-based compensation expense recognized over payments made	—		—			496			—			496
Excess of share-based compensation expense recognized over payments made		—			—			496			—			496
Net income (loss)	—		—			—			(151,156		)	(151,156		)
Net income (loss)		—			—			—			(21,397	)		(21,397	)
BALANCE AT JUNE 30, 2015	30,297		$	303		$	74,398		$	(515,578	)	$	(440,877	)

BALANCE AT MARCH 31, 2015		30,297		$	303		$	74,398		$	(385,819	)	$	(311,118	)

See notes to condensed consolidated financial statements.

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VENOCO, INC. AND SUBSIDIARIES AND DENVER PARENT ~~CORPORATION AND SUBSIDIARIES~~

CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(In thousands)

	Three Months Ended March 31,						Three Months Ended March 31,
	Venoco, Inc.						Denver Parent Corporation
	Six Months Ended June 30,						Six Months Ended June 30,
	2014			2015			2014			2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	~~9,553~~807		$	(11131,~~794~~614	)	$	~~872~~(16,621	)	$	(21151,~~397~~156	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depletion, depreciation and amortization	22,970	~~11,176~~		16,055	~~8,821~~		22,970	~~11,176~~		16,055	~~8,821~~
Accretion of asset retirement obligations		667			497			667			497
Impairment of oil and natural gas properties	817			146,030			817			146,030
Share-based compensation		1,600			496			1,600			496
Accretion of asset retirement obligations	1,223			1,011			1,223			1,011
Interest paid-in-kind		—			—			3,065			8,974
Share-based compensation	1,601			496			1,601			496
Amortization of deferred loan costs		833			607			1,077			871
Interest paid-in-kind	—			4,460			9,264			22,791
Amortization of bond discounts and other		—			—			261			297
Amortization of deferred loan costs	1,696			2,087			2,187			2,625
Unrealized commodity derivative (gains) losses and amortization of premiums		(5,620	)		1,960			(5,620	)		1,960
Loss (gain) on extinguishment of debt	—			(67,515		)	—			(67,515		)
Amortization of bond discounts and other	—			1,450			530			2,054
Unrealized commodity derivative (gains) losses and amortization of premiums	8,760			38,893			8,760			38,893
Changes in operating assets and liabilities:
Accounts receivable	731	~~5,025~~		5,873	~~2,605~~		877	~~5,171~~		5,873	~~2,605~~
Inventories	1,196	~~431~~		71	~~(16~~	)	1,196	~~431~~		71	~~(16~~	)
Other current assets	2,366	~~1,123~~		2,327	~~1,350~~		2,301	~~1,058~~		2,327	~~1,350~~
Other assets	1,766	~~216~~		(210	~~(13~~	)	1,766	~~216~~		(210	~~(13~~	)
Accounts payable and accrued liabilities	3,739	~~(6,767~~	)	(5,749	~~(13,624~~	)	(5,027	~~(17,548~~	)	(5,749	~~(13,624~~	)
Share-based compensation liabilities	(16,815	~~(13,950~~	)	(2,473	~~(1,551~~	)	(16,815	~~(13,950~~	)	(2,473	~~(1,551~~	)

Net cash provided by (used in) operating activities	30,857			11,192			15,029			11,123
Net cash provided by (used in) operating activities		4,287			(10,662	)		(11,524	)		(10,730	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditures for oil and natural gas properties	(52,046	~~(26,182~~	)	(7,296	~~(4,596~~	)	(52,046	~~(26,182~~	)	(7,296	~~(4,596~~	)
Acquisitions of oil and natural gas properties	(16	~~(16~~	)	(12	~~(10~~	)	(16	~~(16~~	)	(12	~~(10~~	)
Expenditures for other property and equipment	(295	~~(177~~	)	(119	~~(43~~	)	(295	~~(177~~	)	(119	~~(43~~	)
Proceeds provided by sale of oil and natural gas properties	—	—		1,811	~~1,786~~		—	—		1,811	~~1,786~~

Net cash provided by (used in) investing activities	(52,357		)	(5,616		)	(52,357		)	(5,616		)
Net cash provided by (used in) investing activities		(26,375	)		(2,863	)		(26,375	)		(2,863	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt	132,000	~~97,000~~		340,000	~~15,000~~		132,000	~~97,000~~		340,000	~~15,000~~
Principal payments on long-term debt		(55,000	)		(8,600	)		(55,000	)		(8,600	)
Debt issuance costs	—			(12,427		)	—			(12,427		)
Payments for deferred loan costs		(13	)		(409	)		(17	)		(409	)
Principal payments on long-term debt	(107,000		)	(155,000		)	(107,000		)	(155,000		)
Dividend to Denver Parent Corporation		(3,905	)		—			—			—
Payments for deferred loan costs	(358		)	—			(467		)	—

Increase in restricted cash	—			(79,595		)	—			(79,595		)
Net cash provided by (used in) financing activities		38,082			5,991			41,983			5,991
Dividend to Denver Parent Corporation	(3,905		)	—			—			—

Net cash provided by (used in) financing activities	20,737			92,978			24,533			92,978
Net (decrease) increase in cash and cash equivalents	(763	~~15,994~~	)	98,554	~~(7,534~~	)	(12,795	~~4,084~~	)	98,485	~~(7,602~~	)
Cash and cash equivalents, beginning of period	828	~~828~~		15,455	~~15,455~~		17,336	~~17,336~~		15,656	~~15,656~~

Cash and cash equivalents, end of period	$	65		$	114,009		$	4,541		$	114,141
Cash and cash equivalents, end of period	$	16,822		$	7,921		$	21,420		$	8,054



Supplemental Disclosure of Cash Flow Information—
Cash paid for interest	$	2426,~~322~~641		$	2324,~~187~~537		$	3942,~~941~~260		$	2324,~~187~~537
Cash paid (received) for income taxes	$	—		$	—		$	—		$	—
Supplemental Disclosure of Noncash Activities—
(Decrease) increase in accrued capital expenditures	$	802,766		$	(~~632~~1,052	)	$	802,766		$	(~~632~~1,052	)
Excess of share-based compensation expense recognized over payments made	$	—		$	496		$	—		$	496

See notes to condensed consolidated financial statements.

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VENOCO, INC. AND SUBSIDIARIES AND DENVER PARENT ~~CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~

CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1. SIGNIFICANT ACCOUNTING POLICIES

Description of Operations Denver Parent Corporation, a Delaware corporation ("“DPC"”), was formed in January 2012 for the purpose of acquiring all of the outstanding common stock of Venoco, Inc., a Delaware corporation ("“Venoco"”), in a transaction referred to as the "“going private transaction"”. The going private transaction was completed in ~~October~~ October 2012. DPC has no operations and no material assets other than 100% of the common stock of Venoco. Venoco is engaged in the acquisition, exploration, exploitation and development of oil and natural gas properties with a focus on properties offshore and onshore in California.

Basis of Presentation In 2011, Venoco'’s board of directors received a proposal from its then-chairman and chief executive officer, Timothy Marquez, to acquire all of the outstanding shares of common stock of Venoco of which he was not the beneficial owner for $12.50 per share in cash. On October 3, 2012, Mr. Marquez and certain of his affiliates, including DPC, completed the going private transaction and acquired all of the outstanding stock of Venoco. As a result, Venoco'’s common stock is no longer publicly traded and Venoco is a wholly owned subsidiary of DPC. DPC is majority-owned and controlled by Mr. Marquez and his affiliates.

This Quarterly Report on Form 10-Q is a combined report being filed by DPC and Venoco. Unless otherwise indicated or the context otherwise requires, (i) references to "“DPC" ” refer only to DPC, (ii) references to the "“Company,"” "“we,"” "“our"” and "“us"” refer, for periods following the going private transaction, to DPC and its subsidiaries, including Venoco and its subsidiaries, and for periods prior to the going private transaction, to Venoco and its subsidiaries and (iii) references to "“Venoco"” refer to Venoco and its subsidiaries. Each registrant included herein is filing on its own behalf all of the information contained in this report that pertains to such registrant. When appropriate, disclosures specific to DPC and Venoco are identified as such. Each registrant included herein is not filing any information that does not relate to such registrant, and therefore makes no representation as to any such information. Where the information provided is substantially the same for both companies, such information has been combined. Where information is not substantially the same for both companies, we have provided separate information. In addition, separate financial statements for each company are included in this report.

The unaudited condensed consolidated financial statements include the accounts of DPC and its subsidiaries, and Venoco and its subsidiaries. All such subsidiaries are wholly owned. The financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial reporting. All significant intercompany balances and transactions have been eliminated in consolidation. In the opinion of management, all material adjustments considered necessary for a fair presentation of the Company'’s interim results have been reflected. All such adjustments are considered to be of a normal recurring nature. The Company has evaluated subsequent events and transactions for matters that may require recognition or disclosure in the financial statements. The Annual Report on Form 10-K for the year ended December 31, 2014 for Venoco and DPC includes certain definitions and a summary of significant accounting policies and should be read in conjunction with this report. The results for interim periods are not necessarily indicative of annual results.

In the course of preparing the condensed consolidated financial statements, management makes various assumptions, judgments and estimates to determine the reported amount of assets, liabilities, revenue and expenses, and in the disclosures of commitments and contingencies. Changes in these assumptions, judgments and estimates will occur as a result of the passage of time and the occurrence of future events and, accordingly, actual results could differ from amounts initially established. Significant areas requiring the use of assumptions, judgments and estimates include (1) oil and gas reserves; (2) cash flow estimates used in ceiling tests of oil and natural gas properties; (3) depreciation, depletion and amortization; (4) asset retirement obligations; (5) assigning fair value and allocating purchase price in connection with business combinations; (6) accrued revenue and related receivables; (7) valuation of commodity derivative instruments; (8) accrued liabilities; (9) valuation of share-based payments and (10) income taxes. Although management believes these estimates are reasonable, actual results could differ from these estimates.

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~~VENOCO~~Liquidity The additional indebtedness that the Company incurred in connection with and following the going private transaction has increased debt- and liquidity-related risks. We have undertaken a variety of measures to reduce our indebtedness, including sales of our Sacramento Basin and West Montalvo properties for an aggregate price of approximately $450 ~~INC~~million. ~~AND~~However, ~~SUBSIDIARIES~~our ~~AND~~deleveraging ~~DENVER~~efforts ~~PARENT CORPORATION~~have ~~AND~~been ~~SUBSIDIARIES~~impacted by various operational issues, including an extended shutdown of the pipeline that transports our South Ellwood field production in 2014 and an additional extended shutdown of the same pipeline resulting from a spill that occurred in the second quarter of 2015. Our deleveraging efforts have also been affected by the dramatic decline in the price of oil that occurred over the second half of 2014 with prices remaining low in the first half of 2015. As a result of the debt restructuring transaction in April 2015 (see note 2), Venoco’s revolving credit facility was terminated. However, prior to that termination, the Company was required to obtain numerous amendments to and waivers from the lenders under the facility as a result of these factors. We may be forced to seek further amendments or waivers from current or future lenders, and there is no assurance that we will be able to obtain them in a timely manner or at all. Due to the Company’s need for increased liquidity we completed the April 2015 debt transactions. The transactions resulted in an increase in our overall indebtedness, but improved our near term liquidity. We are currently exploring additional deleveraging efforts and our planned capital expenditures for 2015 are significantly reduced relative to prior years. However, there can be no assurance that any deleveraging efforts will be successful or that we will be able to maintain adequate liquidity and compliance with our debt and other obligations.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

1. SIGNIFICANT ACCOUNTING POLICIES (Continued)

assumptions, judgments and estimates will occur as a result of the passage of time and the occurrence of future events and, accordingly, actual results could differ from amounts initially established. Significant areas requiring the use of assumptions, judgments and estimates include (1) oil and gas reserves; (2) cash flow estimates used in ceiling tests of oil and natural gas properties; (3) depreciation, depletion and amortization; (4) asset retirement obligations; (5) assigning fair value and allocating purchase price in connection with business combinations; (6) accrued revenue and related receivables; (7) valuation of commodity derivative instruments; (8) accrued liabilities; (9) valuation of share-based payments and (10) income taxes. Although management believes these estimates are reasonable, actual results could differ from these estimates.

Liquidity The additional indebtedness that the Company incurred in connection with the going private transaction and the associated financial covenants in Venoco's revolving credit facility (which was subsequently paid down in April 2015) have increased debt-related risks. We have undertaken a variety of measures to reduce our indebtedness, including in particular sales of our Sacramento Basin and West Montalvo properties for an aggregate price of approximately $450 million. However, our deleveraging efforts have been impacted by various operational issues, including an extended shutdown of the pipeline that transports our South Ellwood field production in 2014 and apparent communication issues affecting production from some of our wells in the same field. More recently, our deleveraging efforts have also been affected by the dramatic decline in the price of oil that occurred over the second half of 2014 with prices remaining low in and the first quarter of 2015. Prior to the termination of Venoco's revolving credit facility in April 2015, we were required to obtain numerous amendments to and waivers from the lenders under the facility as a result of these factors. We may be forced to seek further amendments or waivers from current or future lenders, and there is no assurance that we will be able to obtain them in a timely manner or at all. We are currently exploring additional deleveraging efforts and have significantly curtailed our planned capital expenditures for 2015 relative to prior years.

Income Taxes The Company computes its quarterly taxes under the effective tax rate method based on applying an anticipated annual effective rate to its year-to-date income or loss, except for discrete items. Income taxes for discrete items are computed and recorded in the period in which the specific transaction occurs.

As of December 31, 2014, DPC has net operating loss carryovers ("“NOLs"”) of $499 million for federal income tax purposes and $459 million for financial reporting purposes, and Venoco has net NOLs as of December 31, 2014 of $418 million for federal income tax purposes and $377 million for financial reporting purposes. The difference between the federal income tax NOLs and the financial reporting NOLs of $40 million relates to tax deductions for compensation expense for financial reporting purposes for which the benefit will not be recognized until the related deductions reduce taxes payable. The net operating loss carryovers may be carried back two years and forward twenty years from the year the net operating loss was generated. The net operating losses may be used to offset taxable income through 2034.

Venoco has incurred losses before income taxes in 2008, 2009, and 2012 as well as ~~taxable~~tax losses in each of the tax years from 2008 through 2013. DPC has incurred losses before income taxes in 2008, 2009, 2012, 2013 and 2014 as well as tax losses in each of the tax years from 2008 through 2014. These losses and expected future taxable losses were a key consideration that led each of Venoco and DPC to provide a full valuation allowance against its net deferred tax assets as of December 31, 2014 and June 30, 2015, since it cannot conclude that it is more likely than not that its net deferred tax assets will be fully realized on future income tax returns.

10The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. At each reporting period, management considers the scheduled reversal of deferred tax liabilities, available taxes in carryback periods, tax planning strategies and projected future taxable income in making this assessment. Future events or new evidence which may lead the Company to conclude that it is more likely than not that its net deferred tax assets will be realized include, but are not limited to, cumulative historical pre-tax earnings; consistent and sustained pre-tax earnings; sustained or continued improvements in oil and natural gas commodity prices; meaningful incremental oil production and proved reserves from the Company’s development efforts at its Southern California legacy properties; consistent, meaningful production and proved reserves from the Company’s onshore Monterey shale project; meaningful production and proved reserves from the CO2 project at the Hastings Complex; and taxable events resulting from one or more deleveraging transactions. The Company will continue to evaluate whether the valuation allowance is needed in future reporting periods.

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VENOCO, INC. AND SUBSIDIARIES AND DENVER PARENT CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

1. SIGNIFICANT ACCOUNTING POLICIES (Continued)

2009, 2012, 2013 and 2014 as well as taxable losses in each of the tax years from 2008 through 2014. These losses and expected future taxable losses were a key consideration that led Venoco and DPC to provide a full valuation allowance against its net deferred tax assets as of December 31, 2014 and March 31,2015, since it cannot conclude that it is more likely than not that its net deferred tax assets will be fully realized on future income tax returns.

The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. At each reporting period, management considers the scheduled reversal of deferred tax liabilities, available taxes in carryback periods, tax planning strategies and projected future taxable income in making this assessment. Future events or new evidence which may lead the Company to conclude that it is more likely than not that its net deferred tax assets will be realized include, but are not limited to, cumulative historical pre-tax earnings; consistent and sustained pre-tax earnings; sustained or continued improvements in oil and natural gas commodity prices; meaningful incremental oil production and proved reserves from the Company's development efforts at its Southern California legacy properties; consistent, meaningful production and proved reserves from the Company's onshore Monterey shale project; meaningful production and proved reserves from the CO2 project at the Hastings Complex; and taxable events resulting from one or more deleveraging transactions. The Company will continue to evaluate whether the valuation allowance is needed in future reporting periods.

As long as the Company concludes that it will continue to have a need for a full valuation allowance against its net deferred tax assets, the Company likely will not have any income tax expense or benefit other than for federal alternative minimum tax expense, a release of a portion of the valuation allowance for net operating loss carryback claims or for state income taxes.

~~Reclassifications Certain~~Oil ~~amounts~~and inGas ~~prior~~Properties The ~~years~~Company ~~footnotes~~performs toa full-cost ceiling test on a quarterly basis. The test establishes a limit (ceiling) on the ~~financials~~book ~~have~~value ~~been~~of ~~reclassified~~oil toand ~~2015~~gas ~~presentation~~properties. ~~Reclassified~~ ~~amounts~~The ~~were~~ capitalized costs of oil and gas properties, net of accumulated depreciation, depletion and amortization (DD&A) and the related deferred income taxes, may not ~~material~~exceed this “ceiling.” The ceiling limitation is equal to the ~~financials~~sum ~~presentation~~of: (i) the present value of estimated future net revenues from the projected production of proved oil and gas reserves, excluding future cash outflows associated with settling asset retirement obligations accrued on the balance sheet, calculated using the average oil and natural gas sales price received by the Company as of the first trading day of each month over the preceding twelve months (such prices are held constant throughout the life of the properties) and a discount factor of 10%; (ii) the cost of unproved and unevaluated properties excluded from the costs being amortized; (iii) the lower of cost or estimated fair value of unproved properties included in the costs being amortized; and (iv) related income tax effects. If capitalized costs exceed this ceiling, the excess is charged to expense in the accompanying consolidated statements of operations.

Recently Issued Accounting Standards In May 2014, the FASB issued new authoritative accounting guidance related to the recognition of revenue. This authoritative accounting guidance is effective for the annual period beginning after December 15, 2016, including interim periods within that reporting period, and is to be applied using one of two acceptable methods. The Company is currently evaluating the provisions of this guidance and assessing its impact on the Company's consolidated financial statements and disclosures. 9

In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements—Going Concern, which requires management to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern and provide related footnote disclosures. The guidance is effective for annual and interim reporting periods beginning on or after December 15, 2016. Early adoption is permitted for financial statements that have not been previously issued. The standard allows for either a full retrospective or modified retrospective transition method. The Company is currently evaluating the provisions of this guidance and assessing its impact on the Company's consolidated financials.

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~~VENOCO,~~At June ~~INC~~30, 2015, capitalized costs exceeded the ceiling and the Company recorded an impairment of oil and gas properties of $146 million. The ~~AND~~impairment ~~SUBSIDIARIES~~at ~~AND~~June 30, ~~DENVER~~2015 ~~PARENT CORPORATION~~was ~~AND~~primarily ~~SUBSIDIARIES~~due to continued low commodity prices, which resulted in a reduction of the discounted present value of the Company’s proved oil and natural gas reserves.

Reclassifications Certain ~~NOTES~~amounts TOin ~~CONDENSED~~prior ~~CONSOLIDATED~~year’s ~~FINANCIAL~~footnotes ~~STATEMENTS~~to ~~(Continued)~~the financials statements have been reclassified to the 2015 presentation. Reclassified amounts were not material to the financials presentation.

Recently ~~(UNAUDITED)~~Issued Accounting Standards In May 2014, the FASB issued new authoritative accounting guidance related to the recognition of revenue. This authoritative accounting guidance is effective for the annual period beginning after December 15, 2017, including interim periods within that reporting period, and is to be applied using one of two acceptable methods. The Company is currently evaluating the provisions of this guidance and assessing its impact on the Company’s consolidated financial statements and disclosures.

1In August 2014, the FASB issued ASU No. 2014-15, ~~SIGNIFICANT~~Presentation ~~ACCOUNTING~~of ~~POLICIES~~Financial ~~(Continued)~~Statements—Going Concern, which requires management to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and provide related footnote disclosures. The guidance is effective for annual and interim reporting periods beginning on or after December 15, 2016. Early adoption is permitted for financial statements that have not been previously issued. The standard allows for either a full retrospective or modified retrospective transition method. The Company is currently evaluating the provisions of this guidance and assessing its impact on the Company’s consolidated financials.

In ~~April~~ April 2015, the FASB issued ASU 2015-03 to revise the presentation of debt issuance costs. Under ASU 2015-03, entities will present debt issuance costs in their balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of the deferred costs will continue to be included in interest expense. The guidance is effective for annual and interim reporting periods beginning on or after December 15, 2015. Early adoption is permitted for financial statements that have not been previously issued. The standard will be applied retrospectively to all prior periods. The company is currently evaluating provisions of this guidance and assessing its impact on the Company'’s consolidated financials.

2. DEBT

As of the dates indicated, the Company'’s long-term debt consisted of the following (in thousands):

	December 31, 2014		~~March~~June 3130, 2015		December 31, 2014		~~March~~June 3130, 2015
	Venoco, Inc.				Denver Parent Corporation
Venoco Revolving credit agreement due March 2016	$	65,000	$	~~71,400~~—	$	65,000	$	~~71,400~~—
Venoco 8.875% senior notes due February 2019 (face value $500,000)		500,000		500,000		500,000		500,000
Venoco 8.875% senior notes due February 2019	500,000		308,222		500,000		308,222
DPC 12.25% / 13.00% senior PIK toggle notes due August 2018		—		—		275,065		284,336
First lien secured 12% notes due February 2019	—		175,000		—		175,000

Second lien secured 8.875% / 12% notes due February 2019(1)	—		127,874		—		127,874
Total long-term debt		565,000		571,400		840,065		855,736
Term loan facility due December 2017(2)	—		74,250		—		74,250
Less: current portion of long-term debt		—		—		—		—
DPC 12.25% / 13.00% senior PIK toggle notes due August 2018(3)	—		—		275,065		294,001

Total long-term debt	565,000		685,346		840,065		979,347
Long-term debt, net of current portion	$	565,000	$	571,400	$	840,065	$	855,736
Less: current portion of long-term debt	—		—		—		—

Long-term debt, net of current portion	$	565,000	$	685,346	$	840,065	$	979,347

We recently completed a series of financing transactions in response to our indebtedness and liquidity situation. On April 2, 2015, Venoco entered into agreements relating to three new debt instruments: (i1) ~~first~~ Amounts ~~lien~~are ~~senior~~net ~~secured notes with an aggregate principal amount~~ of $175 million (the "first lien secured notes"), (ii) second lien senior secured notes with an aggregate principal amount of $150 million (the "second lien secured notes") and (iii) a $75 million cash collateralized senior secured credit facility (the "term loan facility")26.9 ~~Approximately $72~~ million ofunamortized ~~proceeds~~discount ~~from~~at the issuance of the first lien secured notes and the term loan facility were used to repay all amounts outstanding under Venoco's revolving credit facility, which was then terminated. The second lien secured notes were issued in exchange for $194June ~~million aggregate principal amount of~~30, ~~and accrued interest on, Venoco's outstanding 8~~2015.875% senior notes due 2019. The terms of the new debt instruments are summarized in "—Liquidity and Capital Resources—Capital Resources and Requirements." These transactions increased our indebtedness overall, but reduced our near-term cash interest expense and provided us with flexibility and additional liquidity that we intend to use to advance longer term projects.

~~The following~~(2) Amounts ~~summarizes~~are ~~the~~net ~~terms~~ of ~~the~~$0.8 ~~agreements~~million ~~governing~~unamortized ~~the~~discount ~~Company's~~at ~~debt outstanding as of March~~June 3130, 2015.

12(3) Amounts are net of $4.8 million, and $5.4 million unamortized discount at June 30, 2015 and December 31, 2014, respectively.

The Company recently completed a series of financing transactions in response to its indebtedness and liquidity situation. On April 2, 2015, Venoco entered into agreements relating to three new debt instruments: (i) first lien senior secured notes with an aggregate principal amount of $175 million (the “first lien secured notes”), (ii) second lien senior secured notes with an aggregate principal amount of $150 million (the “second lien secured notes”) and (iii) a $75 million cash collateralized senior secured credit facility (the “term loan facility”). Approximately $72 million of proceeds from the issuance of the first lien secured notes and the term loan facility were used to repay all amounts outstanding under Venoco’s revolving credit facility, which was then terminated. The second lien secured notes were issued in exchange for $194 million aggregate principal amount of, and accrued interest on, Venoco’s outstanding 8.875% senior notes due 2019. The term loan facility was refinanced on June 11, 2015 with a new $75 million secured term loan facility (the “new term loan facility”). The terms of the new debt instruments are summarized in “—Liquidity and Capital Resources—Capital Resources and Requirements.” These transactions increased the Company’s indebtedness overall, but reduced its near-term cash interest expense and provided it with flexibility and additional liquidity that it intends to use to advance longer term projects.

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~~VENOCO, INC.~~The ~~AND~~following ~~SUBSIDIARIES~~summarizes ~~AND~~the ~~DENVER~~terms ~~PARENT CORPORATION~~of ~~AND~~the ~~SUBSIDIARIES~~agreements governing the Company’s debt outstanding as of June 30, 2015.

First ~~NOTES~~lien TOsecured ~~CONDENSED~~notes. The ~~CONSOLIDATED~~first ~~FINANCIAL~~lien ~~STATEMENTS~~secured notes bear interest at 12% per annum and mature in February 2019. The indenture governing the first lien secured notes includes covenants customary for instruments of this type, including restrictions on Venoco’s ability to incur additional indebtedness, create liens on its properties, pay dividends and make investments and in each case the covenants are subject to exceptions. The covenants regarding the incurrence of additional indebtedness contain exceptions for, among other things, (~~Continued~~i) up to $25 million of additional secured or unsecured indebtedness that may be issued or incurred in connection with certain projects approved by the holders of the notes, (ii) up to $50 million of additional second lien secured notes that may be issued in exchange for Venoco’s outstanding 8.875% senior notes due 2019 and (iii) up to $150 million of additional third lien or unsecured indebtedness that may be issued or incurred in exchange for the Venoco’s outstanding 8.875% senior notes or to fund acquisitions. The indenture also includes restrictions on capital expenditures and an operational covenant pursuant to which Venoco is generally required to maintain a specified level of production for each quarterly period until maturity. Other covenants are generally similar to those contained in the indenture governing the existing 8.875% senior notes. Venoco’s obligations under the first lien secured notes are guaranteed by all of its subsidiaries other than Ellwood Pipeline, Inc. and secured by a first priority lien on substantially all of the assets of Venoco and the guarantors other than the cash collateral under the term loan facility. Venoco may redeem the first lien secured notes at a redemption price of 109% of the principal amount beginning on January 1, 2016 and declining to 100% by January 1, 2019.

Second ~~(UNAUDITED)~~lien secured notes. The second lien secured notes bear interest at 8.875% if paid in cash or 12% if paid in kind. Interest may be paid in cash or in kind, at Venoco’s option, for semiannual interest periods commencing within 24 months following issuance. After the initial 24 month period, interest is payable in cash, but may become payable entirely in cash earlier upon the occurrence of certain events. Venoco elected to PIK the first interest payment which was due July 1, 2015. The second lien secured notes mature in February 2019. The indenture governing the second lien secured notes includes covenants, and exceptions thereto, substantially similar to those set forth in the indenture governing the first lien secured notes. Venoco’s obligations under the notes are guaranteed by Venoco’s subsidiaries that guarantee the first lien secured notes and are secured by a second priority lien on the same assets securing its obligations under the first lien secured notes. Venoco may redeem the second lien secured notes on the same terms as the existing 8.875% senior notes.

2New Term loan facility. The ~~DEBT~~term loan facility, which was fully drawn at closing, matures in December 2017. Amounts borrowed under the facility will bear interest at LIBOR plus 4.0% per annum. The facility contains representations, warranties and covenants typical for instruments of this type. Venoco’s obligations under the term loan facility are secured by a first priority lien on cash collateral, which collateral may be released upon the occurrence of certain events, and are guaranteed by Venoco’s subsidiaries that guarantee the first lien secured notes and second lien secured notes. The cash collateral is accounted for as restricted cash in the condensed consolidated balance sheets (~~Continued~~unaudited). The term facility was incurred under a term loan and security agreement dated as of June 11, 2015 among Venoco, the guarantors and the lenders party thereto.

Venoco ~~Revolving~~8.875% ~~Credit~~Senior ~~Facility~~Notes. ~~Prior~~ In ~~to its refinancing and termination in April 2015~~February 2011, Venoco ~~was~~issued ~~party to a fifth amended and restated credit agreement which governed its revolving credit facility. The credit facility had a maximum size of~~ $500 million ~~and~~in ~~a maturity date of March 31, 2016~~8.875% ~~The~~senior ~~borrowing~~notes ~~base,~~due ~~which~~in ~~was subject~~February 2019 ~~to redetermination twice each year, and was subject to redetermination~~ at ~~other times at Venoco's request or at the request of the lenders, was $88~~par.~~5 million~~ ~~as of March 31, 2015.~~ The ~~credit~~notes ~~facility~~pay ~~was~~interest ~~secured~~semi-annually byin aarrears ~~first priority lien~~ on ~~substantially~~February 15 ~~all of Venoco's oil~~ and ~~natural~~August 15 ~~gas properties and other assets, including the equity interests in all~~ of ~~its subsidiaries, and was unconditionally guaranteed by~~ each ~~of those subsidiaries other than Ellwood Pipeline, Inc~~year. ~~The~~Beginning ~~collateral also secured Venoco's obligations to hedging counterparties that were also lenders~~February 15, ~~or affiliates of lenders~~2015, ~~under~~Venoco ~~the~~may ~~facility.~~redeem ~~Loans made under~~ the ~~revolving~~notes ~~credit facility were designated,~~ at ~~our option, as either "Base Rate Loans" or "LIBO Rate Loans." Loans designated as Base Rate Loans under the facility bore interest at~~ a ~~floating~~redemption ~~rate~~price ~~equal to (i) the greater~~ of ~~(x) the administrative agent's announced prime rate, (y) the federal funds rate plus 0~~104.50438% ~~and~~of ~~(z)~~ the ~~one-month~~principal ~~LIBOR~~amount ~~plus~~and ~~1.0%,~~declining ~~plus (ii) an applicable margin ranging from 1.25%~~ to ~~2.00~~100%, ~~based~~by ~~on utilization. Loans designated as LIBO Rate Loans under the facility bore interest at (i)~~February ~~LIBOR plus (ii) an applicable margin ranging from 2.25% to 3.00%~~15, ~~based upon utilization~~2017. The ~~applicable~~notes ~~margin~~are ~~for~~senior ~~both~~unsecured ~~Base~~obligations ~~Rate Loans~~ and ~~LIBO~~contain ~~Rate Loans~~operational ~~was~~covenants ~~increased~~that, byamong ~~0.50%~~other ~~when~~things, limit Venoco'’s ~~debt~~ability to ~~adjusted~~make ~~EBITDA~~investments, ~~ratio~~incur ~~exceeded~~additional 3.75 to 1.00 on the last day of each of the two fiscal quarters most recently ended. A commitment fee of 0.50% per annum was payable with respect to unused borrowing availability under the facility. The agreement governing the facility contained customary representationsindebtedness, ~~warranties,~~issue ~~events~~preferred ~~of default~~stock, ~~indemnities and~~pay ~~covenants~~dividends, ~~including~~repurchase ~~operational~~its ~~covenants~~stock, ~~that~~create ~~restricted~~liens ~~Venoco's~~or ~~ability~~sell ~~to incur indebtedness and certain financial covenants~~assets.

~~The borrowing~~As ~~base~~part ~~under~~of the ~~revolving~~April 2, ~~credit~~2015 ~~facility~~debt ~~was~~restructuring, ~~allocated~~$192 atmillion ~~various percentages to a syndicate~~ of ~~banks~~the 8.875% Assenior ofnotes ~~March 31,~~were ~~2015~~redeemed, ~~Venoco~~plus ~~had approximately~~ $~~71.4~~ 2 million ~~outstanding~~of onaccrued ~~the~~interest ~~facility~~was ~~and~~extinguished. As ~~had available borrowing capacity~~ of ~~$13.5~~June ~~million~~30, ~~under the facility~~2015, ~~net~~$308 million of ~~the~~8.875% ~~outstanding~~senior ~~balance~~notes ~~and~~are ~~$3.6 million~~still in outstanding ~~letters of credit~~.

~~The revolving~~DPC ~~credit~~12.25% ~~facility~~/ ~~generally~~13.00% ~~permitted~~Senior ~~Venoco~~PIK Toggle Notes. In August 2013, ~~subject~~DPC issued $255 million principal amount of 12.25% / 13.00% senior PIK toggle notes due August 2018 at 97.304% of par. Interest on the notes is payable on February 15 and August 15 of each year. The initial interest payment on the notes was required to be paid in cash. For each interest period after the initial interest period (other than for the final interest period ending at the stated maturity, which will be paid in cash), DPC will, in certain ~~conditions~~circumstances, be permitted to pay ~~cash~~interest ~~dividends~~on tothe ~~DPC~~notes upby toincreasing athe ~~maximum~~principal amount of ~~$35~~the notes or issuing new notes (collectively, “PIK interest”). Cash interest on the notes accrues at the rate of 12.25% per annum. PIK interest on the notes accrues at the rate of 13.00% per annum until the next payment of cash interest. The August ~~million~~2014 interest payment was paid 25% in acash ~~four-quarter period~~and on75% aPIK ~~rolling~~interest. ~~basis~~The February and August 2015 interest payments were paid entirely as PIK interest. DPC is a holding company that owns no material assets other than stock of Venoco; ~~paid~~accordingly, it will be able to pay cash interest on its notes only to the extent that it receives cash dividends or distributions from Venoco. The notes are not currently guaranteed by any of $3DPC’s subsidiaries.9 DPC may redeem all or any part of the notes on and after August ~~million~~15, 2015 at a redemption price of 106.125% of the principal amount and declining to ~~DPC~~100% inby ~~February~~August 15, ~~2014~~2017. The notes are senior unsecured obligations and contain operational covenants that, among other things, limit the Company’s ability to make investments, incur additional indebtedness, issue preferred stock, pay dividends, repurchase stock, create liens or sell assets.

Venoco 8.875% Senior Notes. In February 2011, Venoco issued $500 million in 8.875% senior notes due in February 2019 at par. The notes pay interest semi-annually in arrears on February 15 and August 15 of each year. Venoco may redeem the notes prior to February 15, 2015 at a "make whole premium" defined in the indenture. Beginning February 15, 2015, Venoco may redeem the notes at a redemption price of 104.438% of the principal amount and declining to 100% by February 15, 2017. The notes are senior unsecured obligations and contain operational covenants that, among other things, limit Venoco's ability to make investments, incur additional indebtedness, issue preferred stock, pay dividends, repurchase its stock, create liens or sell assets. 11

DPC 12.25% / 13.00% Senior PIK Toggle Notes. In August 2013, DPC issued $255 million principal amount of 12.25% / 13.00% senior PIK toggle notes due August 2018 at 97.304% of par. Interest on the notes is payable on February 15 and August 15 of each year, commencing February 15,

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~~VENOCO~~The Company accounted for the April 2015 debt exchange as a debt extinguishment because the present value of the cash flows second lien notes were at least 10% different from the present value of the remaining cash flows under the terms of the original 8.875% Venoco notes. The Company recognized a gain of $68 million on the exchange, ~~INC~~ which is net of the write off of $4.5 ~~AND~~million ~~SUBSIDIARIES~~associated ~~AND~~with ~~DENVER~~debt ~~PARENT CORPORATION~~issuances ~~AND~~costs ~~SUBSIDIARIES~~related to the Revolver and the Venoco 8.875% notes. The gain is composed of $43.7 million related to the extinguishment plus an additional $28 million due to the difference between the carrying value and the fair value of the second lien notes on the date of the exchange. The $28 million was accounted for as a discount on the second lien note and will be amortized over the life of the debt through interest expense. The gain is recorded in ‘Loss (gain) on extinguishment of debt’ in the condensed consolidate statements of operations (unaudited).

The ~~NOTES~~Company TOwas ~~CONDENSED~~in ~~CONSOLIDATED~~compliance ~~FINANCIAL~~with ~~STATEMENTS~~all ~~(Continued)~~debt covenants at June 30, 2015.

(UNAUDITED)

2. DEBT (Continued)

2014. The initial interest payment on the notes was required to be paid in cash. For each interest period after the initial interest period (other than for the final interest period ending at the stated maturity, which will be paid in cash), DPC will, in certain circumstances, be permitted to pay interest on the notes by increasing the principal amount of the notes or issuing new notes (collectively, "PIK interest"). Cash interest on the notes accrues at the rate of 12.25% per annum. PIK interest on the notes accrues at the rate of 13.00% per annum until the next payment of cash interest. The August 2014 interest payment was paid 25% in cash and 75% PIK interest, and the February 2015 interest payment was paid entirely as PIK interest. DPC is a holding company that owns no material assets other than stock of Venoco; accordingly, it will be able to pay cash interest on its notes only to the extent that it receives cash dividends or distributions from Venoco. The notes are not currently guaranteed by any of DPC's subsidiaries. DPC may redeem the notes, in whole or in part, at any time prior to August 15, 2015, at a "make-whole" redemption price described in the indenture. DPC may also redeem all or any part of the notes on and after August 15, 2015 at a redemption price of 106.125% of the principal amount and declining to 100% by August 15, 2017. The notes are senior unsecured obligations and contain operational covenants that, among other things, limit our ability to make investments, incur additional indebtedness, issue preferred stock, pay dividends, repurchase stock, create liens or sell assets.

The Company was in compliance with all debt covenants at March 31, 2015.

3. HEDGING AND DERIVATIVE FINANCIAL INSTRUMENTS

Commodity Derivative Agreements. The Company utilizes swap and collar agreements and option contracts in an effort to hedge the effect of commodity price changes on its cash flows. The objective of the Company'’s hedging activities and the use of derivative financial instruments is to achieve more predictable cash flows. While the use of these derivative instruments limits the downside risk of adverse price movements, they also may limit future cash flows from favorable price movements. The Company may, from time to time, opportunistically restructure existing derivative contracts or enter into new transactions to effectively modify the terms of current contracts in order to improve the pricing parameters in existing contracts or realize the current value of the Company'’s existing positions. The Company may use the proceeds from such transactions to secure additional contracts for periods in which the Company believes it has additional unmitigated commodity price risk or for other corporate purposes.

The use of derivatives involves the risk that the counterparties to such instruments will be unable to meet the financial terms of such contracts. The Company generally has netting arrangements with the counterparties that provide for the offset of payables against receivables from separate derivative arrangements with that counterparty in the event of contract termination. The derivative contracts may be terminated by a non-defaulting party in the event of default by one of the parties to the agreement.

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VENOCO, INC. AND SUBSIDIARIES AND DENVER PARENT CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

3. HEDGING AND DERIVATIVE FINANCIAL INSTRUMENTS (Continued)

The components of commodity derivative losses (gains) in the condensed consolidated statements of operations are as follows (in thousands):

	Three Months Ended March 31,
	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2015			2014		2015
Realized commodity derivative losses (gains)	$	34,~~525~~530		$	(1426,~~865~~312	)	$	8,055	$	(40,262	)
Unrealized commodity derivative losses (gains) for changes in fair value	14,380	~~(5,620~~	)	36,017	~~1,960~~		8,760		37,062

Commodity derivative losses (gains), net	$	18,910		$	9,705		$	16,815	$	(3,200	)
Commodity derivative losses (gains), net	$	(2,095	)	$	(12,905	)

As of ~~March~~June 3130, 2015, the Company had entered into certain swap, ~~collar~~ and ~~put~~collar agreements related to its oil production. The aggregate economic effects of those agreements are summarized below. Location and quality differentials attributable to the Company'’s properties are not included in the following prices. The agreements provide for monthly settlement based on the differential between the agreement price and the price per the applicable index, Inter-Continental Exchange Brent ("“Brent"”).

	Oil (Brent)
	Barrels/day		Weighted Avg. Prices per Bbl	~~Weighted Avg. Prices per Bbl~~
January 1 - December 31, 2015:
Swaps	460	~~460~~	$	$100.40	~~100.40~~
Collars	4,135	~~4,135~~	$	90.00/$100.00	~~90.00/$100.00~~
January 1 - December 31, 2016:
Swap	1,715	~~1,715~~	$	$96.00	~~96.00~~
Collars		1,715		$	90.00/$101.75

~~Fair~~In ~~Value~~connection ofwith ~~Derivative~~the ~~Instruments. The~~debt ~~estimated~~transaction ~~fair~~that ~~values~~occured ofin ~~derivatives~~April ~~included~~2015 in the ~~condensed~~Company ~~consolidated~~unwound ~~balance~~its ~~sheets~~2016 ~~at March 31,~~derivative ~~2015~~contract ~~and~~with ~~December 31,~~ABN ~~2014~~AMRO ~~are~~which ~~summarized~~hedged ~~below.~~1,715 ~~The~~bbls ~~net fair value~~ of ~~the~~its ~~Company's~~2016 ~~derivatives~~oil ~~decreased by $2~~production.~~0 million~~ ~~from~~As a ~~net~~result ~~asset~~we ofreceived $7815.~~1 million~~6 ~~at December 31, 2014 to a net asset of $76.1~~ million ~~at March 31, 2015, primarily due to (i) changes~~ in ~~the~~proceeds ~~futures prices for oil,~~ which ~~are~~contributed ~~used in the calculation of the fair value of commodity derivatives, (ii) settlement of commodity derivative positions during the current period and (iii) changes~~ to the ~~Company's~~realized ~~commodity~~gain derivative portfolio in 2015. The Company does not offset asset and liability positions with the same counterparties within the financial statements; rather, all contracts are presented at their gross estimated fair value. As of ~~the dates indicated, the Company's derivative assets and liabilities are presented below (in thousands)~~$40.3 ~~These balances represent the estimated fair value of the contracts~~million. ~~The Company has not designated any of its derivative contracts as~~

15Fair Value of Derivative Instruments. The estimated fair values of derivatives included in the condensed consolidated balance sheets at June 30, 2015 and December 31, 2014 are summarized below. The net fair value of the Company’s derivatives decreased by $38.9 million from a net asset of $78.1 million at December 31, 2014 to a net asset of $39.2 million at June 30, 2015, primarily due to (i) changes in the futures prices for oil, which are used in the calculation of the fair value of commodity derivatives, (ii) settlement of commodity derivative positions during the current period and (iii) changes to the Company’s commodity derivative portfolio in 2015. The Company does not offset asset and liability positions with the same counterparties within the financial statements; rather, all contracts are presented at their gross estimated fair value. As of the dates indicated, the Company’s derivative assets and liabilities are presented below (in thousands). These balances represent the estimated fair value of the contracts. The

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~~VENOCO, INC~~Company has not designated any of its derivative contracts as cash-flow hedging instruments for accounting purposes. ~~AND~~The ~~SUBSIDIARIES~~main ~~AND~~headings ~~DENVER~~represent ~~PARENT CORPORATION~~the ~~AND~~balance ~~SUBSIDIARIES~~sheet captions for the contracts presented (in thousands).

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

	December 31, 2014		June 30, 2015
Current Assets—Commodity derivatives:
Oil derivative contracts	$	48,298	$	30,545
Noncurrent Assets—Commodity derivatives:
Oil derivative contracts	29,793		8,653
Net derivative asset (liability)	$	78,091	$	39,198

(UNAUDITED)

3. HEDGING AND DERIVATIVE FINANCIAL INSTRUMENTS (Continued)

cash-flow hedging instruments for accounting purposes. The main headings represent the balance sheet captions for the contracts presented (in thousands).

	December 31, 2014		March 31, 2015
Current Assets—Commodity derivatives:
Oil derivative contracts	$	48,298	$	49,484
Noncurrent Assets—Commodity derivatives:
Oil derivative contracts		29,793		26,647

Net derivative asset (liability)		78,091	$	76,131

4. ASSET RETIREMENT OBLIGATIONS

The following table summarizes the activities for the Company'’s asset retirement obligations for the ~~three~~six months ended ~~March~~June 3130, 2014 and 2015 (in thousands):

	Three Months Ended March 31,
	Six Months Ended June 30,
	2014			2015
Asset retirement obligations at beginning of period	$	38,182		$	30,851
Revisions of estimated liabilities	(594	~~(594~~	)	1,788	—
Liabilities incurred or acquired	221	72		—	—
Accretion expense		667			497
Liabilities settled	(599		)	—

Accretion expense	1,223			1,011
Asset retirement obligations at end of period	38,433	~~38,327~~		33,650	~~31,348~~
Less: current asset retirement obligations (classified with accounts payable and accrued liabilities)	(700	~~(700~~	)	(500	~~(500~~	)

Long-term asset retirement obligations	$	37,733		$	33,150
Long-term asset retirement obligations	$	37,627		$	30,848

Discount rates used to calculate the present value vary depending on the estimated timing of the obligation, but typically range between 4% and 9%. ~~During the fourth quarter of 2014, the liabilities settled or disposed of $9.4 million for 2014 primarily relate to the Montalvo asset sale.~~

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VENOCO, INC. AND SUBSIDIARIES AND DENVER PARENT CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

5. SHARE-BASED PAYMENTS

The Company has granted cash settlement or liability awards to officers, directors and certain employees of the Company including rights-to-receive awards (RTR), restricted share unit awards (RSUs), share appreciation rights (SARs) and ESOP restricted share units. The Company measures its liability awards based on the award'’s fair value remeasured at each reporting date until the date of settlement. Compensation cost for each period until settlement is based on the change (or a portion of the change, depending on the percentage of the requisite service that has been rendered at the reporting date). Changes in the fair value of a liability that occur after the end of the requisite service period are compensation cost ofin the period in which the changes occur. Any difference between the amount for which a liability award is settled and its fair value at the settlement date is an adjustment of compensation cost in the period of settlement.

6. FAIR VALUE MEASUREMENTS

Fair value is defined as the price that would be received in the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. The Company classifies fair value balances based on the observability of those inputs. The FASB has established a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurement).

The three levels of the fair value hierarchy are as follows:

Level 1—Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2—Pricing inputs are other than quoted prices in active markets included in level 1, but are either directly or indirectly observable as of the reported date and for substantially the full term of the instrument. Inputs may include quoted ~~prices for similar assets and liabilities. Level 2 includes those financial instruments that are valued using models or other valuation methodologies.~~

Level 3—Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management's best estimate of fair value. 13

~~Financial assets~~Table ~~and liabilities are classified in their entirety based on the lowest level~~ of input that is significant to the fair value measurement. The Company's assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of fair value of assets and liabilities and their placement within the fair value hierarchy levels. The following Contents

prices for similar assets and liabilities. Level 2 includes those financial instruments that are valued using models or other valuation methodologies.

Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of fair value of assets and liabilities and their placement within the fair value hierarchy levels. The following table sets forth by level within the fair value hierarchy the Company’s financial assets and liabilities that were accounted for at fair value as of June 30, 2015 (in thousands).

	Level 1	Level 2	Level 3		Fair Value
Assets (Liabilities):
Commodity derivative contracts	—	39,198	—		39,198
Share-based compensation	—	—	(295	)	(295	)

Derivative instruments. The Company’s commodity derivative instruments consist primarily of swaps and collars for oil and natural gas. The Company values the derivative contracts using industry standard models, based on an income approach, which considers various assumptions including quoted forward prices and contractual prices for the underlying commodities, time value and volatility factors, as well as other relevant economic measures. Substantially all of the assumptions can be observed throughout the full term of the contracts, can be derived from observable data or are supportable by observable levels at which transactions are executed in the marketplace and are therefore designated as level 2 within the fair value hierarchy. The discount rates used in the assumptions include a component of non-performance risk. The Company utilizes the relevant counterparty valuations to assess the reasonableness of the calculated fair values.

Share-based compensation. The Company’s current share-based compensation liability includes a liability for restricted share unit awards (RSUs), share appreciation rights (SARs) and employee stock ownership plan unit awards (ESOP). The fair value of DPC common stock is a significant input for determining the share-based compensation amounts and the liability amounts for these cash settled awards. DPC is a privately held entity for which there is no available market price or principal market for DPC common shares. Inputs for determining the fair market value of this instrument are unobservable and are therefore classified as Level 3 inputs. The Company utilizes various valuation methods for determining the fair market value of this instrument including a net asset value approach, a comparable company approach, a discounted cash flow approach and a transaction approach. The Company’s estimate of the value of DPC shares is highly dependent on commodity prices, cost assumptions, discount rates, oil and natural gas proved reserves, overall market conditions and the identification of companies and transactions that are comparable to the Company’s operations and reserve characteristics. While some inputs to the Company’s calculation of fair value of DPC shares are from published sources, others, such as reserve values, the discount rate and expected future cash flows, are derived from the Company’s own calculations and estimates. Significant changes in the unobservable inputs, summarized above, could result in a significantly different fair value estimate.

The grant date fair value of each SAR is estimated using the Black-Scholes valuation model. The fair market value of DPC common shares is a significant input into the Black-Scholes valuation model. Valuation models require the input of highly subjective assumptions, including the expected volatility of the price of the underlying stock. DPC shares have characteristics significantly different from those of traded shares, and because changes in the subjective input assumptions can materially affect the fair value estimate, it is management’s opinion that the valuations afforded by existing models are different from the value that the shares would realize if traded in the market.

The following table summarizes the changes in fair value of financial assets (liabilities), which represent primarily share-based compensation liabilities, designated as Level 3 in the valuation hierarchy (in thousands):

	Six Months Ended June 30,
	2014			2015
Fair value liability, beginning of period	$	(20,928	)	$	(1,038	)
Transfers into Level 3(1)	(4,235		)	(251		)
Transfers out of Level 3(2)	5,162			489
Change in fair value of Level 3	445			505
Fair value liability, end of period	$	(19,556	)	$	(295	)

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(1) The transfers into Level 3 liability during the first half of 2015 and 2014 relate to RSU, SAR and ESOP grants made by the Company to officers, directors and certain employees, and requisite service period expense.

(2) The transfers out of Level 3 liability during the first half of 2015 and 2014 relate to cash settlements of RSU grants, and forfeitures of RSU, SAR and ESOP grants as a result of employee terminations.

Fair Value of Financial Instruments. The Company’s financial instruments consist primarily of cash and cash equivalents, accounts receivable and payable, derivatives (discussed above) and long-term debt. The carrying values of cash equivalents and accounts receivable and payable are representative of their fair values due to their short-term maturities. The carrying amount of Venoco’s revolving credit facility (which was paid off in April 2015) and the term loan facility approximated fair value because the interest rate of the facilities is variable. The fair value of the Venoco senior notes and the DPC PIK toggle notes listed in the table below was derived from available market data (Level 1). We used available market data and valuation techniques (Level 2) to estimate the fair value of the Venoco first lien and second lien notes. This disclosure does not impact our financial position, results of operations or cash flows (in thousands).

	December 31, 2014				June 30, 2015
	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Venoco:
Revolving credit agreement	$	65,000	$	65,000	$	—	$	—
8.875% senior notes	500,000		262,000		308,222		95,583
First lien secured note	—		—		175,000		153,132
Second lien secured note	—		—		127,875		98,871
Term loan facility	—		—		74,250		74,250
Denver Parent Corporation:
12.25% / 13.00% senior PIK toggle notes	275,065		120,369		294,001		27,195

Assets and Liabilities Measured on a Non-recurring Basis. The Company uses fair value to determine the value of its asset retirement obligations (“ARO”). The inputs used to determine such fair value under the expected present value technique are primarily based upon internal estimates prepared by reservoir engineers for costs of dismantlement, removal, site reclamation and similar activities associated with the Company’s oil and gas properties and would be classified as Level 3 inputs.

7. CONTINGENCIES

In the ordinary course of our business we are named from time to time as a defendant in various legal proceedings. We maintain liability insurance and believe that our coverage is reasonable in view of the legal risks to which our business is subject.

Delaware Litigation—In August 2011 Timothy Marquez, the then-Chairman and CEO of Venoco, submitted a nonbinding proposal to the board of directors of Venoco to acquire all of the shares of Venoco he did not beneficially own for $12.50 per share in cash (the “Marquez Proposal”). As a result of that proposal, five lawsuits were filed in the Delaware Court of Chancery in 2011 against Venoco and each of its directors by shareholders alleging that Venoco and its directors had breached their fiduciary duties to the shareholders in connection with the Marquez Proposal. On January 16, 2012, Venoco entered into a Merger Agreement with Mr. Marquez and certain of his affiliates pursuant to which Venoco, Mr. Marquez and his affiliates would effect the going private transaction. Following announcement of the Merger Agreement, five additional suits were filed in Delaware and three suits were filed in federal court in Colorado naming as defendants Venoco and each of its directors. In March 2013 the plaintiffs in Delaware filed a consolidated amended class action complaint in which they requested that the court determine among other things that (i) the merger consideration is inadequate and the Merger Agreement was entered into in breach of the fiduciary duties of the defendants and is therefore unlawful and unenforceable and (ii) the merger should be rescinded or in the alternative, the class should be awarded damages to compensate them for the loss resulting from the breach of fiduciary duties by the defendants. The Colorado actions have been administratively closed pending resolution of the Delaware case. Venoco has reviewed the allegations contained in the amended complaint and believes they are without merit. Trial is expected to occur in 2016.

Denbury Arbitration—In January 2013 Venoco and its wholly owned subsidiary, TexCal Energy South Texas, L.P. (“TexCal”), notified Denbury Resources, Inc. through its subsidiary Denbury Onshore, LLC (“Denbury”) that it was invoking the arbitration provisions contained in contracts between TexCal and Denbury pursuant to which TexCal conveyed its interest in the Hastings Complex to Denbury and retained a reversionary interest. Denbury is obligated to convey the reversionary interest to TexCal at “payout” as defined in the contracts. The dispute involves the calculation of the cost of CO2 delivered to the Hastings Complex which is used in Denbury’s enhanced oil recovery operations. The Company believes that Denbury has materially overcharged the payout account for the cost of CO2 and the cost of transporting it to the Hastings Complex. In December 2013, the three judge arbitration panel unanimously agreed with Venoco’s position. In January 2014 Denbury requested that the arbitration panel modify its decision in a way

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that could increase the cost of CO2. In March 2014 the Arbitration Panel modified its original award consistent with the Company’s position and awarded the Company approximately $1.8 million in attorneys’ fees and costs incurred in the arbitration. In late March 2014 Denbury appealed the arbitration ruling to the District Court for Harris County, Texas asking the court to vacate the arbitration award. On February 11, 2015 the District Court granted Venoco’s motion to confirm the arbitration award. In March 2015, Denbury filed a motion for a new trial with the District Court which was denied. Denbury appealed the case to the Texas Court of Appeals in May 2015.

Other—In addition, Venoco is a party from time to time to other claims and legal actions that arise in the ordinary course of business. Venoco believes that the ultimate impact, if any, of these other claims and legal actions will not have a material effect on its consolidated financial position, results of operations or liquidity.

8. RELATED PARTY TRANSACTIONS

The Company has entered into a non-exclusive aircraft sublease agreement with TimBer, LLC, a company owned by Mr. Marquez and his wife. The Company incurred costs related to the agreement of $0.3 million and $0.4 million in the first half of 2014 and 2015, respectively.

On April 27, 2015, Mr. Marquez entered into an amendment to his existing employment agreement pursuant to which he received $1.5 million in recognition of his leadership in completing the recent debt restructuring transaction.

9. GUARANTOR FINANCIAL INFORMATION

All subsidiaries of Venoco other than Ellwood Pipeline Inc. (“Guarantors”) have fully and unconditionally guaranteed, on a joint and several basis, Venoco’s obligations under its 8.875% senior notes. Ellwood Pipeline, Inc. is not a Guarantor (the “Non-Guarantor Subsidiary”). The condensed consolidating financial information for prior periods has been revised to reflect the guarantor and non-guarantor status of the Company’s subsidiaries as of June 30, 2015. All Guarantors are 100% owned by Venoco. Presented below are Venoco’s condensed consolidating balance sheets, statements of operations and statements of cash flows as required by Rule 3-10 of Regulation S-X of the Securities Exchange Act of 1934. There are currently no guarantors of DPC’s 12.25%/13.00% senior PIK toggle notes.

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CONDENSED CONSOLIDATING BALANCE SHEETS

AT DECEMBER 31, 2014 (Unaudited)

(in thousands)

	Venoco, Inc.			Guarantor Subsidiaries			Non- Guarantor Subsidiary			Eliminations			Consolidated
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	15,455		$	—		$	—		$	—		$	15,455
Accounts receivable	14,140			56			716			—			14,912
Inventories	3,370			—			—			—			3,370
Other current assets	4,715			—			—			—			4,715
Commodity derivatives	48,298			—			—			—			48,298
TOTAL CURRENT ASSETS	85,978			56			716			—			86,750
PROPERTY, PLANT & EQUIPMENT, NET	654,549			(184,362		)	18,327			—			488,514
COMMODITY DERIVATIVES	29,793			—			—			—			29,793
INVESTMENTS IN AFFILIATES	563,401			—			—			(563,401		)	—
OTHER	11,138			59			—			—			11,197
TOTAL ASSETS	1,344,859			(184,247		)	19,043			(563,401		)	616,254
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities	20,535			—			—			—			20,535
Interest payable	17,329			—			—			—			17,329
Commodity derivatives	—			—			—			—			—
Share-based compensation	2,236			—			—			—			2,236
TOTAL CURRENT LIABILITIES:	40,100			—			—			—			40,100
LONG-TERM DEBT	565,000			—			—			—			565,000
COMMODITY DERIVATIVES	—			—			—			—			—
ASSET RETIREMENT OBLIGATIONS	27,906			1,652			793			—			30,351
SHARE-BASED COMPENSATION	648			—			—			—			648
INTERCOMPANY PAYABLES (RECEIVABLES)	735,845			(655,326		)	(80,555		)	36			—
TOTAL LIABILITIES	1,369,499			(653,674		)	(79,762		)	36			636,099
TOTAL STOCKHOLDERS’ EQUITY(DEFICIT)	(24,640		)	469,427			98,805			(563,437		)	(19,845		)
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY(DEFICIT)	$	1,344,859		$	(184,247	)	$	19,043		$	(563,401	)	$	616,254

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~~VENOCO, INC.~~CONDENSED ~~AND~~CONSOLIDATING ~~SUBSIDIARIES~~BALANCE ~~AND DENVER PARENT CORPORATION AND SUBSIDIARIES~~ SHEETS

AT ~~NOTES~~JUNE TO30, ~~CONDENSED~~2015 ~~CONSOLIDATED FINANCIAL STATEMENTS~~ (~~Continued~~Unaudited)

(~~UNAUDITED)~~in thousands)

6. FAIR VALUE MEASUREMENTS (Continued)

	Venoco, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiary			Eliminations			Consolidated
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	114,009		$	—		$	—		$	—		$	114,009
Restricted funds	79,595			—			—			—			79,595
Accounts receivable	8,550			56			433			—			9,039
Inventories	3,299			—			—			—			3,299
Prepaid expenses and other current assets	2,272			—			—			—			2,272
Commodity derivatives	30,545			—			—			—			30,545
TOTAL CURRENT ASSETS	238,270			56			433			—			238,759
PROPERTY, PLANT & EQUIPMENT, NET	501,391			(184,415		)	17,909			—			334,885
COMMODITY DERIVATIVES	8,653												8,653
INVESTMENTS IN AFFILIATES	563,401			—			—			(563,401		)	—
OTHER	16,532			60			—			—			16,592
TOTAL ASSETS	1,328,247			(184,299		)	18,342			(563,401		)	598,889
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities	15,019			—			—			—			15,019
Interest payable	15,926			—			—			—			15,926
Commodity derivatives	—			—			—			—			—
Share-based compensation	176			—			—			—			176
TOTAL CURRENT LIABILITIES:	31,121			—			—			—			31,121
LONG-TERM DEBT	685,346			—			—			—			685,346
COMMODITY DERIVATIVES	—			—			—			—			—
ASSET RETIREMENT OBLIGATIONS	30,679			1,669			802			—			33,150
SHARE-BASED COMPENSATION	235			—			—			—			235
INTERCOMPANY PAYABLES (RECEIVABLES)	742,315			(655,544		)	(86,807		)	36			—
TOTAL LIABILITIES	1,489,696			(653,875		)	(86,005		)	36			749,852
TOTAL STOCKHOLDERS’ EQUITY	(161,449		)	469,576			104,347			(563,437		)	(150,963		)
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,328,247		$	(184,299	)	$	18,342		$	(563,401	)	$	598,889

table sets forth by level within the fair value hierarchy the Company's financial assets and liabilities that were accounted for at fair value as of March 31, 2015 (in thousands).


Assets (Liabilities):
Commodity derivative contracts	—	76,131	—		76,131
Share-based compensation	—	—	(1,209	)	(1,209	)

Derivative instruments. The Company's commodity derivative instruments consist primarily of swaps and collars for oil and natural gas. The Company values the derivative contracts using industry standard models, based on an income approach, which considers various assumptions including quoted forward prices and contractual prices for the underlying commodities, time value and volatility factors, as well as other relevant economic measures. Substantially all of the assumptions can be observed throughout the full term of the contracts, can be derived from observable data or are supportable by observable levels at which transactions are executed in the marketplace and are therefore designated as level 2 within the fair value hierarchy. The discount rates used in the assumptions include a component of non-performance risk. The Company utilizes the relevant counterparty valuations to assess the reasonableness of the calculated fair values.

Share-based compensation. The Company's current share-based compensation liability includes a liability for restricted share unit awards (RSUs), share appreciation rights (SARs) and employee stock ownership plan unit awards (ESOP). The fair value of DPC common stock is a significant input for determining the share-based compensation amounts and the liability amounts for these cash settled awards. DPC is a privately held entity for which there is no available market price or principal market for DPC common shares. Inputs for determining the fair market value of this instrument are unobservable and are therefore classified as Level 3 inputs. The Company utilizes various valuation methods for determining the fair market value of this instrument including a net asset value approach, a comparable company approach, a discounted cash flow approach and a transaction approach. The Company's estimate of the value of DPC shares is highly dependent on commodity prices, cost assumptions, discount rates, oil and natural gas proved reserves, overall market conditions and the identification of companies and transactions that are comparable to the Company's operations and reserve characteristics. While some inputs to the Company's calculation of fair value of DPC shares are from published sources, others, such as reserve values, the discount rate and expected future cash flows, are derived from the Company's own calculations and estimates. Significant changes in the unobservable inputs, summarized above, could result in a significantly different fair value estimate.

The grant date fair value of each SAR is estimated using the Black-Scholes valuation model. The fair market value of DPC common shares is a significant input into the Black-Scholes valuation model. Valuation models require the input of highly subjective assumptions, including the expected volatility of the price of the underlying stock. DPC shares have characteristics significantly different from those of traded shares, and because changes in the subjective input assumptions can materially affect the fair value estimate, it is management's opinion that the valuations afforded by existing models are different from the value that the shares would realize if traded in the market.

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~~VENOCO, INC.~~CONDENSED ~~AND~~CONSOLIDATING ~~SUBSIDIARIES~~STATEMENTS ~~AND~~OF ~~DENVER PARENT CORPORATION AND SUBSIDIARIES~~ OPERATIONS

THREE ~~NOTES~~MONTHS TOENDED ~~CONDENSED~~JUNE ~~CONSOLIDATED~~30, ~~FINANCIAL~~2014 ~~STATEMENTS~~ (~~Continued~~Unaudited)

(~~UNAUDITED)~~in thousands)

6. FAIR VALUE MEASUREMENTS (Continued)

	Venoco, Inc.			Guarantor Subsidiaries		Non-Guarantor Subsidiary			Eliminations			Consolidated
REVENUES:
Oil and natural gas sales	$	66,247		$	316	$	—		$	—		$	66,563
Other	125			—		1,882			(1,531		)	476
Total revenues	66,372			316		1,882			(1,531		)	67,039
EXPENSES:
Lease operating expense	17,240			12		933			—			18,185
Production and property taxes	2,231			15		24			—			2,270
Transportation expense	1,482			3		—			(1,436		)	49
Depletion, depreciation and amortization	11,561			26		207			—			11,794
Impairment of oil and gas properties	817			—		—			—			817
Accretion of asset retirement obligations	515			31		10			—			556
General and administrative, net of amounts capitalized	8,948			1		136			(95		)	8,990
Total expenses	42,794			88		1,310			(1,531		)	42,661
Income (loss) from operations	23,578			228		572			—			24,378
FINANCING COSTS AND OTHER:
Interest expense, net	14,836			—		(1,485		)	—			13,351
Amortization of deferred loan costs	863			—		—			—			863
Commodity derivative losses (gains), net	18,910			—		—			—			18,910
Total financing costs and other	34,609			—		(1,485		)	—			33,124
Equity in subsidiary income	1,417			—		—			(1,417		)	—
Income (loss) before income taxes	(9,614		)	228		2,057			(1,417		)	(8,746		)
Income tax provision (benefit)	(868		)	86		782			—			—
Net income (loss)	$	(8,746	)	$	142	$	1,275		$	(1,417	)	$	(8,746	)

	Three Months Ended March 31,
	2014			2015
Fair value liability, beginning of period	$	(20,928	)	$	(1,038	)
Transfers into Level 3(1)		(2,249	)		(181	)
Transfers out of Level 3(2)		242			10
Change in fair value of Level 3		(5	)		—

Fair value liability, end of period	$	(22,940	)	$	(1,209	)

Fair Value of Financial Instruments. The Company's financial instruments consist primarily of cash and cash equivalents, accounts receivable and payable, derivatives (discussed above) and long-term debt. The carrying values of cash equivalents and accounts receivable and payable are representative of their fair values due to their short-term maturities. The carrying amount of Venoco's revolving credit facility approximated fair value because the interest rate of the facility was variable. The fair value of the Venoco senior notes listed in the table below was derived from available market data (Level 1). We used available market data and valuation techniques (Level 2) to estimate the fair value of the DPC PIK toggle notes. This disclosure does not impact our financial position, results of operations or cash flows (in thousands).

	December 31, 2014				March 31, 2015
	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Venoco:
Revolving credit agreement	$	65,000	$	65,000	$	71,400	$	71,400
8.875% senior notes		500,000		262,000		500,000		255,000
Denver Parent Corporation:
12.25% / 13.00% senior PIK toggle notes		275,065		120,369		284,336		43,717

Assets and Liabilities Measured on a Non-recurring Basis. The Company uses fair value to determine the value of its asset retirement obligations ("ARO"). The inputs used to determine such fair value under the expected present value technique are primarily based upon internal estimates prepared by reservoir engineers for costs of dismantlement, removal, site reclamation and similar activities associated with the Company's oil and gas properties and would be classified Level 3 inputs.

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~~VENOCO, INC.~~CONDENSED ~~AND~~CONSOLIDATING ~~SUBSIDIARIES~~STATEMENTS ~~AND~~OF ~~DENVER PARENT CORPORATION AND SUBSIDIARIES~~ OPERATIONS

THREE ~~NOTES~~MONTHS TOENDED ~~CONDENSED~~JUNE ~~CONSOLIDATED~~30, ~~FINANCIAL~~2015 ~~STATEMENTS~~ (~~Continued~~Unaudited)

(~~UNAUDITED~~in thousands)

7. CONTINGENCIES

	Venoco, Inc.			Guarantor Subsidiaries		Non-Guarantor Subsidiary			Eliminations			Consolidated
REVENUES:
Oil and natural gas sales	$	19,151		$	166	$	—		$	—		$	19,317
Other	127			—		1,949			(1,523		)	553
Total revenues	19,278			166		1,949			(1,523		)	19,870
EXPENSES:
Lease operating expense	12,536			16		654			—			13,206
Production and property taxes	1,956			1		70			—			2,027
Transportation expense	1,461			9		—			(1,424		)	46
Depletion, depreciation and amortization	6,999			26		209			—			7,234
Impairment of oil and gas properties	146,030			—		—			—			146,030
Accretion of asset retirement obligations	474			35		5			—			514
General and administrative, net of amounts capitalized	7,000			—		136			(99		)	7,037
Total expenses	176,456			87		1,074			(1,523		)	176,094
Income (loss) from operations	(157,178		)	79		875			—			(156,224		)
FINANCING COSTS AND OTHER:
Interest expense, net	21,622			—		(1,696		)	—			19,926
Amortization of deferred loan costs	1,480			—		—			—			1,480
Loss (gain) on extinguisment of debt	(67,515		)	—		—			—			(67,515		)
Commodity derivative losses (gains), net	9,705			—		—			—			9,705
Total financing costs and other	(34,708		)	—		(1,696		)	—			(36,404		)
Equity in subsidiary income	1,644			—		—			(1,644		)	—
Income (loss) before income taxes	(120,826		)	79		2,571			(1,644		)	(119,820		)
Income tax provision (benefit)	(1,007		)	30		977			—			—
Net income (loss)	$	(119,819	)	$	49	$	1,594		$	(1,644	)	$	(119,820	)

Delaware Litigation—In August 2011 Timothy Marquez, the then-Chairman and CEO of Venoco, submitted a nonbinding proposal to the board of directors of Venoco to acquire all of the shares of Venoco he did not beneficially own for $12.50 per share in cash (the "Marquez Proposal"). As a result of that proposal, five lawsuits were filed in the Delaware Court of Chancery in 2011 against Venoco and each of its directors by shareholders alleging that Venoco and its directors had breached their fiduciary duties to the shareholders in connection with the Marquez Proposal. On January 16, 2012, Venoco entered into a Merger Agreement with Mr. Marquez and certain of his affiliates pursuant to which Venoco, Mr. Marquez and his affiliates would effect the going private transaction. Following announcement of the Merger Agreement, five additional suits were filed in Delaware and three suits were filed in federal court in Colorado naming as defendants Venoco and each of its directors. In March 2013 the plaintiffs in Delaware filed a consolidated amended class action complaint in which they requested that the court determine among other things that (i) the merger consideration is inadequate and the Merger Agreement was entered into in breach of the fiduciary duties of the defendants and is therefore unlawful and unenforceable and (ii) the merger should be rescinded or in the alternative, the class should be awarded damages to compensate them for the loss as a result of the breach of fiduciary duties by the defendants. The Colorado actions have been administratively closed pending resolution of the Delaware case. Venoco has reviewed the allegations contained in the amended complaint and believes they are without merit. Trial is expected to occur in 2015.

Denbury Arbitration—In January 2013 Venoco and its wholly owned subsidiary, TexCal Energy South Texas, L.P. ("TexCal"), notified Denbury Resources, Inc. through its subsidiary Denbury Onshore, LLC ("Denbury") that it was invoking the arbitration provisions contained in contracts between TexCal and Denbury pursuant to which TexCal conveyed its interest in the Hastings Complex to Denbury and retained a reversionary interest. Denbury is obligated to convey the reversionary interest to TexCal at "payout" as defined in the contracts. The dispute involves the calculation of the cost of CO2 delivered to the Hastings Complex which is used in Denbury's enhanced oil recovery operations. The Company believes that Denbury has materially overcharged the payout account for the cost of CO2 and the cost of transporting it to the Hastings Complex. In December 2013, the three judge arbitration panel unanimously agreed with Venoco's position. In January 2014 Denbury requested that the arbitration panel modify its decision in a way that could increase the cost of CO2. In March 2014 the Arbitration Panel modified its original award consistent with the Company's position and awarded the Company approximately $1.8 million in attorneys' fees and costs incurred in the arbitration. In late March 2014 Denbury appealed the arbitration ruling to the District Court for Harris County, Texas asking the court to vacate the arbitration award. On February 11, 2015 the District Court granted Venoco's motion to confirm the arbitration award. On March 12, 2015 Denbury filed a motion for a new trial with the District Court.

Other—In addition, Venoco is a party from time to time to other claims and legal actions that arise in the ordinary course of business. Venoco believes that the ultimate impact, if any, of these other

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~~VENOCO, INC.~~CONDENSED ~~AND~~CONSOLIDATING ~~SUBSIDIARIES~~STATEMENTS ~~AND~~OF ~~DENVER PARENT CORPORATION AND SUBSIDIARIES~~ OPERATIONS

SIX ~~NOTES~~MONTHS TOENDED ~~CONDENSED~~JUNE ~~CONSOLIDATED~~30, ~~FINANCIAL~~2014 ~~STATEMENTS~~ (~~Continued~~Unaudited)

(~~UNAUDITED)~~in thousands)

7. CONTINGENCIES (Continued)

	Venoco, Inc.			Guarantor Subsidiaries		Non-Guarantor Subsidiary			Eliminations			Consolidated
REVENUES:
Oil and natural gas sales	$	128,460		$	641	$	—		$	—		$	129,101
Other	240			—		3,700			(3,005		)	935
Total revenues	128,700			641		3,700			(3,005		)	130,036
EXPENSES:
Lease operating expense	36,020			30		1,603			—			37,653
Production and property taxes	3,967			15		24			—			4,006
Transportation expense	2,917			6		—			(2,817		)	106
Depletion, depreciation and amortization	22,503			52		415			—			22,970
Impairment of oil and gas properties	817			—		—			—			817
Accretion of asset retirement obligations	1,140			62		21			—			1,223
General and administrative, net of amounts capitalized	17,579			1		260			(188		)	17,652
Total expenses	84,943			166		2,323			(3,005		)	84,427
Income (loss) from operations	43,757			475		1,377			—			45,609
FINANCING COSTS AND OTHER:
Interest expense, net	29,210			—		(2,919		)	—			26,291
Amortization of deferred loan costs	1,696			—		—			—			1,696
Commodity derivative losses (gains), net	16,815			—		—			—			16,815
Total financing costs and other	47,721			—		(2,919		)	—			44,802
Equity in subsidiary income	2,958			—		—			(2,958		)	—
Income (loss) before income taxes	(1,006		)	475		4,296			(2,958		)	807
Income tax provision (benefit)	(1,813		)	180		1,633			—			—
Net income (loss)	$	807		$	295	$	2,663		$	(2,958	)	$	807

claims and legal actions will not have a material effect on its consolidated financial position, results of operations or liquidity.

8. GUARANTOR FINANCIAL INFORMATION

All subsidiaries of Venoco other than Ellwood Pipeline Inc. ("Guarantors") have fully and unconditionally guaranteed, on a joint and several basis, Venoco's obligations under its 8.875% senior notes. Ellwood Pipeline, Inc. is not a Guarantor (the "Non-Guarantor Subsidiary"). The condensed consolidating financial information for prior periods has been revised to reflect the guarantor and non-guarantor status of the Company's subsidiaries as of March 31, 2015. All Guarantors are 100% owned by Venoco. Presented below are Venoco's condensed consolidating balance sheets, statements of operations and statements of cash flows as required by Rule 3-10 of Regulation S-X of the Securities Exchange Act of 1934. There are currently no guarantors of DPC's 12.25%/13.00% senior PIK toggle notes.

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~~VENOCO, INC.~~CONDENSED ~~AND~~CONSOLIDATING ~~SUBSIDIARIES~~STATEMENTS ~~AND~~OF ~~DENVER PARENT CORPORATION AND SUBSIDIARIES~~ OPERATIONS

SIX ~~NOTES~~MONTHS TOENDED ~~CONDENSED~~JUNE ~~CONSOLIDATED~~30, ~~FINANCIAL~~2015 ~~STATEMENTS~~ (~~Continued~~Unaudited)

(~~UNAUDITED~~in thousands)

8. GUARANTOR FINANCIAL INFORMATION (Continued)

	Venoco, Inc.			Guarantor Subsidiaries		Non-Guarantor Subsidiary			Eliminations			Consolidated
REVENUES:
Oil and natural gas sales	$	38,753		$	313	$	—		$	—		$	39,066
Other	248			—		4,447			(3,473		)	1,222
Total revenues	39,001			313		4,447			(3,473		)	40,288
EXPENSES:
Lease operating expense	26,613			27		1,498			—			28,138
Production and property taxes	4,088			1		70			—			4,159
Transportation expense	3,355			17		—			(3,279		)	93
Depletion, depreciation and amortization	15,585			52		418			—			16,055
Impairment of oil and gas properties	146,030			—		—			—			146,030
Accretion of asset retirement obligations	933			68		10			—			1,011
General and administrative, net of amounts capitalized	13,667			—		234			(194		)	13,707
Total expenses	210,271			165		2,230			(3,473		)	209,193
Income (loss) from operations	(171,270		)	148		2,217			—			(168,905		)
FINANCING COSTS AND OTHER:
Interest expense, net	34,662			—		(3,325		)	—			31,337
Amortization of deferred loan costs	2,087			—		—			—			2,087
Loss (gain) on extinguisment of debt	(67,515		)	—		—			—			(67,515		)
Commodity derivative losses (gains), net	(3,200		)	—		—			—			(3,200		)
Total financing costs and other	(33,966		)	—		(3,325		)	—			(37,291		)
Equity in subsidiary income	3,528			—		—			(3,528		)	—
Income (loss) before income taxes	(133,776		)	148		5,542			(3,528		)	(131,614		)
Income tax provision (benefit)	(2,162		)	56		2,106			—			—
Net income (loss)	$	(131,614	)	$	92	$	3,436		$	(3,528	)	$	(131,614	)

CONDENSED CONSOLIDATING BALANCE SHEETS AT DECEMBER 31, 2014 (Unaudited) (in thousands)

	Venoco, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiary			Eliminations			Consolidated
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	15,455		$	—		$	—		$	—		$	15,455
Accounts receivable		14,140			56			716			—			14,912
Inventories		3,370			—			—			—			3,370
Other current assets		4,715			—			—			—			4,715
Commodity derivatives		48,298			—			—			—			48,298

TOTAL CURRENT ASSETS		85,978			56			716			—			86,750

PROPERTY, PLANT & EQUIPMENT, NET		654,549			(184,362	)		18,327			—			488,514
COMMODITY DERIVATIVES		29,793			—			—			—			29,793
INVESTMENTS IN AFFILIATES		563,401			—			—			(563,401	)		—
OTHER		11,138			59			—			—			11,197

TOTAL ASSETS		1,344,859			(184,247	)		19,043			(563,401	)		616,254



LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities		20,535			—			—			—			20,535
Interest payable		17,329			—			—			—			17,329
Commodity derivatives		—			—			—			—			—
Share-based compensation		2,236			—			—			—			2,236

TOTAL CURRENT LIABILITIES:		40,100			—			—			—			40,100

LONG-TERM DEBT		565,000			—			—			—			565,000
COMMODITY DERIVATIVES		—			—			—			—			—
ASSET RETIREMENT OBLIGATIONS		27,906			1,652			793			—			30,351
SHARE-BASED COMPENSATION		648			—			—			—			648
INTERCOMPANY PAYABLES (RECEIVABLES)		735,845			(655,326	)		(80,555	)		36			—

TOTAL LIABILITIES		1,369,499			(653,674	)		(79,762	)		36			636,099

TOTAL STOCKHOLDERS' EQUITY(DEFICIT)		(24,640	)		469,427			98,805			(563,437	)		(19,845	)

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY(DEFICIT)	$	1,344,859		$	(184,247	)	$	19,043		$	(563,401	)	$	616,254

Table of Contents

~~VENOCO, INC.~~CONDENSED ~~AND~~CONSOLIDATING ~~SUBSIDIARIES~~STATEMENT ~~AND~~OF ~~DENVER~~CASH ~~PARENT CORPORATION AND SUBSIDIARIES~~ FLOWS

FOR ~~NOTES~~THE TOSIX ~~CONDENSED~~MONTHS ~~CONSOLIDATED~~ENDED ~~FINANCIAL~~JUNE ~~STATEMENTS~~30, 2014 (~~Continued~~Unaudited)

(~~UNAUDITED~~in thousands)

8. GUARANTOR FINANCIAL INFORMATION (Continued)

	Venoco, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiary			Eliminations		Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash provided by (used in) operating activities	$	25,727		$	617		$	4,513		$	—	$	30,857
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditures for oil and natural gas properties	(51,888		)	2			(160		)	—		(52,046		)
Acquisitions of oil and natural gas properties	(16		)	—			—			—		(16		)
Expenditures for property and equipment and other	(295		)	—			—			—		(295		)
Net cash provided by (used in) investing activities	(52,199		)	2			(160		)	—		(52,357		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from (repayments of) intercompany borrowings	4,972			(619		)	(4,353		)	—		—
Proceeds from long-term debt	132,000			—			—			—		132,000
Principal payments on long-term debt	(107,000		)	—			—			—		(107,000		)
Payments for deferred loan costs	(358		)	—			—			—		(358		)
Dividend paid to Denver Parent Corporation	(3,905		)	—			—			—		(3,905		)
Net cash provided by (used in) financing activities	25,709			(619		)	(4,353		)	—		20,737
Net increase (decrease) in cash and cash equivalents	(763		)	—			—			—		(763		)
Cash and cash equivalents, beginning of period	828			—			—			—		828
Cash and cash equivalents, end of period	$	65		$	—		$	—		$	—	$	65

CONDENSED CONSOLIDATING BALANCE SHEETS AT MARCH 31, 2015 (Unaudited) (in thousands)

	Venoco, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiary			Eliminations			Consolidated
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	7,921		$	—		$	—		$	—		$	7,921
Accounts receivable		11,059			51			1,197			—			12,307
Inventories		3,386			—			—			—			3,386
Prepaid expenses and other current assets		3,333			—			—			—			3,333
Commodity derivatives		49,484			—			—			—			49,484

TOTAL CURRENT ASSETS		75,183			51			1,197			—			76,431

PROPERTY, PLANT & EQUIPMENT, NET		648,194			(184,388	)		18,118			—			481,924
COMMODITY DERIVATIVES		26,647												26,647
INVESTMENTS IN AFFILIATES		563,401			—			—			(563,401	)		—
OTHER		10,985			59			—			—			11,044

TOTAL ASSETS		1,324,410			(184,278	)		19,315			(563,401	)		596,046



LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities		18,073			—			—			—			18,073
Interest payable		5,535			—			—			—			5,535
Commodity derivatives		—			—			—			—			—
Share-based compensation		602			—			—			—			602

TOTAL CURRENT LIABILITIES:		24,210			—			—			—			24,210

LONG-TERM DEBT		571,400			—			—			—			571,400
COMMODITY DERIVATIVES		—			—			—			—			—
ASSET RETIREMENT OBLIGATIONS		28,365			1,685			798			—			30,848
SHARE-BASED COMPENSATION		731			—			—			—			731
INTERCOMPANY PAYABLES (RECEIVABLES)		738,681			(655,458	)		(83,259	)		36			—

TOTAL LIABILITIES		1,363,387			(653,773	)		(82,461	)		36			627,189

TOTAL STOCKHOLDERS' EQUITY		(38,977	)		469,495			101,776			(563,437	)		(31,143	)

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	1,324,410		$	(184,278	)	$	19,315		$	(563,401	)	$	596,046

Table of Contents

~~VENOCO, INC.~~CONDENSED ~~AND~~CONSOLIDATING ~~SUBSIDIARIES~~STATEMENT ~~AND~~OF ~~DENVER~~CASH ~~PARENT CORPORATION AND SUBSIDIARIES~~ FLOWS

FOR ~~NOTES~~THE TOSIX ~~CONDENSED~~MONTHS ~~CONSOLIDATED~~ENDED ~~FINANCIAL~~JUNE ~~STATEMENTS~~30, 2015 (~~Continued~~Unaudited)

(~~UNAUDITED~~in thousands)

8. GUARANTOR FINANCIAL INFORMATION (Continued)

	Venoco, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiary			Eliminations		Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash provided by (used in) operating activities	$	4,671		$	268		$	6,253		$	—	$	11,192
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditures for oil and natural gas properties	(7,246		)	(50		)	—			—		(7,296		)
Acquisitions of oil and natural gas properties	(12		)	—			—			—		(12		)
Expenditures for property and equipment and other	(119		)	—			—			—		(119		)
Proceeds provided by sale of oil and gas properties	1,811			—			—			—		1,811
Net cash provided by (used in) investing activities	(5,566		)	(50		)	—			—		(5,616		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from (repayments of) intercompany borrowings	6,471			(218		)	(6,253		)	—		—
Proceeds from long-term debt	340,000			—			—			—		340,000
Principal payments on long-term debt	(155,000		)	—			—			—		(155,000		)
Debt issuances cost	(12,427		)	—			—			—		(12,427		)
Increase in restricted cash	(79,595		)	—			—			—		(79,595		)
Net cash provided by (used in) financing activities	99,449			(218		)	(6,253		)	—		92,978
Net increase (decrease) in cash and cash equivalents	98,554			—			—			—		98,554
Cash and cash equivalents, beginning of period	15,455			—			—			—		15,455
Cash and cash equivalents, end of period	$	114,009		$	—		$	—		$	—	$	114,009

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS THREE MONTHS ENDED MARCH 31, 2014 (Unaudited) (in thousands)

	Venoco, Inc.			Guarantor Subsidiaries		Non-Guarantor Subsidiary			Eliminations			Consolidated
REVENUES:
Oil and natural gas sales	$	62,213		$	325	$	—		$	—		$	62,538
Other		115			—		1,818			(1,474	)		459

Total revenues		62,328			325		1,818			(1,474	)		62,997

EXPENSES:
Lease operating expense		18,780			18		670			—			19,468
Production and property taxes		1,736			—		—			—			1,736
Transportation expense		1,435			3		—			(1,381	)		57
Depletion, depreciation and amortization		10,942			26		208			—			11,176
Accretion of asset retirement obligations		625			31		11			—			667
General and administrative, net of amounts capitalized		8,631			—		124			(93	)		8,662

Total expenses		42,149			78		1,013			(1,474	)		41,766

Income (loss) from operations		20,179			247		805			—			21,231
FINANCING COSTS AND OTHER:
Interest expense, net		14,374			—		(1,434	)		—			12,940
Amortization of deferred loan costs		833			—		—			—			833
Commodity derivative losses (gains), net		(2,095	)		—		—			—			(2,095	)

Total financing costs and other		13,112			—		(1,434	)		—			11,678

Equity in subsidiary income		1,541			—		—			(1,541	)		—

Income (loss) before income taxes		8,608			247		2,239			(1,541	)		9,553
Income tax provision (benefit)		(945	)		94		851			—			—

Net income (loss)	$	9,553		$	153	$	1,388		$	(1,541	)	$	9,553

Table of Contents

~~VENOCO, INC~~ITEM 2. ~~AND~~Management’s ~~SUBSIDIARIES~~Discussion ~~AND~~and ~~DENVER~~Analysis ~~PARENT CORPORATION~~of ~~AND~~Financial ~~SUBSIDIARIES~~Condition and Results of Operation

This ~~NOTES~~Quarterly TOReport ~~CONDENSED~~on ~~CONSOLIDATED~~Form 10-Q ~~FINANCIAL~~is ~~STATEMENTS~~a combined report being filed by Denver Parent Corporation (~~Continued~~“DPC”) and Venoco, Inc. (“Venoco”), a direct 100% owned subsidiary of DPC. DPC is a holding company formed to acquire all of the common stock of Venoco in a going private transaction that was completed in October 2012. Unless otherwise indicated or the context otherwise requires, (i) references to “DPC” refer only to DPC, (ii) references to the “company,” “we,” “our” and “us” refer, for periods following the going private transaction, to DPC and its subsidiaries, including Venoco and its subsidiaries, and for periods prior to the going private transaction, to Venoco and its subsidiaries and (iii) references to “Venoco” refer to Venoco and its subsidiaries. See “Explanatory Note” immediately preceding Part I of this report. Venoco and DPC are filing this combined report to satisfy reporting requirements under the indentures governing their respective senior notes.

The ~~(UNAUDITED)~~following discussion and analysis should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in the Venoco / DPC Annual Report on Form 10-K for the year ended December 31, 2014 as well as with the financial statements and related notes and the other information appearing elsewhere in this report.

~~8. GUARANTOR FINANCIAL INFORMATION (Continued)~~ Overview

We are ~~CONDENSED~~an ~~CONSOLIDATING~~independent ~~STATEMENTS~~energy OFcompany ~~OPERATIONS THREE~~primarily ~~MONTHS~~engaged ~~ENDED~~in ~~MARCH~~the 31acquisition, ~~2015~~exploration, ~~(Unaudited) (~~exploitation and development of oil and natural gas properties. Our strategy is to grow through exploration, exploitation and development projects we believe to have the potential to add significant reserves on a cost- effective basis and through selective acquisitions of underdeveloped properties. In the execution of our strategy, our management is principally focused on economically developing additional reserves and on maximizing production levels through exploration, exploitation and development activities in ~~thousands)~~ a manner consistent with preserving adequate liquidity and financial flexibility.

	Venoco, Inc.			Guarantor Subsidiaries		Non-Guarantor Subsidiary			Eliminations			Consolidated
REVENUES:
Oil and natural gas sales	$	19,602		$	147	$	—		$	—		$	19,749
Other		121			—		2,498			(1,950	)		669

Total revenues		19,723			147		2,498			(1,950	)		20,418

EXPENSES:
Lease operating expense		14,077			11		844			—			14,932
Production and property taxes		2,132			—		—			—			2,132
Transportation expense		1,894			8		—			(1,855	)		47
Depletion, depreciation and amortization		8,586			26		209			—			8,821
Accretion of asset retirement obligations		459			33		5			—			497
General and administrative, net of amounts capitalized		6,667			—		98			(95	)		6,670

Total expenses		33,815			78		1,156			(1,950	)		33,099

Income (loss) from operations		(14,092	)		69		1,342			—			(12,681	)
FINANCING COSTS AND OTHER:
Interest expense, net		13,040			—		(1,629	)		—			11,411
Amortization of deferred loan costs		607			—		—			—			607
Commodity derivative losses (gains), net		(12,905	)		—		—			—			(12,905	)

Total financing costs and other		742			—		(1,629	)		—			(887	)

Equity in subsidiary income		1,884			—		—			(1,884	)		—

Income (loss) before income taxes		(12,950	)		69		2,971			(1,884	)		(11,794	)
Income tax provision (benefit)		(1,155	)		26		1,129			—			—

Net income (loss)	$	(11,795	)	$	43	$	1,842		$	(1,884	)	$	(11,794	)

Recent Developments

25On May 19, 2015, the third-party common carrier pipeline that transports oil production from Platform Holly in the South Ellwood field ruptured, resulting in a spill near Refugio Beach State Park. We have temporarily halted production activities at Platform Holly in response to the incident. The affected pipeline, in Santa Barbara County, is currently inoperable due to the spill and related ongoing repairs. Until the required metallurgical and root cause analysis are completed the pipeline operator has stated that it is unable to address the timing of returning the pipeline to service. The results of the analysis are expected in late August 2015. However, the operator’s current forecasts estimate that the pipeline will be shut down for the remainder of 2015. As a result we are currently in the process of evaluating alternatives that would allow us to return to production. In order to minimize full-year 2015 downtime, we elected to move our annual maintenance shutdown at the South Ellwood field from the third quarter of 2015 up to May and June to coincide with the pipeline shutdown.

~~Table~~Capital ~~of Contents~~ Expenditures

~~VENOCO~~As a result of the additional financing received in April 2015 the Company increased its 2015 capital budget from $18 million to $33 million. The additional budget has been allocated to drilling two wells on Platform Gail as discussed below. In the first half of 2015 our development, ~~INC~~ exploitation and exploration capital expenditures were $8.3 million, ~~AND~~with ~~SUBSIDIARIES~~approximately ~~AND~~$7.0 million ~~DENVER~~incurred ~~PARENT CORPORATION~~for ~~AND~~Southern ~~SUBSIDIARIES~~ California legacy projects.

The ~~NOTES~~aggregate TOlevels ~~CONDENSED~~of ~~CONSOLIDATED~~capital ~~FINANCIAL~~expenditures ~~STATEMENTS~~for ~~(Continued)~~ the remainder of 2015, and the allocation of those expenditures, are dependent on a variety of factors, including changes in commodity prices, permitting matters, the availability of capital resources to fund the expenditures and changes in our business assessments as to where our capital can be most profitably employed. Accordingly, the actual levels of capital expenditures and the allocation of those expenditures may vary materially from our estimates. The following summarizes certain significant aspects of our 2015 capital spending program.

In ~~(UNAUDITED)~~ the first half of 2015, we focused our capital spending primarily on operational improvements, regulatory, health, safety and environmental compliance and progressing other long lead-time projects, primarily at our legacy Southern California assets. The aggregate levels of capital expenditures through the first half of 2015 were in line with our budget estimates.

8In the third quarter of 2014 our application to adjust the lease line at the South Ellwood field was deemed complete by the California State Lands Commission (“CSLC”). ~~GUARANTOR~~The ~~FINANCIAL~~application ~~INFORMATION~~is subject to review by the CSLC under the California Environmental Quality Act (~~Continued~~“CEQA”) . In the first half of 2015 CSLC initiated efforts relating to the environmental impact review (“EIR”) and related report as required by CEQA. The scope of the EIR includes evaluating a number of project alternatives.

~~CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 2014 (Unaudited) (in thousands)~~ 25

	Venoco, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiary			Eliminations		Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash provided by (used in) operating activities	$	1,628		$	331		$	2,328		$	—	$	4,287
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditures for oil and natural gas properties		(26,024	)		2			(160	)		—		(26,182	)
Acquisitions of oil and natural gas properties		(16	)		—			—			—		(16	)
Expenditures for property and equipment and other		(177	)		—			—			—		(177	)

Net cash provided by (used in) investing activities		(26,217	)		2			(160	)		—		(26,375	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from (repayments of) intercompany borrowings		2,501			(333	)		(2,168	)		—		—
Proceeds from long-term debt		97,000			—			—			—		97,000
Principal payments on long-term debt		(55,000	)		—			—			—		(55,000	)
Payments for deferred loan costs		(13	)		—			—			—		(13	)
Dividend paid to Denver Parent Corporation		(3,905	)		—			—			—		(3,905	)

Net cash provided by (used in) financing activities		40,583			(333	)		(2,168	)		—		38,082

Net increase (decrease) in cash and cash equivalents		15,994			—			—			—		15,994
Cash and cash equivalents, beginning of period		828			—			—			—		828

Cash and cash equivalents, end of period	$	16,822		$	—		$	—		$	—	$	16,822

Table of Contents

26Additionally, the EIR will evaluate the major environmental issues associated with the adjustment such as hazardous materials and risk of upset, air quality, greenhouse gases and a number of other issues. We anticipate a draft of the EIR to be issued in the fall of 2015, but it could be longer. Our application may not be granted on the terms we request or at all.

~~Table~~In the Sockeye field, we focused capital spending in the first half of ~~Contents~~2015 on advancing long lead-time projects and operational improvements. As a result of the recently completed financing transactions, we have decided to proceed with drilling activities in 2015. We are currently drilling one well off of Platform Gail into the M2 zone. Additionally, we are preparing an engineering program for the drilling of one additional well into the M2 zone at Platform Gail.

~~VENOCO~~With respect to our reversionary interest in the Hastings Complex CO2 project being developed by Denbury, in January ~~INC~~2013 Venoco notified Denbury that it was invoking the arbitration provisions contained in contracts relating to the project. ~~AND~~The ~~SUBSIDIARIES~~dispute ~~AND~~involves ~~DENVER~~the ~~PARENT CORPORATION~~calculation ~~AND~~of ~~SUBSIDIARIES~~the cost of CO2 delivered to the Hastings Complex which is used in Denbury’s enhanced oil recovery operations. Venoco believes that Denbury has materially overcharged the payout account for the cost of CO2 and the cost of transporting it to the Hastings Complex. In December 2013 a three member arbitration panel ruled unanimously that Venoco’s interpretation of the contracts was correct. In January 2014, Denbury requested that the arbitration panel modify its decision in a way that could increase the cost of CO2 delivered to the Hastings Complex. In March 2014, the arbitration panel affirmed its decision consistent with Venoco’s position. In late March 2014 Denbury filed a petition in Harris County Texas District Court to modify and vacate the arbitration award. In May 2014 Venoco filed an opposition to Denbury’s petition and requested that the Texas District Court confirm the arbitration award. On February 11, 2015 the District Court granted Venoco’s motion to confirm the arbitration award. In March 2015, Denbury filed a motion for a new trial with the District Court which was denied. Denbury appealed the case to the Texas Court of Appeals in May 2015.

Trends ~~NOTES~~Affecting TOour ~~CONDENSED~~Results ~~CONSOLIDATED~~of ~~FINANCIAL STATEMENTS (Continued)~~ Operations

Oil ~~(UNAUDITED)~~and Natural Gas Prices. Historically, prices received for our oil and natural gas production have been volatile and unpredictable, and that volatility is expected to continue. Changes in the market prices for oil directly impact many aspects of our business, including our financial condition, revenues, results of operations, liquidity, rate of growth, carrying value of our properties and value of our proved reserves, all of which depend in part upon those prices. We have sold all of our properties that produce primarily natural gas and therefore expect to have minimal exposure to changes in natural gas prices for the foreseeable future.

8We follow the full cost method of accounting for our oil and gas properties. In ~~GUARANTOR~~the ~~FINANCIAL~~second ~~INFORMATION~~quarter ~~(Continued)~~of 2015, the results of our full cost “ceiling test” required us to recognize a before tax impairment of our oil and gas properties of $146 million. While this impairment did not impact cash flow from operating activities, it did reduce our earnings. We will likely be required to recognize additional impairments of oil and gas properties in future periods if we continue to experience an extended period of low commodity prices, which will result in a downward adjustment to our estimated proved reserves and the associated present value of estimated future net revenues, or if we incur actual development costs in excess of the estimated costs used in preparing our reserve reports.

We ~~CONDENSED~~employ ~~CONSOLIDATING~~a ~~STATEMENT~~hedging OFstrategy ~~CASH~~designed ~~FLOWS FOR~~to ~~THE~~reduce ~~THREE~~the ~~MONTHS~~variability ~~ENDED~~in ~~MARCH~~cash 31flows resulting from changes in commodity prices. As of June 30, 2015, ~~(Unaudited) (in~~we ~~thousands)~~ had hedge contract floors covering 4,595 barrels of oil per day for 2015. We have also secured hedge contracts for portions of our 2016 production. See “Quantitative and Qualitative Disclosures About Market Risk—Commodity Derivative Transactions” for further details concerning our hedging activities.

	Venoco, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiary			Eliminations		Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash provided by (used in) operating activities	$	(13,498	)	$	132		$	2,704		$	—	$	(10,662	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditures for oil and natural gas properties		(4,596	)		—			—			—		(4,596	)
Acquisitions of oil and natural gas properties		(10	)		—			—			—		(10	)
Expenditures for property and equipment and other		(43	)		—			—			—		(43	)
Proceeds provided by sale of oil and gas properties		1,786			—			—			—		1,786

Net cash provided by (used in) investing activities		(2,863	)		—			—			—		(2,863	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from (repayments of) intercompany borrowings		2,836			(132	)		(2,704	)		—		—
Proceeds from long-term debt		15,000			—			—			—		15,000
Principal payments on long-term debt		(8,600	)		—			—			—		(8,600	)
Payments for deferred loan costs		(409	)		—			—			—		(409	)
Dividend paid to Denver Parent Corporation		—			—			—			—		—

Net cash provided by (used in) financing activities		8,827			(132	)		(2,704	)		—		5,991

Net increase (decrease) in cash and cash equivalents		(7,534	)		—			—			—		(7,534	)
Cash and cash equivalents, beginning of period		15,455			—			—			—		15,455

Cash and cash equivalents, end of period	$	7,921		$	—		$	—		$	—	$	7,921

Production. Average BOE per day produced in the first half of 2015 was 5,285 compared to 6,612 for the fourth quarter of 2014. The reduction in production is due the sale of our West Montalvo properties and the effect of shutting in Platform Holly as a result of the pipeline spill. Our 2015 capital spending has been allocated approximately 92% to our legacy Southern California fields and 8% to our onshore Monterey shale program. In light of current commodity prices and our need to preserve liquidity, we have substantially reduced our capital expenditure budget for 2015 relative to prior years. Due to these factors and natural production declines, we expect production to decline year over year from 2014.

9Lease Operating Expenses. Lease ~~SUBSEQUENT~~operating ~~EVENTS~~ expenses (“LOE”) of $29.40 per BOE for the first half of 2015 were higher than our full year 2014 results of $26.77 per BOE. Lower production at the South Ellwood field contributed to higher LOE per BOE costs, as did the sale of the West Montalvo field.

On April 2, 2015, Venoco entered into agreements relating to three new debt instruments: (i) first lien senior secured notes with an aggregate principal amount of $175 million (the "first lien secured notes"), (ii) second lien senior secured notes with an aggregate principal amount of $150 million (the 26

27Table of Contents

~~Table~~Property and Production Taxes. Property and production taxes of ~~Contents~~$4.35 per BOE for the first half of 2015 were higher than our full year 2014 results of $2.82 per BOE. We expect our 2015 property and production taxes to be higher on a per BOE basis than they were in 2014. Our ad valorem tax expense is highly sensitive to drilling results and the estimated present value of future net cash flows from new wells, and may be volatile in the future.

~~VENOCO, INC~~General and Administrative Expenses. General ~~AND~~and ~~SUBSIDIARIES~~administrative ~~AND~~expenses ~~DENVER~~were ~~PARENT CORPORATION~~$14.32 ~~AND~~per ~~SUBSIDIARIES~~BOE (excluding non-cash share-based compensation charges of $0.18 per BOE) for the first half of 2015 compared to $8.39 per BOE for the full year 2014 (excluding non-cash share-based compensation decreases of $1.01 per BOE). During 2014 we implemented a reduction in work force program to reduce our overhead to be more reflective of the asset base we have following the Sacramento Basin and West Montalvo asset sales. Excluding share-based compensation charges and certain one-time charges, we expect our 2015 G&A costs to be less than they were in 2014, but, on a per BOE basis, to increase in 2015 compared to 2014 due to our lower expected production in 2015.

Depreciation, ~~NOTES~~Depletion TOand ~~CONDENSED~~Amortization ~~CONSOLIDATED~~(DD&A). DD&A ~~FINANCIAL~~for ~~STATEMENTS~~the ~~(Continued)~~first half of 2015 was $16.78 per BOE compared to $16.31 per BOE for the full year 2014. We expect our 2015 DD&A to be similar on a per BOE basis compared to our 2014 results.

Commodity ~~(UNAUDITED)~~Derivative Gains and Losses. We do not account for commodity derivative contracts as cash flow hedges. Commodity derivative gains and losses include settlements of commodity derivative contracts, changes in fair value of open commodity derivative contracts and amortization of derivative premiums. The fair value of the open commodity derivative instruments will continue to change in value until the transactions are settled. Therefore, we expect our net income to reflect the volatility of commodity price forward markets. Our cash flows will only be affected upon settlement of the transactions at the current market prices at that time. Cash settlement of derivative instruments represents the difference between the strike prices in contracts settled during the period and the ultimate settlement prices. Payments actually due to or from counterparties on these derivatives will typically be offset by corresponding changes in prices ultimately received from the sale of our production. We have incurred significant commodity derivative gains and losses in recent periods and may continue to incur these types of gains and losses in the future.

9.Income ~~SUBSEQUENT~~Tax ~~EVENTS~~Provision (~~Continued~~Benefit). We incurred losses before income taxes in 2008, 2009, and 2012, as well as tax losses in each of the tax years from 2008 through 2013. These losses and expected future tax losses were key considerations that led us to conclude that we should maintain a full valuation allowance against our net deferred tax assets at December 31, 2014 and June 30, 2015 since we could not conclude that it is more likely than not that the net deferred tax assets will be fully realized. As long as we continue to conclude that we have a need for a full valuation allowance against our net deferred tax assets, we likely will not have any income tax expense or benefit other than for federal alternative minimum tax expense or for state income taxes. Future events or new evidence which may lead us to conclude that it is more likely than not that our net deferred tax assets will be realized include, but are not limited to, cumulative historical pre-tax earnings; consistent and sustained pre-tax earnings; sustained or continued improvements in oil and natural gas commodity prices; meaningful incremental oil production and proved reserves from development efforts at our Southern California legacy properties; meaningful production and proved reserves from the CO2 project at the Hastings Complex; and taxable events resulting from one or more deleveraging transactions. We will continue to evaluate whether the valuation allowance is needed in future reporting periods.

~~"second lien~~Our ~~secured~~expectations ~~notes")~~with ~~and~~respect ~~(iii) a~~to ~~$75 million~~future ~~cash~~production ~~collateralized~~rates, ~~senior~~expenses ~~secured~~and ~~credit facility (~~the ~~"term~~other ~~loan~~matters ~~facility").~~discussed ~~Approximately~~above ~~$72 million~~are ofsubject ~~proceeds~~to ~~from~~a ~~the issuance~~number of ~~the~~uncertainties, ~~first~~including ~~lien~~those ~~secured~~discussed ~~notes~~ and ~~the~~referenced ~~term~~in ~~loan~~“Risk ~~facility~~Factors.” ~~were~~For ~~used~~example, with respect to ~~repay~~future ~~all~~production ~~amounts~~rates, ~~outstanding~~uncertainties ~~under~~include ~~Venoco's~~those ~~revolving~~associated ~~credit~~with ~~facility~~third party services, ~~which~~limitations ~~was~~on ~~then~~capital ~~terminated.~~expenditures ~~The~~resulting ~~second~~from ~~lien secured~~the ~~notes~~terms ~~were~~of ~~issued~~our indebt ~~exchange~~agreements, ~~for~~the ~~$194 million~~availability ~~aggregate~~of ~~principal~~drilling ~~amount~~rigs, ofoil ~~and~~prices, ~~accrued~~events ~~interest~~resulting onin ~~Venoco's~~unexpected ~~outstanding~~downtime, ~~8.875%~~permitting ~~senior~~issues ~~notes~~and ~~due~~drilling ~~2019.~~success rates.

~~First~~Results lien secured notes. The first lien secured notes bear interest at 12% per annum and mature in February 2019. The indenture governing the first lien secured notes includes covenants customary for instruments of this type, including restrictions on Venoco's ability to incur additional indebtedness, create liens on its properties, pay dividends and make investments, in each case subject to exceptions. The covenants regarding the incurrence of additional indebtedness contain exceptions for, among other things, (i) up to $25 million of additional secured or unsecured indebtedness that may be issued or incurred in connection with certain projects approved by the holders of the notes, (ii) up to $50 million of additional second lien secured notes that may be issued in exchange for Venoco's outstanding 8.875% senior notes due 2019 and (iii) up to $150 million of additional third lien or unsecured indebtedness that may be issued or incurred in exchange for the Venoco's outstanding 8.875% senior notes or to fund acquisitions. The indenture also includes restrictions on capital expenditures and an operational covenant pursuant to which Venoco is generally required to maintain a specified level of production for each quarterly period until maturity. Other covenants are generally similar to those contained in the indenture governing the existing 8.875% senior notes. Venoco's obligations under the first lien secured notes are guaranteed by all of its subsidiaries other than Ellwood Pipeline, Inc. and secured by a first priority lien on substantially all of the assets of Venoco and the guarantors other than the cash collateral under the term loan facility. Venoco may redeem the first lien secured notes at a redemption price of 109% of the principal amount beginning on January 1, 2016 and declining to 100% by January 1, 2019. Operations

~~Second lien secured notes.~~ The ~~second~~following ~~lien~~table ~~secured~~reflects ~~notes~~the ~~bear~~components ~~interest~~of atour ~~8.875%~~oil ifand ~~paid~~natural ingas ~~cash~~production orand ~~12%~~sales ifprices, ~~paid~~and inour ~~kind.~~operating ~~Interest may be paid in cash or in kind~~revenues, atcosts ~~Venoco's~~and ~~option~~expenses, for ~~semiannual~~the ~~interest~~ periods ~~commencing within 24 months following issuance, but may become payable entirely in cash earlier upon the occurrence of certain events~~indicated. ~~The~~No ~~second~~pro ~~lien~~forma ~~secured~~adjustments ~~notes~~have ~~mature~~been inmade ~~February~~for ~~2019. The indenture governing~~ the ~~second~~acquisitions ~~lien~~and ~~secured~~divestitures ~~notes~~of ~~includes~~oil ~~covenants,~~ and ~~exceptions~~natural ~~thereto~~gas properties, ~~substantially~~which ~~similar~~will toaffect ~~those set forth in~~ the ~~indenture~~comparability ~~governing~~of the ~~first~~data ~~lien secured notes~~below. ~~Venoco's~~The ~~obligations~~information ~~under~~set ~~the~~forth ~~notes~~below ~~are~~is ~~guaranteed~~not bynecessarily ~~Venoco's~~indicative ~~subsidiaries~~of ~~that~~future ~~guarantee the first lien secured notes and are secured by a second priority lien on the same assets securing its obligations under the first lien secured notes~~results. ~~Venoco~~Except ~~may~~for ~~redeem~~ the ~~second~~items ~~lien~~identified ~~secured~~below ~~notes on the same terms~~ as ~~the~~being ~~existing~~specific ~~8.875% senior~~to ~~notes.~~Venoco ~~The~~or ~~first lien secured notes were issued under an Indenture dated as of April 2~~DPC, ~~2015~~all ~~among~~information ~~Venoco,~~shown ~~the~~is ~~guarantors~~for ~~and~~both Ucompanies.~~S. Bank National Association, as trustee and collateral agent.~~

Term loan facility. The term loan facility, which was fully drawn at closing, matures in October 2015. Amounts borrowed under the facility will bear interest at 4.0% per annum for the first thirty days and at 12% thereafter. Venoco may repay or refinance the term facility at any time. The facility contains representations, warranties and covenants typical for instruments of this type. Venoco's

	Three Months Ended June 30,					Six Months Ended June 30,
	2014			2015		2014			2015
Production Volume(1):
Oil (MBbls)	681			396		1,336			911
Natural gas (MMcf)	231			118		500			278
MBOE(2)	720			416		1,419			957
Daily Average Production Volume:
Oil (Bbls/d)	7,484			4,337		7,381			5,028
Natural gas (Mcf/d)	2,538			1,303		2,762			1,544
BOE/d(2)	7,907			4,554		7,841			5,285
Oil Price per Bbl Produced (in dollars):
Realized price	$	95.63		$	49.50	$	95.10		$	43.09
Realized commodity derivative gain (loss) (4)	(6.65		)	68.76		(6.03		)	46.21
Net realized price	$	88.98		$	118.26	$	89.07		$	89.30
Natural Gas Price per Mcf (in dollars):
Realized price	$	5.35		$	3.04	$	5.73		$	3.12
Realized commodity derivative gain (loss)	—			—		—			—
Net realized price	$	5.35		$	3.04	$	5.73		$	3.12
Expense per BOE:
Lease operating expenses	$	25.26		$	31.75	$	26.53		$	29.40
Property and production taxes	3.15			4.87		2.82			4.35
Transportation expenses	0.07			0.11		0.07			0.10
Depreciation, depletion and amortization	16.38			17.39		16.19			16.78
Venoco:
General and administrative expense, net(3)	12.49			16.92		12.44			14.32
Interest expense	18.54			47.90		18.53			32.75
Denver Parent Corporation:
General and administrative expense, net(3)	12.60			12.43		12.68			14.39
Interest expense	30.23			71.13		30.22			52.53

2827

Table of Contents

~~VENOCO, INC~~(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). ~~AND~~Revenue ~~SUBSIDIARIES~~accruals ~~AND~~are ~~DENVER~~adjusted ~~PARENT CORPORATION~~for ~~AND~~actual ~~SUBSIDIARIES~~sales volumes since offshore oil inventories can vary significantly from month to month based on pipeline inventories and oil pipeline sales nominations.

(2) BOE ~~NOTES~~is TOdetermined ~~CONDENSED~~using ~~CONSOLIDATED~~the ~~FINANCIAL~~ratio ~~STATEMENTS~~of ~~(Continued)~~one barrel of oil or natural gas liquids to six Mcf of natural gas.

(~~UNAUDITED~~3) Net of amounts capitalized.

9.(4) Includes ~~SUBSEQUENT~~proceeds ~~EVENTS~~from ~~(Continued)~~the unwinding of our 2016 derivative contract with ABN AMRO of $15.6 million.

~~obligations under~~Comparison ~~the term loan facility are secured by a first priority lien on cash collateral, which collateral may be released upon the occurrence~~ of ~~certain~~Quarter ~~events,~~Ended and are guaranteed by Venoco's subsidiaries that guarantee the first lien secured notes and second lien secured notes. The term facility was incurred under a term loan and security agreement dated as of AprilJune 230, 2015 ~~among Venoco,~~to ~~the~~Quarter ~~guarantors~~Ended ~~and~~June 30, ~~the lenders party thereto.~~ 2014

~~Derivatives. In~~Oil ~~connection~~and ~~with~~Natural ~~the~~Gas ~~debt~~Sales. Oil ~~transactions~~and ~~noted~~natural ~~above~~gas ~~that~~sales ~~were~~decreased ~~entered~~$47.2 million ~~into~~(71%) onto ~~April~~$19.3 2,million ~~2015~~in ~~Venoco~~the ~~unwound~~second ~~our~~quarter ~~2016 derivative contract~~of ~~with~~2015 ~~ABN~~compared ~~AMRO~~to ~~which~~$66.5 million ~~hedged~~in ~~1,715~~the ~~barrels~~second ~~per~~quarter ~~day~~ of ~~our~~2014. ~~2016~~The ~~oil~~decrease ~~production,~~was ~~receiving~~due ~~proceeds~~to oflower ~~$15.6 million.~~oil Weand ~~also~~natural ~~novated~~gas ~~the~~production, ~~remaining~~and ~~derivative~~lower ~~contracts~~oil toprices, ~~Bank~~as ofdescribed ~~America Merrill Lynch (BAML)~~below.

29Oil sales decreased by $46.3 million (71%) in the second quarter of 2015 to $19.0 million compared to $65.3 million in the second quarter of 2014. Oil production decreased by 42%, with production of 396 MBbls in the second quarter of 2015 compared to 681 MBbls in the second quarter of 2014. The decrease is due to the sale of our West Montalvo field in the fourth quarter of 2014, the effect of shutting in Platform Holly due to the pipeline spill and natural production declines. Our average realized price for oil decreased $46.13 per Bbl (48%) from $95.63 per Bbl in the second quarter of 2014 to $49.50 per Bbl in the second quarter of 2015.

Natural ~~Table~~gas sales decreased $0.8 million (67%) in the second quarter of ~~Contents~~2015 to $0.4 million compared to $1.2 million in the second quarter of 2014. Natural gas production decreased by 49% in the second quarter of 2015, with production of 118 MMcf compared to 231 MMcf in the second quarter of 2014. The decrease is primarily due to the sale of our West Montalvo assets and the effect of shutting in Platform Holly due to the pipeline spill. Our average realized price for natural gas decreased $2.31 per Mcf (43%) from $5.35 per Mcf in the second quarter of 2014 to $3.04 per Mcf in the second quarter of 2015.

Other ~~ITEM~~Revenues. Other 2revenues stayed consistent at $0. ~~Management's~~5 ~~Discussion~~million ~~and~~for ~~Analysis~~both ofthe ~~Financial~~second ~~Condition~~quarter of 2015 and ~~Results~~the second quarter of ~~Operation~~ 2014.

~~This~~Lease ~~Quarterly~~Operating ~~Report~~Expenses. Lease onoperating ~~Form 10-Q~~expenses ~~is a combined report being filed by Denver Parent Corporation~~ (~~"DPC"~~“LOE”) ~~and~~decreased ~~Venoco, Inc~~$5. 0 million (~~"Venoco"~~27%), ain ~~direct~~the ~~100%~~second ~~owned~~quarter ~~subsidiary~~ of ~~DPC.~~2015 ~~DPC is a holding company formed~~ to ~~acquire all of the common stock of Venoco in a going private transaction that was completed in October 2012~~$13. ~~Unless otherwise indicated or the context otherwise requires, (i)~~2 ~~references~~million tocompared ~~"DPC" refer only~~ to ~~DPC, (ii)~~$18.2 ~~references~~million toin the ~~"company,"~~second ~~"we,"~~quarter ~~"our"~~of ~~and~~2014. ~~"us"~~The ~~refer,~~decrease ~~for~~was ~~periods following~~primarily ~~the~~due ~~going private transaction,~~ to ~~DPC and its subsidiaries, including Venoco and its subsidiaries, and for periods prior to~~ the ~~going~~sale ~~private transaction, to Venoco and its subsidiaries and (iii) references to "Venoco" refer to Venoco and its subsidiaries. See "Explanatory Note" immediately preceding Part I~~ of ~~this report. Venoco and DPC are filing this combined report to satisfy reporting requirements under~~ the ~~indentures governing their respective senior notes.~~ West

The following discussion and analysis should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained in the Venoco / DPC Annual Report on Form 10-K for the year ended December 31, 2014 as well as with the financial statements and related notes and the other information appearing elsewhere in this report. 28

~~Overview~~ Table of Contents

WeMontalvo ~~are~~field ~~an independent energy company primarily engaged~~ in the ~~acquisition,~~fourth ~~exploration,~~quarter ~~exploitation and development~~ of ~~oil and natural gas properties. Our strategy is to grow through exploration~~2014, ~~exploitation~~as ~~and~~well ~~development~~as ~~projects~~lower welease ~~believe~~operating toexpenses ~~have~~at the ~~potential~~South toEllwood ~~add~~and ~~significant~~Sockeye ~~reserves~~fields. onOn a ~~cost-~~per ~~effective~~unit basis, ~~and~~LOE ~~through selective~~increased ~~acquisitions~~by ~~of underdeveloped properties~~$6.49 Inper ~~the~~BOE ~~execution~~from of$25.26 ~~our~~in ~~strategy,~~the ~~our~~second ~~management~~quarter isof ~~principally~~2014 ~~focused~~to on$31.75 ~~economically developing additional reserves and on maximizing production levels through exploration, exploitation and development activities~~ in athe ~~manner~~second ~~consistent~~quarter ~~with~~of ~~preserving adequate liquidity and financial flexibility~~2015.

~~Recent~~Property ~~Developments~~ and Production Taxes. Property and production taxes decreased $0.3 million (13%) in the second quarter of 2015 to $2.0 million compared to $2.3 million in the second quarter of 2014. The decrease is primarily due to the sale of the West Montalvo field. On a per BOE basis, property and production taxes increased $1.72 per BOE to $4.87 in the second quarter of 2015 from $3.15 in the second quarter of 2014.

WeDepletion, ~~completed~~Depreciation ~~the going private transaction in October 2012~~ and ~~incurred~~Amortization a(DD&A). DD&A ~~substantial~~expense ~~amount~~decreased of$4.6 million ~~additional~~(39%) ~~debt in order~~ to ~~do so~~$7.2 million ~~We have~~in ~~undertaken~~the asecond ~~variety~~quarter of ~~measures~~2015 compared to ~~reduce~~$11.8 million ~~our~~in ~~indebtedness,~~the ~~including~~second ~~sales~~quarter of ~~our Sacramento Basin and West Montalvo assets~~2014. ~~However,~~The ~~our~~decrease ~~deleveraging~~was ~~efforts~~primarily ~~have~~due ~~been~~to ~~impacted~~the bysale ~~various operational issues, including an extended shutdown~~ of the ~~pipeline~~West ~~that~~Montalvo ~~transports~~properties ~~our South Ellwood field production~~ in ~~2014~~the ~~and~~fourth ~~apparent~~quarter ~~communication affecting production from some~~ of ~~our wells in the same field~~2014. ~~More~~DD&A ~~recently,~~expense ~~our~~on ~~deleveraging~~a ~~efforts~~per ~~have~~unit ~~also~~basis ~~been~~increased ~~affected~~$1.01 byper ~~the~~BOE ~~dramatic~~to ~~decline~~$17.39 inper ~~the~~BOE ~~price~~for ~~of oil that occurred over~~ the second ~~half~~quarter of ~~2014, with low prices continuing into~~ 2015. Wecompared ~~have been required~~ to ~~obtain~~$16.38 ~~numerous~~per ~~amendments~~BOE tofor ~~and waivers from~~ the ~~lenders~~second ~~under~~quarter ~~Venoco's revolving credit facility as a result~~ of ~~these factors, and we have significantly curtailed our planned capital expenditures for 2015 relative to prior years~~2014.

~~We recently~~Impairment ~~completed a series~~ of ~~financing~~oil ~~transactions in response to our indebtedness~~ and ~~liquidity~~gas ~~situation~~properties. We Onrecorded ~~April 2,~~pre-tax ~~2015,~~impairment ~~Venoco~~expense ~~entered~~related ~~into agreements relating~~ to ~~three~~ ~~new~~our ~~debt~~oil ~~instruments:~~and ~~(i) first~~natural ~~lien~~gas ~~senior~~properties ~~secured~~for ~~notes~~the ~~with~~three anmonths ~~aggregate~~ended ~~principal~~June 30, ~~amount~~2015 of $~~175~~ 146 million ~~(the~~as ~~"first~~a ~~lien~~result ~~secured~~of ~~notes"),~~our ~~(ii) second~~full-cost ~~lien~~ceiling ~~senior secured~~test. ~~notes~~Under ~~with~~the anfull ~~aggregate~~cost ~~principal~~method, ~~amount~~we ofare ~~$150 million~~subject ~~(the~~to ~~"second~~quarterly ~~lien~~calculations ~~secured~~of ~~notes") and (iii)~~ a ~~$75 million~~ceiling ~~cash~~or ~~collateralized~~limitation ~~senior~~on ~~secured credit facility (~~the ~~"term~~ ~~loan~~amount ~~facility").~~of ~~Approximately~~costs ~~$72 million~~associated ofwith ~~proceeds~~our ~~from~~oil ~~the~~and ~~issuance~~natural ofgas ~~the~~properties ~~first~~that ~~lien~~can ~~secured~~be ~~notes~~capitalized ~~and~~in ~~the~~our ~~term~~condensed ~~loan~~consolidated ~~facility~~balance ~~were~~sheets. ~~used~~The toimpairment ~~repay~~expense ~~all~~for ~~amounts~~the ~~outstanding~~three ~~under Venoco's~~months ~~revolving~~ended ~~credit facility~~June 30, ~~which~~2015 was ~~then~~due ~~terminated.~~to ~~The~~a ~~second~~decrease ~~lien~~in ~~secured~~the ~~notes~~value ~~were~~of ~~issued~~our inproven ~~exchange~~oil ~~for~~and ~~$194 million~~natural ~~aggregate~~gas ~~principal~~reserves ~~amount~~as a result of, ~~and~~an ~~accrued~~extended ~~interest~~period ~~on, Venoco's~~of ~~outstanding~~low 8commodity prices.~~875%~~ ~~senior~~In ~~notes~~2014 ~~due~~we ~~2019.~~recorded ~~The~~an ~~terms~~impairment of ~~the~~$0.8 ~~new~~million ~~debt~~related ~~instruments~~to ~~are~~the ~~summarized~~abandonment ~~in "—Liquidity~~of ~~and~~further ~~Capital~~efforts ~~Resources—Capital~~to ~~Resources~~evaluate ~~and~~expansion ~~Requirements."~~outside ~~These~~the ~~transactions~~ U.S.A.

30Accretion of Abandonment Liability. Accretion expense decreased $0.1 million (17%) to $0.5 million in the second quarter of 2015 compared to $0.6 million in the second quarter of 2014.

~~Table~~General and Administrative (G&A). The following table summarizes the components of ~~Contents~~Venoco’s general and administrative expense incurred during the periods indicated (in thousands):

increased our indebtedness overall, but reduced our near-term cash interest expense and provided us with flexibility and additional liquidity that we intend to use to advance longer term projects.

	Three Months Ended June 30,
	2014			2015
General and administrative costs	$	9,364		$	9,985
Share-based compensation costs	473			(395		)
One time general and administrative costs	3,024			—
General and administrative costs capitalized	(3,871		)	(2,553		)
General and administrative expense, net of amounts capitalized	$	8,990		$	7,037

~~Capital~~Venoco ~~Expenditures~~ G&A expenses decreased $2.0 million (22%) to $7.0 million in the second quarter of 2015 compared to $9.0 million in the second quarter of 2014. The decrease is due to lower employee related G&A costs as a result of the reduction in work force program introduced in 2014 to reduce our overhead to be more reflective of the asset base we have following the Sacramento Basin and West Montalvo asset sales. The 2014 one time G&A cost of $3.0 million was related to the write-off of deferred costs associated with a planned Master Limited Partnership offering which was aborted, and severance costs related to a G&A reduction.

~~Our~~Interest ~~2015~~Expense. For ~~development~~Venoco, ~~exploitation~~interest ~~and~~expense ~~exploration~~increased ~~capital~~$6.5 million ~~expenditure~~(63%) ~~budget~~to is $1819.9 million, in the second quarter of ~~which~~2015 ~~approximately~~ compared to $1613.54 million isin ~~expected~~the tosecond bequarter ~~devoted~~of to2014. ~~our~~The ~~legacy~~increase ~~Southern~~was ~~California~~primarily ~~assets~~the ~~and~~result ~~approximately~~of increase in total outstanding borrowings. For DPC, interest expense increased $17.58 million (35%) to ~~onshore Monterey shale activities~~$29.6 million Inin the ~~first~~second quarter of 2015 ~~our development,~~compared ~~exploitation~~to ~~and~~$21.8 million ~~exploration~~in ~~capital~~the ~~expenditures~~second ~~were~~quarter $3of 2014.~~8 million,~~ ~~with~~The ~~approximately~~incremental difference of $39.07 million ~~incurred~~from ~~for~~Venoco’s ~~Southern~~total ~~California~~interest ~~legacy~~expense ~~projects~~to ~~and~~DPC’s ~~$0.8 million for~~total ~~onshore~~consolidated ~~Monterey~~interest ~~projects~~expense was due to interest on DPC’s 12.25% / 13.00% senior PIK toggle notes and the amortization of the bond discount.

~~The aggregate~~Amortization ~~levels~~ of ~~capital~~Deferred ~~expenditures~~Loan ~~for~~Costs. For ~~the~~Venoco, ~~remainder~~amortization of ~~2015,~~deferred ~~and~~loan ~~the~~costs ~~allocation~~increased of$0.6 million ~~those~~(71%) ~~expenditures,~~to ~~are~~$1.5 million ~~dependent~~in onthe asecond ~~variety~~quarter of ~~factors,~~2015 ~~including~~compared ~~changes~~to $0.9 million in ~~commodity prices, permitting matters,~~ the ~~availability~~second quarter of ~~capital~~2014. ~~resources~~For toDPC, ~~fund~~amortization ~~the~~of ~~expenditures~~deferred ~~and~~loan ~~changes~~costs inincreased ~~our~~$0.7 million ~~business~~(63%) ~~assessments~~to as$1.8 million toin ~~where~~the ~~our~~second ~~capital~~quarter ~~can~~of be2015 ~~most~~compared ~~profitably~~to ~~employed~~$1.1 million ~~Accordingly,~~ in the ~~actual~~second ~~levels~~quarter of ~~capital~~2014. ~~expenditures~~The ~~and~~increase ~~the~~in ~~allocation~~amortization of ~~those~~deferred ~~expenditures~~loan ~~may~~costs ~~vary~~is ~~materially~~related ~~from~~to ~~our~~the ~~estimates.~~costs ~~The~~associated ~~following~~with ~~summarizes~~the ~~certain~~new ~~significant~~loan ~~aspects~~agreements ofwhich ~~our~~are ~~2015~~amortized ~~capital spending~~over ~~program.~~the estimated lives of the agreements.

~~In the~~Loss ~~first~~(gain) ~~quarter~~on Extinguishment of ~~2015,~~Debt. Venoco werecognized ~~focused~~a ~~our~~$67.5 ~~capital~~million ~~spending~~gain ~~primarily~~ on ~~operational~~extinguishment ~~improvements,~~of ~~regulatory,~~debt ~~health,~~as ~~safety~~a ~~and~~result ~~environmental compliance and progressing other long lead-time projects, primarily at our legacy Southern California assets. The aggregate levels~~ of ~~capital expenditures through~~ the ~~first~~debt ~~quarter~~exchange ofthat ~~2015~~occurred ~~were relatively~~ in~~-line~~ ~~with~~April ~~our budget estimates~~2015.

~~In the~~Commodity ~~third~~Derivative ~~quarter~~Losses ~~of 2014 our application to adjust the lease line at the South Ellwood field was deemed complete by the California State Lands Commission~~ (~~"CSLC"~~Gains)., Net. The ~~application~~following ~~is subject~~table tosets ~~review~~forth by the ~~CSLC~~components ~~under~~of ~~the~~commodity ~~California~~derivative ~~Environmental~~losses ~~Quality Act~~ (~~"CEQA"~~gains)., Innet ~~the~~in ~~first~~our ~~quarter~~condensed ofconsolidated ~~2015~~statements ~~CSLC initiated efforts on the environmental impact review and related report as required by CEQA. We anticipate that the review period will be approximately one year from the initiation~~ of ~~the~~operations ~~EIR,~~for ~~but it could be longer. Our application may not be granted on~~ the ~~terms~~periods weindicated ~~request or at all.~~ (in thousands):

During the first quarter of 2015 in the Sockeye field, we focused capital spending primarily on advancing long lead-time projects and on operational improvements. We spent $0.2 million on onshore Monterey shale activities during the first quarter of 2015, primarily on land and leasehold rental payments.

	Three Months Ended June 30,
	2014		2015
Realized commodity derivative losses (gains)	$	4,530	$	(26,312	)
Unrealized commodity derivative losses (gains) for changes in fair value	14,380		36,017
Commodity derivative losses (gains), net	$	18,910	$	9,705

With respect to our reversionary interest in the Hastings Complex CO2 project being developed by Denbury, in January 2013 Venoco notified Denbury that it was invoking the arbitration provisions contained in contracts relating to the project. The dispute involves the calculation of the cost of CO2 delivered to the Hastings Complex which is used in Denbury's enhanced oil recovery operations. Venoco believes that Denbury has materially overcharged the payout account for the cost of CO2 and the cost of transporting it to the Hastings Complex. In December 2013 a three member arbitration panel ruled unanimously that Venoco's interpretation of the contracts was correct. In January 2014, Denbury requested that the arbitration panel modify its decision in a way that could increase the cost of CO2 delivered to the Hastings Complex. In March 2014, the arbitration panel affirmed its decision consistent with Venoco's position. In late March 2014 Denbury filed a petition in Harris County Texas District Court to modify and vacate the arbitration award. In May 2014 Venoco filed an opposition to Denbury's petition and requested that the Texas District Court confirm the arbitration award. On February 11, 2015 the District Court granted Venoco's motion to confirm the arbitration award. On March 12th, Denbury filed a motion for a new trial with the District Court. On May 12th, Denbury notified Venoco they were appealing the District Court's ruling. 29

31Table of Contents

~~Table~~Realized commodity derivative gains or losses represent the difference between the strike prices in the contracts settled during the period and the ultimate settlement prices. The realized commodity derivative gains in the second quarter of ~~Contents~~2015 reflect the settlement of contracts at prices below the relevant strike prices. Additionally, in the second quarter of 2015 $15.6 million of the realized gain was related to the settlement of our 2016 derivative contract with ABN AMRO. Unrealized commodity derivative (gains) losses represent the change in the fair value of our open derivative contracts from period to period. Derivative premiums are amortized over the term of the underlying derivative contracts.

~~Trends~~Income ~~Affecting~~Tax Expense (Benefit). Due to our ~~Results~~valuation ofallowance, ~~Operations~~ there was no income tax expense (benefit) recorded for the quarters ended June 30, 2015 or 2014. As long as we continue to conclude that we have a need for a full valuation allowance against our net deferred tax assets, we likely will not have any income tax expense or benefit other than for federal alternative minimum tax expense or for state income taxes.

~~Oil~~Net ~~and~~Income ~~Natural Gas Prices~~(Loss). ~~Historically~~ For Venoco, ~~prices~~net ~~received~~loss for ~~our~~the ~~oil~~second ~~and~~quarter ~~natural~~of ~~gas~~2015 ~~production~~was ~~have~~$119.8 million ~~been~~compared ~~volatile~~to ~~and~~the ~~unpredictable, and~~net ~~that volatility~~loss isof ~~expected to continue~~$8.7 million ~~Changes~~for in the ~~market~~same ~~prices~~period ~~for~~in ~~oil~~2014. ~~directly~~For ~~impact many aspects of our business~~DPC, ~~including~~net ~~our~~loss ~~financial~~for ~~condition,~~the ~~revenues,~~second ~~results~~quarter of ~~operations,~~2015 ~~liquidity, rate~~was of$129.8 million ~~growth,~~compared ~~carrying~~to ~~value~~the ofnet ~~our~~loss ~~properties and value~~ of ~~our~~$17.5 million ~~proved~~for ~~reserves,~~the ~~all~~same ofperiod ~~which depend~~ in ~~part upon those prices~~2014. WeThe ~~therefore expect to have minimal exposure to~~ changes inbetween ~~natural~~periods ~~gas prices~~are ~~for~~ the ~~foreseeable~~result ~~future.~~of ~~Due to continued depressed commodity prices, we currently expect to recognize a non-cash ceiling test impairment charge in~~ the ~~second~~items ~~quarter~~discussed ~~of 2015~~above.

~~We employ~~Comparison aof ~~hedging~~Six ~~strategy~~Months ~~designed~~Ended ~~to reduce the variability in cash flows resulting from changes in commodity prices. As of March~~June 3130, 2015, weto ~~had~~Six ~~hedge~~Months ~~contract~~Ended ~~floors covering 4~~June 30,~~595~~ barrels of oil per day for 2015. We have also secured hedge contracts for portions of our 2016 production. See "Quantitative and Qualitative Disclosures About Market Risk—Commodity Derivative Transactions" for further details concerning our hedging activities. 2014

~~Production. Average~~Oil ~~BOE~~and ~~per~~Natural ~~day~~Gas ~~for~~Sales. Oil ~~the~~and ~~first~~natural ~~quarter~~gas ofsales ~~2015~~decreased ~~was~~$90.0 million ~~6,016~~(70%) ~~compared~~ to ~~6,612 for the year ended 2014~~$39.1 million ~~The reduction~~ in ~~production~~ ~~is due~~ the ~~sale~~first half of ~~West Montalvo. Our~~ 2015 ~~capital~~compared ~~spending has been allocated approximately 92%~~ to ~~our~~$129.1 million ~~legacy~~in ~~Southern~~the ~~California~~first ~~fields~~half ~~and~~of ~~8% to our onshore Monterey shale program~~2014. InThe ~~light~~decrease ofwas ~~current commodity~~due ~~prices and our need~~ to ~~preserve~~lower ~~liquidity,~~oil weand ~~have~~natural ~~substantially~~gas ~~reduced our capital expenditure budget for 2015. This capital program is focused on operational improvements~~production, ~~meeting regulatory~~ and ~~EHS~~lower ~~requirements,~~oil ~~and progressing long lead-time projects. As a result~~prices, weas ~~expect~~described ~~production to decline year over year from 2014~~below.

~~Lease~~Oil ~~Operating~~sales ~~Expenses. Lease~~decreased ~~operating~~by ~~expenses~~$88.0 million (~~"LOE"~~70%) in the first half of 2015 to $2738.552 million ~~per~~compared ~~BOE~~to ~~for~~$126.2 million in the first ~~quarter~~half of 2014. Oil production decreased by 32%, with production of 911 MBbls in the first half of 2015 ~~were~~compared ~~higher~~to ~~than~~1,336 MBbls in the first half of 2014. The decrease is primarily due to the sale of our ~~full year~~West Montalvo field in the fourth quarter of 2014 ~~results~~ and the effect of ~~$26.77~~shutting ~~per~~in ~~BOE~~Platform Holly due to the pipeline spill and natural declines. ~~However,~~Our weaverage ~~expect~~realized ~~that~~price ~~our~~for ~~LOE~~oil decreased $52.01 per ~~BOE~~Bbl ~~for~~(55%) ~~the~~from ~~full~~$95.10 ~~year~~per ~~2015~~Bbl ~~will~~in bethe ~~generally~~first ~~consistent~~half ~~with~~of 2014 to $43.09 per Bbl for the first half of 2015.

~~Property~~Natural ~~and~~gas ~~Production~~sales ~~Taxes~~decreased $2. ~~Property~~0 million ~~and~~(70%) ~~production~~in ~~taxes~~the first half of 2015 to $30.939 million ~~per~~compared ~~BOE~~to ~~for~~$2.9 million in the first ~~quarter~~half of ~~2015~~2014. ~~were~~Natural ~~higher~~gas ~~than~~production ~~our~~decreased ~~full year~~by ~~2014 results~~44% ofin ~~$2.82~~the ~~per~~first ~~BOE.~~half Weof ~~expect~~2015, ~~our~~with ~~2015~~production ~~property~~of ~~and~~278 ~~production~~MMcf ~~taxes~~compared to be500 ~~higher~~MMcf onin athe ~~per~~first ~~BOE~~half ~~basis~~of ~~than~~2014. ~~they~~The ~~were~~decrease inis ~~2014.~~primarily ~~Our~~due adto ~~valorem~~the ~~tax~~sale ~~expense~~of isour ~~highly~~West ~~sensitive~~Montalvo toassets. ~~drilling~~Our ~~results and~~average ~~the~~realized ~~estimated~~price ~~present~~for ~~value~~natural ofgas ~~future~~decreased ~~net~~$2.61 ~~cash~~per ~~flows~~Mcf (46%) from ~~new~~$5.73 ~~wells,~~per ~~and~~Mcf ~~may~~in bethe ~~volatile~~first half of 2014 to $3.12 per Mcf in the ~~future.~~first half of 2015.

~~General~~Other ~~and Administrative Expenses~~Revenues. ~~General~~ Other ~~and~~revenues ~~administrative~~increased ~~expenses were~~ $~~12.24 per BOE (excluding non-cash share-based compensation charges of $~~0.073 million ~~per BOE~~(33%) ~~for~~in the first ~~quarter~~half of 2015 ~~compared~~ to $81.392 million ~~per~~compared ~~BOE~~to ~~for the full year 2014 (excluding non-cash share-based compensation decreases of~~ $10.019 million ~~per BOE). During 2014 we implemented a reduction~~ in ~~work~~the ~~force~~first ~~program~~half ~~to reduce our overhead to be more reflective~~ of ~~the asset base we have following the Sacramento Basin and West Montalvo asset sales~~2014. ~~Excluding~~The ~~share-based~~increase ~~compensation charges~~is ~~and~~primarily ~~certain~~due ~~one-time charges, we expect our 2015 G&A costs~~ to behigher ~~less~~pipeline ~~than~~revenue ~~they were~~ in ~~2014,~~the ~~but,~~first onhalf aof ~~per BOE basis, to increase in~~ 2015 ~~compared to 2014 due to our lower expected production in 2015~~.

~~Depreciation,~~Lease ~~Depletion~~Operating ~~and~~Expenses. Lease ~~Amortization~~operating expenses (~~DD&A~~“LOE”) decreased $9. ~~DD&A~~6 million ~~for~~(25%) in the first ~~quarter~~half of 2015 ~~was~~to $1628.271 million ~~per BOE~~ compared to $1637.317 million ~~per BOE~~in ~~for~~ the ~~full~~first ~~year~~ half of 2014. WeThe ~~expect~~decrease ~~our~~was ~~2015~~primarily ~~DD&A~~due to bethe ~~similar~~sale onof the West Montalvo field in the fourth quarter of 2014, as well as lower lease operating expenses at the South Ellwood and Sockeye fields. On a per ~~BOE~~unit basis, ~~compared~~LOE toincreased ~~our~~by $2.87 per BOE from $26.53 in the first half of 2014 ~~results~~to $29.40 in the first half of 2015 due to lower production at the South Ellwood field.

~~Commodity~~Property ~~Derivative Gains~~ and ~~Losses~~Production Taxes. We Property doand ~~not~~production ~~account~~taxes ~~for~~increased ~~commodity derivative contracts as cash flow hedges~~$0.1 million ~~Commodity~~(3%) ~~derivative gains~~in ~~and losses~~the ~~include~~first ~~settlements~~half of ~~commodity~~2015 ~~derivative~~to ~~contracts,~~$4.1 million ~~changes~~compared into ~~fair~~$4.0 million ~~value~~in ofthe ~~open~~first ~~commodity~~half ~~derivative contracts and amortization~~ of ~~derivative premiums~~2014. The ~~fair~~increase ~~value~~is ofprimarily ~~the~~due ~~open~~to ~~commodity derivative~~higher ~~instruments~~property ~~will~~taxes ~~continue~~from toprior ~~change~~drilling inresults ~~value~~at ~~until~~our ~~the~~South ~~transactions~~Ellwood ~~are settled~~field. ~~Therefore,~~On wea ~~expect~~per ~~our~~BOE ~~net~~basis, ~~income~~property toand ~~reflect~~production ~~the~~taxes ~~volatility~~increased of$1.53 ~~commodity~~per ~~price~~BOE ~~forward~~to ~~markets~~$4.35 ~~Our~~in ~~cash flows~~the ~~will~~first ~~only~~half beof ~~affected~~2015 ~~upon~~from ~~settlement~~$2.82 ofin the first half of 2014.

32Depletion, Depreciation and Amortization (DD&A). DD&A expense decreased $6.9 million (30%) to $16.1 million in the first half of 2015 compared to $23.0 million in the first half of 2014. The decrease was primarily due to the sale of the Montalvo assets in the third

~~Table of Contents~~30

~~transactions at~~Table ~~the current market prices at that time. Cash settlement~~ of derivative instruments represents the difference between the strike prices in contracts settled during the period and the ultimate settlement prices. Payments actually due to or from counterparties on these derivatives will typically be offset by corresponding changes in prices ultimately received from the sale of our production. We have incurred significant commodity derivative gains and losses in recent periods and may continue to incur these types of gains and losses in the future. Contents

~~Income~~quarter ~~Tax Provision (Benefit). We incurred losses before income taxes in 2008, 2009, and 2012, as well as taxable losses in each~~ of ~~the~~ ~~tax years from 2008 through 2013~~2014. ~~These~~DD&A ~~losses~~expense ~~and~~on ~~expected future taxable losses were key considerations that led us to conclude that we should maintain~~ a ~~full~~per ~~valuation~~unit ~~allowance~~basis ~~against~~increased ~~our net deferred tax assets at December 31, 2014 and March 31, 2015 since we could not conclude that it is more likely than not that the net deferred tax assets will be fully realized~~$0.59 Asper ~~long~~BOE ~~as we continue~~ to ~~conclude~~$16.78 ~~that~~per weBOE ~~have a need~~ for athe ~~full~~first ~~valuation~~half ~~allowance~~of ~~against~~2015 ~~our~~compared net deferred tax assets, we likely will not have any income tax expense or benefit other than for federal alternative minimum tax expense or for state income taxes. Future events or new evidence which may lead us to conclude that it is more likely than not that our net deferred tax assets will be realized include, but are not limited to, cumulative historical pre-tax earnings; consistent and sustained pre-tax earnings; sustained or continued improvements in oil and natural gas commodity prices; meaningful incremental oil production and proved reserves from development efforts at our Southern California legacy properties; meaningful production and proved reserves from the CO2 project at the Hastings Complex; and taxable events resulting from one or more deleveraging transactions$16.19 Weper ~~will~~BOE ~~continue~~for ~~to evaluate whether~~ the ~~valuation~~first ~~allowance~~half isof ~~needed in future reporting periods~~2014.

~~Our expectations~~Impairment ~~with~~of ~~respect~~oil and gas properties. We recorded pre-tax impairment expense related to ~~future~~our ~~production~~oil ~~rates~~and natural gas properties for the six months ended June 30, ~~expenses~~2015 ~~and~~of $146 million as a result of our full-cost ceiling test. Under the ~~other~~full ~~matters~~cost ~~discussed~~method, ~~above~~we are subject to quarterly calculations of a ~~number~~ceiling or limitation on the amount of ~~uncertainties,~~costs ~~including~~associated ~~those~~with ~~discussed~~our oil and ~~referenced~~ innatural ~~"Risk~~gas ~~Factors."~~properties ~~For~~that ~~example,~~can ~~with~~be ~~respect~~capitalized toin ~~future~~our ~~production~~condensed ~~rates,~~consolidated ~~uncertainties~~balance ~~include~~sheets. ~~those~~The ~~associated~~impairment ~~with~~expense ~~third~~for ~~party~~the ~~services~~six months ended June 30, ~~limitations~~2015 onwas ~~capital~~due ~~expenditures~~to ~~resulting~~a ~~from~~ decrease in the ~~terms~~value of our ~~debt~~proven ~~agreements,~~oil ~~the~~and ~~availability~~natural gas reserves as a result of ~~drilling~~an ~~rigs,~~extended ~~oil~~period ~~prices,~~of ~~events~~low ~~resulting~~commodity inprices. ~~unexpected~~In ~~downtime,~~2014 ~~permitting~~we ~~issues~~recorded ~~and~~an ~~drilling~~impairment ~~success~~of ~~rates~~$0.8 million related to the abandonment of further efforts to evaluate expansion outside the U.S.A.

~~Results~~Accretion of ~~Operations~~ Abandonment Liability. Accretion expense decreased $0.2 million (17%) to $1.0 million in the first half of 2015 compared to $1.2 million in the first half of 2014.

General and Administrative (G&A). The following table ~~reflects~~summarizes the components of ~~our~~Venoco’s ~~oil~~general and ~~natural~~administrative ~~gas~~expense ~~production~~incurred ~~and~~during ~~sales prices, and our operating revenues, costs and expenses, for~~ the periods indicated. No(in pro forma adjustments have been made for the acquisitions and divestitures of oil and natural gas properties, which will affect the comparability of the data below. The information set forth below is not necessarily indicative of thousands):

	Six Months Ended June 30,
	2014			2015
General and administrative costs	$	19,969		$	19,113
Share-based compensation costs	3,118			(266		)
One time general and administrative	3,024			—
General and administrative costs capitalized	(8,459		)	(5,140		)
General and administrative expense, net of amounts capitalized	$	17,652		$	13,707

~~Table~~Venoco G&A expenses decreased $4.0 million (23%) to $13.7 million in the first half of ~~Contents~~2015 compared to $17.7 million in the first half of 2014. The decrease is due to lower employee related G&A costs as a result of the reduction in work force program introduced in 2014 to reduce our overhead to be more reflective of the asset base we have following the Sacramento Basin and West Montalvo asset sales. Share-based compensation costs decreased $3.4 million due to the 2.0 million unit decrease in the number of units outstanding from 6.0 million in the first half of 2014 to 4.0 million in the first half of 2015 and the per unit share price reduction of $11.22.

~~future results.~~DPC ~~Except~~incurred ~~for~~nominal ~~the~~G&A ~~items~~expenses ~~identified~~during ~~below~~the asfirst ~~being~~half ~~specific~~of to2015 ~~Venoco~~of ~~or DPC, all information shown is for both companies~~$0. 1 million.

	Three Months Ended March 31,
	2014			2015
Production Volume(1):
Oil (MBbls)		655			515
Natural gas (MMcf)		269			160
MBOE(2)		700			542
Daily Average Production Volume:
Oil (Bbls/d)		7,278			5,719
Natural gas (Mcf/d)		2,989			1,784
BOE/d(2)		7,776			6,016
Oil Price per Bbl Produced (in dollars):
Realized price	$	94.55		$	38.17
Realized commodity derivative gain (loss)		(5.38	)		28.86

Net realized price	$	89.17		$	67.03



Natural Gas Price per Mcf (in dollars):
Realized price	$	6.06		$	3.18
Realized commodity derivative gain (loss)		—			—

Net realized price	$	6.06		$	3.18



Expense per BOE:
Lease operating expenses	$	27.81		$	27.55
Property and production taxes		2.48			3.93
Transportation expenses		0.08			0.09
Depreciation, depletion and amortization		15.97			16.27
Venoco:
General and administrative expense, net(3)		12.37			12.31
Interest expense		18.49			21.05
Denver Parent Corporation:
General and administrative expense, net(3)		12.74			12.43
Interest expense		30.18			38.16

Interest Expense. For Venoco, interest expense increased $5.0 million (19%) to $31.3 million in the first half of 2015 compared to $26.3 million in the first half of 2014. The increase was primarily the result of higher total outstanding borrowings. For DPC, interest expense increased $7.4 million (17%) to $50.3 million in the first half of 2015 compared to $42.9 million in the first half of 2014. The incremental difference of $19.0 million from Venoco’s total interest expense to DPC’s total consolidated interest expense was due to interest on DPC’s 12.25% / 13.00% senior PIK toggle notes and amortization of the bond discount.

~~Comparison~~Amortization of ~~Quarter~~Deferred ~~Ended~~Loan ~~March 31~~Costs. For Venoco, ~~2015~~amortization of deferred loan costs increased $0.4 million (23%) to ~~Quarter~~$2.1 million ~~Ended~~in ~~March~~the first half of 2015 compared to $1.7 31million in the first half of 2014. For DPC, amortization of deferred loan costs increased $0.4 million (18%) to $2.6 million in the first half of 2015 compared to $2.2 million in the first half of 2014 . The increase in amortization of deferred loan costs is related to the costs associated with the new loan agreements which are amortized over the estimated lives of the agreements.

~~Oil~~Loss ~~and Natural Gas Sales. Oil and natural gas sales decreased $42.8 million~~ (~~68%~~gain) toon ~~$19.7 million~~Extinguishment inof ~~the~~Debt. Venoco ~~first~~recognized ~~quarter~~a ~~of 2015 compared to~~ $6267.5 million ingain ~~the~~on ~~first~~extinguishment ~~quarter~~ of ~~2014.~~debt ~~The~~as ~~decrease~~a ~~was~~result ~~due~~of tothe ~~lower~~debt ~~oil~~exchange ~~and~~that ~~natural~~occurred ~~gas~~in ~~production,~~April ~~and lower oil prices, as described below~~2015.

34Commodity Derivative Losses (Gains), Net. The following table sets forth the components of commodity derivative losses (gains), net in our condensed consolidated statements of operations for the periods indicated (in thousands):

Table of Contents

	Six Months Ended June 30,
	2014		2015
Realized commodity derivative losses (gains)	$	8,055	$	(40,262	)
Unrealized commodity derivative losses (gains) for changes in fair value	8,760		37,062
Commodity derivative losses (gains), net	$	16,815	$	(3,200	)

~~Oil sales~~Realized ~~decreased~~commodity byderivative ~~$41.7 million~~gains ~~(68%)~~or inlosses represent the ~~first~~difference ~~quarter~~between ofthe ~~2015~~strike toprices ~~$19.2 million~~in ~~compared~~the tocontracts ~~$60.9 million~~settled induring the ~~first~~period ~~quarter~~and ofthe ~~2014.~~ultimate ~~Oil~~settlement ~~production decreased~~prices. byThe ~~21%,~~realized ~~with~~commodity ~~production~~derivative ofgains ~~515 MBbls~~ in the first ~~quarter~~half of 2015 ~~compared~~reflect tothe ~~655~~settlement ~~MBbls~~of incontracts ~~the~~at ~~first~~prices ~~quarter~~below ofthe ~~2014.~~relevant ~~The~~strike ~~decrease~~prices. isAdditionally, ~~primarily~~in ~~due to~~ the ~~sale~~first half of ~~our~~2015, ~~West~~$15.6 ~~Montalvo Field~~million inof the ~~fourth~~realized ~~quarter~~gain ofwas ~~2014.~~related ~~Our~~to ~~average~~the ~~realized~~settlement ~~price~~of ~~for~~our ~~oil~~2016 ~~decreased~~derivative ~~$56~~contract with ABN AMRO.38 ~~per~~Unrealized ~~Bbl~~commodity derivative (~~60%~~gains) ~~from~~losses ~~$94.55~~represent ~~per~~the ~~Bbl~~change in the ~~first~~fair ~~quarter~~value of ~~2014~~our open derivative contracts from period to ~~$38~~period.17 ~~per~~Derivative ~~Bbl~~premiums ~~for~~are ~~the~~amortized ~~first~~over ~~quarter~~the term of ~~2015.~~the underlying derivative contracts.

~~Natural gas~~Income ~~sales~~Tax ~~decreased~~Expense ~~$1.1 million~~ (~~69%~~Benefit) ~~in the first quarter of 2015 to $0~~.~~5 million~~ Due ~~compared~~ to ~~$1.6 million~~our invaluation ~~the~~allowance, ~~first~~there ~~quarter~~was ofno ~~2014.~~income ~~Natural~~tax ~~gas production~~expense ~~decreased~~(benefit) byrecorded ~~40%~~for in the ~~first~~six ~~quarter~~month ofperiods ~~2015~~ended June 30, ~~with~~2015 ~~production~~or of2014. ~~160~~As ~~MMcf~~long ~~compared~~as towe ~~269~~continue ~~MMcf~~to inconclude ~~the~~that ~~first~~we ~~quarter~~have ofa ~~2014.~~need ~~The~~for ~~decrease~~a isfull ~~primarily~~valuation ~~due~~allowance toagainst ~~the~~our ~~sale~~net ofdeferred ~~our~~tax ~~West Montalvo~~ assets., ~~Our~~we ~~average~~likely ~~realized~~will ~~price~~not ~~for~~have ~~natural~~any ~~gas decreased~~income ~~$2.88~~tax ~~per~~expense ~~Mcf~~or ~~(48%)~~benefit ~~from~~other ~~$6.06~~than ~~per~~for ~~Mcf~~federal inalternative ~~the~~minimum ~~first~~tax ~~quarter~~expense ofor ~~2014~~for tostate ~~$3.18~~income ~~per Mcf in the first quarter of 2015~~taxes.

Other Revenues. Other revenues increased $0.2 million in the first quarter of 2015 to $0.7 million compared to $0.5 million in the first quarter of 2014. The increase is primarily due to higher pipeline revenue in the first quarter of 2015. 31

~~Lease~~Table ~~Operating Expenses. Lease operating expenses ("LOE") decreased $4.6 million (24%) in the first quarter~~ of 2015 to $14.9 million compared to $19.5 million in the first quarter of 2014. The decrease was primarily due to the sale of the West Montalvo field in the fourth quarter of 2014, as well as lower lease operating expenses at the South Ellwood and Sockeye fields. On a per unit basis, LOE decreased by $0.26 per BOE from $27.81 in the first quarter of 2014 to $27.55 in the first quarter of 2015. Contents

~~Property~~Net ~~and~~Income ~~Production Taxes~~(Loss). ~~Property~~ For ~~and~~Venoco, ~~production~~net ~~taxes~~loss ~~increased~~for ~~$0.4 million (24%) in~~ the first ~~quarter~~half of 2015 to was $2131.16 million compared to the net income of $10.78 million infor the ~~first~~same ~~quarter~~period ofin 2014. ~~The~~For ~~increase~~DPC, isnet ~~primarily~~loss ~~due~~for tothe ~~higher~~first ~~property~~half ~~taxes~~of ~~from~~2015 ~~prior~~was ~~drilling results at our South Ellwood field~~$151.2 million Oncompared ato ~~per~~the ~~BOE~~net ~~basis, property~~loss ~~and~~of ~~production taxes increased~~ $116.456 million ~~per~~for ~~BOE~~the tosame ~~$3.93~~period in ~~the~~2014. ~~first~~The ~~quarter~~changes ofbetween ~~2015~~periods ~~from~~are ~~$2.48~~the inresult of the ~~first~~items ~~quarter~~discussed ~~of 2014~~above.

~~Depletion,~~Liquidity ~~Depreciation~~ and ~~Amortization~~Capital (DD&A). DD&A expense decreased $2.4 million (21%) to $8.8 million in the first quarter of 2015 compared to $11.2 million in the first quarter of 2014. The decrease was primarily due to the sale of the West Montalvo assets in the third quarter of 2014. DD&A expense on a per unit basis increased $0.40 per BOE to $16.27 per BOE for the first quarter of 2015 compared to $15.97 per BOE for the first quarter of 2014. Resources

~~Accretion~~Venoco’s primary sources of ~~Abandonment~~liquidity ~~Liability~~are cash generated from our operations and proceeds from debt transactions. ~~Accretion~~ ~~expense~~In ~~decreased~~addition, Venoco has commodity derivative positions with a net asset value of $039.2 million ~~(29%)~~as of June 30, 2015. If unwound, these positions could provide an additional source of liquidity subject to $0the commodity price environment at the relevant time.5 Venoco unwound one position on April ~~million~~2, in2015, ~~the~~which ~~first~~hedged ~~quarter~~1,715 barrels per day of ~~2015 compared~~ toour 2016 oil production, receiving proceeds of $015.76 million. inDPC’s ~~the~~primary ~~first~~sources ~~quarter~~of liquidity are distributions from Venoco and the issuance of ~~2014.~~debt securities.

~~General~~Cash ~~and Administrative (G&A). The following table summarizes the components of Venoco's general and administrative expense incurred during the periods indicated (in thousands):~~ Flows

	Three Months Ended March 31,
	Venoco, Inc.						Denver Parent Corporation
	2014			2015
	Six Months Ended June 30,						Six Months Ended June 30,
General and administrative costs	$	13,250		$	9,256
	2014			2015			2014			2015
Share-based compensation costs capitalized		(857	)		(48	)
	(in thousands)
General and administrative costs capitalized		(3,731	)		(2,538	)
Cash (used in) provided by operating activities	$	30,857		$	11,192		$	15,209		$	11,123

Cash (used in) provided by investing activities	(52,357		)	(5,616		)	(52,357		)	(5,616		)
General and administrative expense, net of amounts capitalized	$	8,662		$	6,670
Cash (used in) provided by financing activities	20,737			92,978			24,533			92,978

35Net cash provided by operating activities for Venoco was $11.2 million in the first half of 2015 compared to net cash provided by operating activities of $30.9 million in the 2014 period. Cash flows provided by operating activities in the first half of 2015 as compared to cash flows provided by operating activities in the first half of 2014 were impacted by the lower oil prices, lower oil and natural gas production, and the effect of shutting in Platform Holly due to the pipeline spill.

~~Table~~Net cash provided by operating activities for DPC was $11.1 million in the first half of ~~Contents~~2015 compared to $15.2 million provided in the 2014 period. The difference in the amounts between Venoco and DPC relates to additional DPC interest expense.

~~Venoco~~Net ~~G&A~~cash ~~expenses~~used ~~decreased~~in ~~$2.0 million~~investing ~~(23%)~~activities tofor Venoco and DPC was $65.76 million in the first ~~quarter~~half of 2015 compared to net cash used by investing activities of $852.74 million in the 2014 period. The primary investing activities in the first ~~quarter~~ half of ~~2014~~2015 were $7.3 million ~~The~~in ~~decrease~~capital isexpenditures ~~due~~on oil properties related to ~~lower~~our ~~employee~~capital ~~related~~expenditure ~~G&A~~program, ~~costs~~partially asoffset aby ~~result~~$1.8 million ofreceived from the ~~reduction~~final insettlement ~~work~~from ~~force~~the ~~program~~sale ~~introduced~~of inMontalvo ~~2014~~and tocertain ~~reduce~~other ~~our~~assets. ~~overhead~~The toprimary beinvesting ~~more~~activities ~~reflective~~in the first half of ~~the~~2014 ~~asset~~were ~~base~~$52.0 million ~~we have~~in ~~following~~capital ~~the~~expenditures ~~Sacramento~~on ~~Basin~~oil ~~and~~properties ~~West~~related ~~Montalvo~~to ~~asset~~our ~~sales.~~capital expenditure program.

~~DPC incurred~~Net ~~nominal~~cash ~~G&A~~provided ~~expenses~~by financing activities for Venoco was $92.9 million in the first half of 2015 compared to net cash provided by financing activities of $20.7 million during the 2014 period. The primary financing activities in the first ~~quarter~~half of 2015 were borrowings of $340 million and payments of $155 million. The primary financing activities in the first half of 2014 were borrowings of $132.0 million payments of $107 million and a dividend paid to DPC of $3.19 million.

~~Interest~~Net ~~Expense. For~~cash ~~Venoco,~~provided ~~interest~~by ~~expense~~financing ~~decreased~~activities ~~$1.5 million~~for ~~(12%)~~DPC towas $1192.~~4 million in the first quarter of 2015 compared to $12.~~9 ~~million~~ ~~in the first quarter of 2014. The decrease was primarily the result lower total outstanding borrowings on the revolving credit facility. For DPC, interest expense decreased $0.4~~ million ~~(2%) to $20.7 million~~ in the first ~~quarter~~half of 2015 compared to ~~$21.1 million~~net incash ~~the~~provided ~~first~~by ~~quarter~~financing ofactivities ~~2014. The incremental difference~~ of $924.35 million ~~from Venoco's~~during ~~total~~the ~~interest~~2014 ~~expense to DPC's total consolidated interest expense was due to interest on DPC's 12~~period.~~25% / 13.00% senior PIK toggle notes.~~

~~Amortization~~Capital ofResources Deferred Loan Costs. For Venoco, amortization of deferred loan costs decreased $0.2 million (25%) to $0.6 million in the first quarter of 2015 compared to $0.8 million in the first quarter of 2014. For DPC, amortization of deferred loan costs decreased $0.2 million (18%) to $0.9 million in the first quarter of 2015 compared to $1.1 million in the first quarter of 2014. The costs incurred relate to our loan agreements and ~~are amortized over the estimated lives of the agreements.~~ Requirements

~~Commodity~~Our ~~Derivative~~current ~~Losses~~2015 ~~(Gains)~~capital expenditure budget is $33 million. This amount is substantially less than it has been in past years and is reflective of current market and economic conditions. We previously expected our 2015 capital expenditures to be devoted primarily to operational improvements, ~~Net~~regulatory, health, safety and environmental compliance and progressing other long lead-time projects. ~~The~~ ~~following~~However, ~~table~~as ~~sets~~a ~~forth~~result of the ~~components~~recently completed series of ~~commodity~~financing ~~derivative~~transactions ~~losses~~which ~~(gains)~~reduced our near-term cash interest expense, ~~net~~and provided us with flexibility and additional liquidity to advance longer term projects, we have decided to proceed with drilling activities in ~~our~~ ~~condensed consolidated~~2015. We ~~statements~~are currently drilling one well off of ~~operations~~Platform Gail at the Sockeye field into the M2 zone. Additionally we are preparing an engineering program for the ~~periods~~drilling ~~indicated~~of ~~(in thousands):~~one additional well into the M2 zone at Platform Gail.

	Three Months Ended March 31,
	2014			2015
Realized commodity derivative losses (gains)	$	3,525		$	(14,865	)
Unrealized commodity derivative losses (gains) for changes in fair value		(5,620	)		1,960

Commodity derivative losses (gains), net	$	(2,095	)	$	(12,905	)

The aggregate levels of capital expenditures in 2015, and the allocation of those expenditures, are dependent on a variety of factors, including changes in commodity prices, permitting matters, the availability of capital resources to fund the expenditures and changes in our business assessments as to where our capital can be most profitably employed. Accordingly, the actual levels of capital

Realized commodity derivative gains or losses represent the difference between the strike prices in the contracts settled during the period and the ultimate settlement prices. The realized commodity derivative gains in the first quarter of 2014 and 2015 reflect the settlement of contracts at prices below the relevant strike prices. Unrealized commodity derivative (gains) losses represent the change in the fair value of our open derivative contracts from period to period. Derivative premiums are amortized over the term of the underlying derivative contracts. 32

~~Income~~Table ~~Tax~~of Expense (Benefit). Due to our valuation allowance, there was no income tax expense (benefit) recorded for the quarters ended March 31, 2015 or 2014. As long as we continue to conclude that we have a need for a full valuation allowance against our net deferred tax assets, we likely will not have any income tax expense or benefit other than for federal alternative minimum tax expense or for state income taxes. Contents

~~Net~~expenditures ~~Income~~and ~~(Loss). For~~the ~~Venoco,~~allocation ~~net~~of ~~loss~~those ~~for~~expenditures ~~the~~may ~~first~~vary ~~quarter~~materially offrom ~~2015~~our ~~was $11~~estimates.~~8 million~~ ~~compared~~Our toother ~~the~~principal ~~net~~anticipated ~~income~~uses of ~~$9.6 million~~ ~~for the~~cash ~~same~~are ~~period~~ongoing inoperating ~~2014.~~expenses ~~For~~and ~~DPC~~interest payments on our indebtedness. Historically, ~~net~~we ~~loss~~have ~~for~~used ~~the~~funds ~~first~~from ~~quarter~~operations ofand ~~2015~~borrowings ~~was~~under ~~$21.4 million~~our ~~compared~~revolving tocredit ~~the~~facility ~~net~~as ~~income~~our primary sources of $0liquidity.~~9 million~~ ~~for~~We ~~the~~project ~~same~~that ~~period~~cash inflow ~~2014.~~from ~~The~~operations ~~changes~~and ~~between periods~~cash ~~are~~on ~~the~~hand ~~result~~resulting offrom ~~the~~our ~~items~~recent ~~discussed~~financing ~~above.~~transactions will be sufficient to fund our planned capital expenditures and ongoing operations in 2015.

36We are currently pursuing a number of actions to improve our balance sheet. We cannot assure you that any initiatives will be successful. Uncertainties relating to our capital resources and requirements include the possibility that one or more of the counterparties to our hedging arrangements may fail to perform under the contracts, the effects of changes in commodity prices and differentials, and the possibility of an unexpected interruption in production.

~~Table~~In ofaddition, ~~Contents~~Venoco is subject to various legal and contractual limitations on its ability to pay dividends or otherwise make distributions to DPC, and DPC will be able to pay interest on its 12.25% /13.00% senior PIK toggle notes in cash only if it receives cash dividends or distributions from Venoco. Venoco’s agreements permit it to pay dividends to DPC in certain circumstances. We do not expect these criteria to be met in 2015. The February 2015 interest payment on DPC’s notes was made 100% in kind, and we expect to continue making interest payments 100% in kind for the foreseeable future.

~~Liquidity~~Because we must dedicate a substantial portion of our cash flow from operations to the payment of amounts due under our debt agreements, that portion of our cash flow is not available for other purposes. Our ability to make scheduled interest payments on our indebtedness, maintain compliance with the covenants in our debt agreements and ~~Capital~~pursue ~~Resources~~ our capital expenditure plan will depend to a significant extent on our financial and operating performance, which is subject to prevailing economic conditions, commodity prices and a variety of other factors. If our cash flow and other capital resources are insufficient to fund our debt service obligations and our capital expenditure budget while also allowing us to maintain compliance with our debt agreements, we may be forced to reduce or delay scheduled capital projects, sell material assets or operations, seek to restructure our indebtedness, and/or seek additional capital. Needed capital may not be available on acceptable terms or at all. Our ability to raise funds through the incurrence of additional indebtedness and certain other means is limited by covenants in our debt agreements. In addition, pursuant to mandatory prepayment provisions in our debt agreements, our ability to respond to a shortfall in our expected liquidity by selling assets or incurring additional indebtedness would be limited by provisions in the agreements that require us to use some or all of the proceeds of such transactions to reduce amounts outstanding under the agreements in some circumstances. If we are unable to obtain funds when needed and on acceptable terms, we may not be able to complete acquisitions that may be favorable to us, meet our debt obligations or finance the capital expenditures necessary to replace our reserves.

~~Venoco's~~The ~~primary~~additional ~~sources~~indebtedness we incurred in connection with and after the going private transaction, significant decreases in the price of oil and various operational issues have increased the debt- and liquidity-related ~~are~~risks ~~cash~~we ~~generated~~face, ~~from~~including the risks that we may default on our ~~operations~~obligations under our debt agreements, that our ability to replace our reserves and ~~proceeds~~maintain ~~from~~our production may be adversely affected by capital constraints and the financial covenants under our debt ~~transactions.~~agreements Inand ~~addition,~~that ~~Venoco has~~we ~~commodity~~may ~~derivative~~be ~~positions~~more ~~with~~vulnerable ato ~~net~~further ~~asset~~adverse ~~value~~changes ofin ~~$76~~commodity prices and other unfavorable economic conditions.~~1 million~~ asPrior to the termination of ~~March 31,~~Venoco’s ~~2015.~~revolving Ifcredit ~~unwound~~facility, ~~these~~we ~~positions~~were ~~could~~required ~~provide~~to anobtain ~~additional~~numerous ~~source~~amendments ofto ~~liquidity~~and ~~subject~~waivers to from the ~~commodity~~lenders ~~price~~under ~~environment~~the atfacility as a result of anticipated or actual breaches of the ~~relevant~~covenants ~~time~~in the facility. ~~Venoco~~We ~~unwound~~may ~~one~~be ~~position~~forced onto ~~April 2,~~seek ~~2015,~~similar ~~which~~amendments ~~hedged~~or 1waivers from current or future lenders,~~715~~ ~~barrels~~and ~~per~~there ~~day~~is ofno ~~our~~assurance ~~2016~~that ~~oil~~we ~~production,~~will ~~receiving~~be ~~proceeds~~able ~~of $15.6 million.~~to ~~DPC's~~obtain ~~primary~~them ~~sources~~in ofa ~~liquidity~~timely manner or at all. We are ~~distributions~~currently ~~from~~exploring ~~Venoco~~additional deleveraging efforts and ~~the~~have ~~issuance~~significantly ofcurtailed ~~debt~~our ~~securities~~planned capital expenditures for 2015 relative to prior years. There can be no assurance that our deleveraging efforts will be successful.

~~Cash~~Off-Balance ~~Flows~~ Sheet Arrangements

	Venoco, Inc.						Denver Parent Corporation
	Three Months Ended March 31,						Three Months Ended March 31,
	2014			2015			2014			2015
	(in thousands)
Cash (used in) provided by operating activities	$	4,287		$	(10,662	)	$	(11,524	)	$	(10,730	)
Cash (used in) provided by investing activities		(26,375	)		(2,863	)		(26,375	)		(2,863	)
Cash (used in) provided by financing activities		38,082			5,991			41,983			5,991

At June 30, 2015, we had no existing off-balance sheet arrangements, as defined under SEC rules, that have or are reasonably likely to have a material current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

~~Net cash~~Adjusted ~~used~~Consolidated byNet ~~operating~~Tangible activities for Venoco was $10.7 million in the first quarter of 2015 compared to net cash provided by operating activities of $4.3 million in the 2014 period. Cash flows used in operating activities in the first quarter of 2015 as compared to cash flows provided by operating activities in the first quarter of 2014 were impacted by the lower oil prices and lower oil and natural gas production. Assets

~~Net cash~~As ~~used~~of inJune 30, ~~operating~~2015, ~~activities for~~ DPC’s ~~was~~“Adjusted ~~$10.7 million~~Consolidated inNet ~~the~~Tangible ~~first~~Assets,” ~~quarter~~as ofthat ~~2015~~term ~~compared~~is todefined ~~$11.5 million used~~ in the ~~2014~~indenture ~~period.~~governing ~~The~~its ~~difference~~12.25% in/ ~~the amounts~~13.00% ~~between~~senior ~~Venoco~~PIK ~~and~~toggle ~~DPC~~notes, ~~relates~~was to$880 ~~additional DPC interest expense~~million.

Net cash used in investing activities for Venoco and DPC was $2.9 million in the first quarter of 2015 compared to net cash provided by investing activities of $26.4 million in the 2014 period. The primary investing activities in the first quarter of 2015 were $4.5 million in capital expenditures on oil properties related to our capital expenditure program, partially offset by a $1.8 million final settlement from the sale of Montalvo and certain other assets. The primary investing activities in the first quarter of 2014 were $26.2 million in capital expenditures on oil properties related to our capital expenditure program. 33

~~Net cash~~Table ~~provided by financing activities for Venoco was $6.0 million in the first quarter~~ of 2015 compared to net cash provided by financing activities of $38.1 million during the 2014 period. The primary financing activities in the first quarter of 2015 were net borrowings of $6.4 million on the revolving credit facility. The primary financing activities in the first quarter of 2014 were net borrowings of $42.0 million on the revolving credit facility and a dividend paid to DPC of $3.9 million. Contents

~~Net cash~~ITEM ~~provided by financing activities for DPC was $5~~3.~~9 million~~ inQuantitative ~~the~~and ~~first~~Qualitative ~~quarter~~Disclosures ofAbout ~~2015~~Market ~~compared to net cash provided by financing activities of $42.0 million during the 2014 period.~~ Risk

~~Capital~~This ~~Resources~~section provides information about derivative financial instruments we use to manage commodity price volatility. Due to the historical volatility of crude oil and ~~Requirements~~ natural gas prices, we have implemented a hedging strategy aimed at reducing the variability in cash flows resulting from changes in commodity prices. Currently, we purchase puts and enter into other derivative transactions such as collars and fixed price swaps in order to hedge our exposure to changes in commodity prices. All contracts are settled with cash and do not require the delivery of a physical quantity to satisfy settlement. While this hedging strategy may result in us having lower cash flows than we would have if we were unhedged in times of higher oil and natural gas prices, management believes that reducing volatility associated with commodity prices is beneficial. We may, from time to time, opportunistically restructure existing derivative contracts or enter into new transactions to effectively modify the terms of current contracts in order to improve the pricing parameters in existing contracts or realize the current value of our existing positions. We may use the proceeds from such transactions to secure additional contracts for periods in which we believe there is additional unmitigated commodity price risk or for other corporate purposes.

~~Our 2015 capital expenditure budget is $18 million.~~ This ~~amount~~section isalso ~~substantially~~provides ~~less~~information ~~than~~about ~~it has been in past years and is reflective of current market and economic conditions. We expect~~ our ~~2015~~interest ~~capital~~rate ~~expenditures to be devoted primarily to operational improvements, regulatory, health, safety and environmental compliance and progressing other long lead-time projects~~risk. ~~The~~See ~~aggregate~~“—Interest ~~levels~~Rate ~~of capital expenditures in 2015, and the allocation of those expenditures, are dependent on a variety of factors,~~ Risk.”

37Commodity Derivative Transactions

~~Table~~Commodity Derivative Agreements. As of ~~Contents~~June 30, 2015, we had entered into various swap, collar and option agreements related to our oil and natural gas production. The aggregate economic effects of those agreements are summarized below. Location and quality differentials attributable to our properties are not included in the following prices. The agreements provide for monthly settlement based on the differential between the agreement price and the price per the applicable index, Inter-Continental Exchange Brent (“Brent”) (oil).

including changes in commodity prices, permitting matters, the availability of capital resources to fund the expenditures and changes in our business assessments as to where our capital can be most profitably employed. Accordingly, the actual levels of capital expenditures and the allocation of those expenditures may vary materially from our estimates. Our other principal anticipated uses of cash are ongoing operating expenses and interest payments on our indebtedness. Historically, we have used funds from operations and borrowings under our revolving credit facility as our primary sources of liquidity. We project that cash flow from operations and cash on hand resulting from our recent financing transactions will be sufficient to fund our planned capital expenditures and ongoing operations for 2015.

	Oil (Brent)
	Barrels/day	Weighted Avg. Prices per Bbl
January 1 - December 31, 2015:
Swaps	460	$100.40
Collars	4,135	$90.00/$100.00
January 1 - December 31, 2016:
Swap	1,715	$96.00

~~We are~~Portfolio ~~currently pursuing a number~~ of ~~actions~~Derivative to improve our balance sheet including minimizing our capital expenditures by suspending drilling operations for 2015, effectively managing our working capital and improving our cash flows from operations. We cannot assure you that these initiatives will be successful. Uncertainties relating to our capital resources and requirements include the possibility that one or more of the counterparties to our hedging arrangements may fail to perform under the contracts, the effects of changes in commodity prices and differentials, and the possibility of an unexpected interruption in production. Transactions

~~In addition,~~Our ~~Venoco~~portfolio isof ~~subject~~commodity toderivative ~~various~~transactions ~~legal~~as ~~and~~of ~~contractual limitations on its ability to pay dividends or otherwise make distributions to DPC~~June 30, and DPC will be able to pay interest on its 12.25% /13.00% senior PIK toggle notes in cash only if it receives cash dividends or distributions from Venoco. The agreements permit Venoco to pay dividends to DPC in certain circumstances. We do not expect these criteria to be met in 2015. ~~The~~is ~~February~~summarized ~~2015 interest payment on DPC's notes was made 100% in kind, and we expect to continue making interest payments 100% in kind for the foreseeable future.~~ below:

The following is a summary of the terms of our significant debt agreements as of March 31,2015 and as of the date of this report. As discussed in "—Recent Events," Venoco entered into financing transactions in April 2015 pursuant to which it (i) issued the first lien secured notes and the second lien secured notes, (ii) entered into the term loan facility, (iii) repaid all amounts outstanding under its revolving credit facility and terminated the facility and (iv) repurchased $194 million aggregate principal amount of, and accrued interest on, its 8.875% senior notes due 2019. Oil

Revolving Credit Facility ($71.4 million outstanding as of March 31, 2015; terminated as of the date of this report). In October 2012, Venoco entered into a fifth amended and restated credit agreement governing its revolving credit facility, and entered into several subsequent amendments to the agreement. The facility had a maturity date of March 31, 2016. The agreement contained customary representations, warranties, events of default, indemnities and covenants, including covenants that restricted Venoco's ability to incur indebtedness and required it to meet specified financial tests. As of March 31, 2015, all covenants under the facility were satisfied or waived.

Type of Contract	Counterparty	Basis	Quantity (Bbl/d)	Strike Price ($/Bbl)	Term
Collar	Bank of America	Brent	1,000	$90.00/$98.00	Jan 1, 14 - Dec 31, 15
Collar	Bank of America	Brent	1,000	$90.00/$101.25	Jan 1, 14 - Dec 31, 15
Collar	Bank of America	Brent	1,675	$90.00/$98.15	Jan 1, 14 - Dec 31, 15
Colla

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