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March 18, 2009

To the Shareholders of Biloxi Marsh Lands Corporation:

We are pleased to report that 2008 was the thirteenth consecutive profitable year for your Company. Total revenue for the year ending December 31, 2008 was $2,960,529 compared to total revenue of $4,639,317 in 2007. The annual revenue breakdown is as follows: 2008 revenue from oil and gas activity was $3,247,721 compared to revenue of $4,861,263 in 2007. During 2008 total revenues included a $613,015 loss emanating from partnership income which represents the Company’s interest in B&L Exploration, LLC (BLX) compared a loss of $974,359 in the same category for the prior year. It should be noted that BLX was able to expense $855,599 and $212,995 for Depreciation, Depletion, and Amortization during 2008 and 2007 respectively. Dividend and interest income for 2008 was $330,394 compared to $521,942 for 2007. In 2008 we incurred a cumulative loss from the sale of investment securities of $26,696 as compared to a cumulative gain from the sale of investment securities in the amount of $208,600 in 2007. During the second quarter of 2008, management decided to realign its treasury investments reducing the Company’s exposure to equity investments. This decision prompted the sale of equity securities during the second and third quarters of 2008. As a result, the Company carried on its books a gain realized from the sale of securities of $521,115 through the third quarter of 2008. During the fourth quarter of 2008, due to the precipitous decline in the value of equity investments and in an effort to increase the Company’s liquidity, management decided to offset the gain on the sale of securities realized during the second and third quarters. Meanwhile, expenses for the year totaled $1,653,448 compared to $1,432,138 for the prior year. For the year net earnings were $1,076,816 or $.39 per share compared to $2,340,175 or $.85 per share in 2007.
As of December 31, 2008 the combined gross daily production rate from 11 wells operated by the Company’s mineral Lessees was approximately 10.7 million cubic feet (mmcf) of natural gas with net daily production accruing to the Company of approximately 1.1 mmcf. Combining this daily production with the Company’s proportional share of the daily production from the B&L Exploration, LLC (BLX) wells makes the total net daily production accruing to the Company as of December 31, 2008 approximately 2.2 mmcf. While the SL 18955 #1 and 18957 #1 wells are near the end of their productive lives, the SL 19064 #1 and LKEU #1 wells were being brought on production during December of 2008. It should be noted that as of March 1, 2009, the combined daily production rates from all of the BLX wells was approximately 9.0 mmcf. This makes the total net daily natural gas production accruing to the Company (Lessee wells and BLX wells) as of March 1, 2009 approximately 2.7 mmcf. The Company owns a 75% interest in BLX.
The Company commissioned T. J. Smith & Company, Inc., independent reservoir engineers, to complete a proved reserve study. This reserve study estimates that as of December 31, 2008 the Company’s “Developed Producing” (PDP) reserves are .8188 billion cubic feet (bcf) of natural gas and estimates that the “Developed Non-Producing” (PDNP) reserves are .6413 bcf, with the “Proved Un-Developed” (PUD) reserves being 1.0325 bcf, totaling 2.4926 bcf of estimated proved reserves (see “Appendix A” for definitions of reserve classifications). For the years ending 2007 and 2008, the total amount of proved natural gas reserves remained constant near 2.5 bcf, while the “Proved Developed Producing” (PDP) reserves actually decreased year over year from approximately .9144 bcf to .8188 bcf, a decrease of .09 bcf in PDP reserves (see note 5 below). Additionally, this reserve study estimates that slightly more than 20% of the PDP and PDNP reserves directly attributable to the Company will deplete by the end of 2009.

Please find the following table showing the Company’s proved reserves as of December 31, 2008: Proved Reserves as of December 31, 2008 (3), (5)
Developed Developed Proved
Producing (PDP) Non-Producing (PDNP) Un-Developed (PUD) Total
(Dollars in thousands)
Net Proved Reserves (1):
Natural Gas (BCF): .8188 .6413 1.0325 2.4926
Estimated Future Net Revenues (before income taxes) (2)’ 12,870 (4)
Estimated Discounted Future Net Revenues (before income taxes) (2): …. 9,919 (4)
(1) In general, our engineers based their estimates of economically recoverable oil and natural gas reserves and of the future net revenues therefrom on a number of variable factors and assumptions, such as historical production from the subject properties, the assumed effects of regulation by governmental agencies and assumptions concerning future oil and natural gas prices, all of which may vary considerably from actual results. All such estimates are to some degree speculative, and classifications of reserves, that are based on the mechanical status of the completion, may also define the degree of speculation involved. For these reasons, estimates of the economically recoverable oil and natural gas reserves attributable to any particular group of wells, classifications of such reserves based on risk of recovery and estimates of the future net revenues expected therefrom, prepared by different engineers or by the same engineers at different times, may vary substantially. Therefore, the actual production, revenues, and severance taxes with respect to reserves likely will vary from such estimates, and such variances could be material.
Estimates with respect to proved reserves that may be developed and produced in the future are often based on volumetric calculations and by analogy to similar types of reserves rather than actual production history. Estimates based on these methods are generally less reliable than those based on actual production history, and subsequent evaluation of the same reserves, based on production history, will result in variations, which may be substantial, in the estimated reserves.
In accordance with applicable requirements of the Commission, the estimated discounted future net revenues from estimated proved reserves are based on prices as of the date of the estimate. Actual future prices may be materially higher or lower. Actual future net revenues also will be affected by factors such as actual production, supply and demand for oil and natural gas, curtailments or increases in consumption by natural gas purchasers, changes in governmental regulations or taxation and the impact of inflation on costs.
(2) The Estimated Discounted Future Net Revenues represents the Estimated Future Net Revenues before income taxes discounted at 10%. For calculating The Estimated Future Net Revenues and the Estimated Discounted Future Net Revenues, we used the price as of December 31, 2008 which was $5.71 per mmcf of natural gas.
(3) The Meridian Resource and Exploration, LLC and Manti Jamba, Ltd. separately operate the various producing wells. The Company has no control over operations and maintains only a landowner’s mineral royalty interest. Please see footnote (i) following the final paragraph of this letter for a warning concerning forward-looking information.
(4) The value of the proved reserves “Undiscounted, M$” and “Discounted at 10%, M$” includes a minimal amount of Oil and
Condensate as well as Natural Gas Liquids.
(5) The majority of “Proved Reserves as of December 31, 2008” and the related “Estimated Revenues” are “Proved Undeveloped” (PUD). As is typical to PUD reserves there is currently no production related to this category and additional development drilling is necessary for production to commence. As of the date of this letter, there is no additional development drilling scheduled.
Based on another proved reserve study completed by T. J. Smith & Company, Inc., as of December 31, 2008 the BLX’s estimated proved reserves were 1.436 billion cubic feet (bcf) of natural gas which equates to “Estimated Future Net Revenues” of $6.43mm with an “Estimated Discounted Future Net Revenues” of $5.74mm (see note 2 above). Based upon the Company’s seventy-five percent ownership of BLX the estimated reserves allocated to the Company were 1.08 bcf of natural gas which equates to “Estimated Future Net Revenues” of $4.82mm with an “Estimated Discounted Future Net Revenues” of $4.31mm (see note 2 above). Combining the proved reserves in the foregoing table with the Company’s portion of BLX’s estimated reserves makes the total estimated proved reserves accruing the Company 3.57 bcf of natural gas. The combined “Estimated Future Net Revenues” is $17.69mm and the combined “Estimated Discounted Future Net Revenues” is $14.23mm (see notes 2, 4 & 5 above).

We elected not to host a booth during this year’s NAPE Expo in Houston, Texas. While we did not host a booth, Company representatives attended NAPE in an effort to identify investment opportunities. In the current business environment, management believes that it will have more success placing prospects through private marketing efforts. As stated in the past, deeper Tuscaloosa prospects are much more difficult to place than the shallower drilling packages previously placed by BLX. We are focusing on developing creative ways to explore the deeper horizons under our property that appear to be prospective on 3D Seismic.
During 2008 the Company, through its subsidiary BLX, entered into negotiations with the Whitney National Bank to affect a line of credit to be used for general corporate purposes. As a result BLX currently has available to it a line of credit in the amount of $5mm. BLX has only utilized a small portion of the line of credit and as of the date of this letter has no outstanding balance.
As previously reported, there is currently pending a possessory action suit which was filed by the Company in state district court on or about November 2, 2001. This suit was filed due to disturbances in the Company’s possession of Sections 1, 2 & 3, T13S, R16E. The disturbances of possession were caused by protective oil, gas & mineral leases granted by the Manuel Molero Family (Moleros) and the Louis and Gustave Carmadelle family entities (Carmadelles) to Manti Resources, Inc. (Manti). On or about April 11, 2002, the Moleros filed a declaratory judgment action with regard to the same acreage. Additionally, in 2003 Manti filed concursus proceedings, and began to deposit funds into the registry of the court representing royalties attributable to the conflict acreage in the producing unit. Meanwhile, Meridian Resource & Exploration LLC (Meridian) also filed concursus proceedings in 2003 with respect to additional producing units formed which contain conflict acreage. Consolidation of the concursus proceedings with the possessory and declaratory judgment actions above mentioned has been granted by the state courts.
As a result of adverse rulings by the state district court dating back to 2003 regarding the procedure to be employed at trial, the Company was forced to engage itself in protracted legal proceedings before the Louisiana appellate courts. In April of 2003 the state trial court ruled against the Company, essentially determining that it would not consider the issues involved in the Company’s first-filed possessory action prior to considering issues of ownership and title. Accordingly, the Company was forced to apply for a supervisory writ to the Louisiana Fourth Circuit Court of Appeal (“Fourth Circuit”). On September 30, 2003, the Fourth Circuit granted the Company’s writ, ordering the state district court to first make a finding of which party is in possession of the property prior to considering the issues of ownership and title. The Moleros challenged this ruling by application for a writ of certiorari to the Louisiana Supreme Court; however, the writ was denied on January 16, 2004. Thereafter, in an effort to circumvent the determination of possession altogether and avoid applicable Louisiana law, the Carmadelles challenged the substance and scope of this initial ruling by the Fourth Circuit on several occasions. In appellate rulings dated March 31, 2004, March 30, 2005, and June 27, 2005, the Fourth Circuit upheld its position in favor of the Company. The Carmadelles sought review of all of these Fourth Circuit rulings. The Louisiana Supreme Court denied these requests via rulings dated June 25, 2004 and February 3, 2006, respectively.
In response to the appellate rulings set out above, on or about July 20, 2006 the Carmadelles filed another petition in the state district court against the Company, the Assessor of St. Bernard Parish, the Sheriff of St. Bernard Parish and the Clerk of Court of St. Bernard Parish. This suit sought to prematurely litigate the issue of title in contravention of the rulings of the Fourth Circuit and the Louisiana Supreme Court. In response to the suit, the Company filed exceptions seeking to have the suit dismissed. The state district court granted the Company’s exceptions on April 9, 2007, and the matter was dismissed. No appeal was taken, and thus, the dismissal is now a final judgment.
Shortly thereafter, in May of 2007, for the fifth time, the Carmadelles, yet again, tried to have the issue of their title litigated prior to the determination of the Company’s possessory action by filing new litigation in the United States District Court in New Orleans against the Company, the Moleros, the Assessor of St. Bernard Parish, the Sheriff of St. Bernard Parish and the Clerk of Court of St. Bernard Parish. The Company immediately moved to have this new suit dismissed or, in the alternative, have the federal district court abstain from hearing the new lawsuit. The Company’s motion was granted in March of 2008, with the federal district

court electing to stay the federal proceedings pending resolution of the state court issues. Thereafter, in April of 2008, the Carmadelles filed a Notice of Interlocutory Appeal seeking a review of the District Court’s ruling by the United States Fifth Circuit Court of Appeals (“Fifth Circuit”). Appellate briefs have been filed and oral arguments held before the Fifth Circuit on March 4, 2009. We are currently awaiting a decision by the Fifth Circuit. If the ruling by the federal district court is upheld by the Fifth Circuit, the federal court litigation will be concluded (barring a Writ of Certiorari filed with the United States Supreme Court). Due to a concern that a decision in federal court could affect the state court proceedings, the parties have been reluctant to schedule the initial trial in state court until the outcome of the actions in federal court becomes apparent.
During 2008, in addition to the federal court proceedings, discovery in the state court proceedings, including but not limited to the taking of several depositions, was conducted by the Company’s attorneys as preparations for trial in state court continues.
Once the issues are settled by the federal courts in a manner that will allow the state district court proceedings to move forward, there will be an initial trial in state district court to determine which party was in possession of the property prior to the disturbance of the Company’s possession caused by the Moleros and Carmadelles granting protective oil, gas and mineral leases to Manti. The ruling in this initial trial will set the burden of proof by which each party must establish ownership. Once an un-appealable judgment is received in this initial trial, the state district court will conduct a second trial to determine ownership. Only after an un-appealable judgment is received in this second trial will the matter be resolved and the litigation complete. Taking into consideration the strong probability that each state district court ruling will be appealed, as of the date of this report there is no way to forecast a timetable for the conclusion of these matters.
In addition to the above described competing claims to the subject acreage, there are also competing claims between the Company and the State of Louisiana regarding certain tracts within the various producing units (“Concursus Proceedings”). The object of the Concursus Proceedings is to determine whether the State or the Company is entitled to the royalty on production attributable to the disputed acreage. The judgments ultimately rendered in these proceedings will order the distribution of royalty proceeds currently being deposited into the Registry of the Court. The competing claims between the Company and the State of Louisiana involve multiple suits covering different geographical areas which are beds of various bodies of water. We are in the process moving the first Concursus Proceeding toward trial with the goal of trying each of these Concursus Proceedings sequentially. This type of litigation is dependent on assembling the most respected team of experts. The Company has retained Louisiana’s most respected experts in the fields of land surveying, biological, physical, and cultural sciences as well as geoforensic services. While the trial is not yet scheduled in the first sequential Concursus Proceeding, we hope that it will be held during the fourth quarter of 2009 or the first quarter of 2010.
As of December 31, 2008, the Company’s potential share of the funds deposited in the various concursus’ accounts (if the Company prevails in all of the issues raised in all of the aforesaid litigation proceedings) is approximately 50 million dollars. This amount includes revenues from land and water-bottom disputes. There is no potential in any of the litigation, including the Concursus Proceedings, for rendition of an adverse judgment requiring the payment of Company funds.
On October 1, 2008 we announced our plans to repurchase up to 27,500 shares of our common stock. As of December 31, 2008 we have been successful in purchasing 5,000 shares of common stock. As of this time, we plan to continue to repurchase our common stock until we fulfill our goal of acquiring 27,500 shares.
Two years ago, the Company returned to its custom of paying one dividend per calendar year. During 2008 we paid $1.00 per share of outstanding common stock or $2,754,428 in November. It is anticipated that the custom of paying one dividend per calendar year will be followed in 2009. It should be noted that during 2008, a dividend was paid which equated to more than our net earnings. Since 2002 the Company has paid close to $39,000,000 in total dividends.

In the past we have reported that the Company developed The Biloxi Marsh Stabilization and Restoration Plan. After Hurricane Katrina we extended the scope of this project and retained additional technical experts to assist in formulating The Biloxi Marsh Stabilization and Restoration Plan. To enhance the surface of our property management is working closely with local, state and federal officials in an attempt to influence any restoration projects that may take place on or near the Company’s property. Our efforts have resulted in bringing the need to stabilize and restore the marshes of St. Bernard Parish, Louisiana the forefront of the coastal restoration debate. This is evidenced by restoration projects such as the closure of the Mississippi River Gulf Outlet (MRGO) and the Violet – Mississippi River diversion, as well as my recent appointment to the Governor’s Advisory Commission on Coastal Restoration and Flood Protection. A
complete copy of The Biloxi Marsh Stabilization and Restoration Plan is available on our website
www.biloximarshlandscorp.com .
Please remember to visit our website, www.biloximarshlandscorp.com to obtain general information about the Company as well as recent historical annual reports and all historical press releases. We strongly recommend that all interested parties become familiar with the information available on the Company’s website: www.biloximarshlandscorp.com .
Through our investment in BLX, we were able to replace our reserves and keep our production rates relatively steady. This was accomplished primarily due to BLX bringing two new wells on production during the fourth quarter of 2008. We are pleased that during the second quarter of 2008, management took steps to insulate the Company’s treasury from fluctuations in the equity markets by reducing our investment in equity securities. Management and your Board of Directors clearly understand the difficult business environment that we are operating in today and plan to move the Company forward in a cautious and prudent manner. With this said, we have a strong balance sheet accompanied by significant proved reserves and steady production rates relative to 2007. Based on these facts we are optimistic, that we will be able to take advantag: •f the current downturn in the oil and gas industry by identifying opportunities that may not have been avai b e in a more robust business environment. While challenging, we are hopeful that 2009 will be another • • ear for your Company.

William B. Rudolf
President and Chief Executive Officer Metairie, Louisiana
Email: [email protected]

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‘ This letter contains forward-looking statements regarding oil and gas discoveries, oil and gas exploration, development and production activities and reserves. Accuracy of the forward-looking statements depends on assumptions about events that change over time and is thus susceptible to periodic change based on actual experience and new developments. The Company cautions readers that it assumes no obligation to update or publicly release any revisions to the forward-looking statements in this report. Important factors that might cause future results to differ from these forward-looking statements include: variations in the market prices of oil and natural gas; drilling results; unanticipated fluctuations in flow rates of producing wells; oil and natural gas reserves expectations; the ability to satisfy future cash obligations and environmental costs; additional drilling, and general exploration and development risks and hazards. Readers are cautioned not to place undue reliance on forward-looking statements made by or on behalf of the Company. Each such statement speaks only as of the day it was made. The factors described above cannot be controlled by the Company. When used in this report, the words “hopeful”, “believes”, “estimates”, “plans”, “expects”, “should”, “outlook”, and “anticipates” and similar expressions as they relate to the Company or its management are intended to identify forward-looking statements.