With all of the folks trying to get out of the Gulf of Mexico, you'd think there's no more oil or gas there. Of course, there's a little more to it than that -- it can be difficult (and expensive) to operate in that area, and maybe it's better for Houston Exploration (NYSE:THX) in the long run to leave it to companies like Apache (NYSE:APA), who seem to have much more success with it.

For those not familiar with the company, Houston Exploration used to be balanced between offshore assets in the Gulf and onshore assets in places like Texas, Colorado, and Utah. Management decided that the Gulf ops didn't really fit into their future plans and so they've gone about selling them -- disposing of assets off Texas for $220 million and assets off Louisiana for $590 million. All in all, the prices that the company received seem relatively fair to me, but it wouldn't surprise me if there were analysts out there hoping and modeling for better.

So what's the company going to do now? Well, obviously it's going to focus on maximizing their onshore opportunities. It seems like the company could book more reserves through recoveries as it further exploits its Texas assets -- assuming that it can successfully move "possible" reserves to proven or probable. What's more, in addition to share repurchases, I would expect the company to look for acquisition opportunities.

It will certainly take some time for this to all play out, so I'm not sure how much this recent earnings report tells us. Revenue was up 7% on a combination of modestly lower production and higher realized prices, while reported operating and net income was lower. Here, though, is some of the rationale for moving onshore -- onshore production was stronger this quarter (actually up). What's more, costs were up, but Houston has never been a great Gulf operator, so I would think it could see margin improvements from the switch as well.

There are definitely some risks to this story. Production targets could prove challenging and the company still has a relatively low reserve life today -- though perhaps that makes them interesting to someone else as an acquisition candidate. Part of what attracts me, though, is the skepticism and pessimism about whether or not it'll achieve its onshore goals. With so many analysts expecting so much from many other energy companies, maybe Houston has the board arranged in a way so that it could actually outperform in the coming years.

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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).