The following discussion and analysis should be read in conjunction with the Company's unaudited consolidated financial statements and related footnotes presented in Item 1 and the Company's December 31, 2007 Form 10-KSB.

Overview

AMEN Properties, Inc. (the "Company") is in the business of acquiring profitable, cash-generating businesses with proven track records and the ability to create sustained value. The Company is a holding company and conducts its business through the following subsidiaries:

· AMEN Delaware, LLC ("Delaware") - real estate investments

· AMEN Minerals, LLC ("Minerals") - oil and gas royalties, other investments

· W Power & Light, LLC ("W Power") - retail electricity provider in the State of Texas

· Priority Power Management, LLC. ("Priority Power") - energy management, consulting and aggregation

Application of Critical Accounting Policies

Our discussion and analysis of financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, and contingencies as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. We evaluate our assumptions and estimates on an ongoing basis. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. These estimates form the basis for making judgments about the carrying values of assets and liabilities where that information is available from other sources. Certain estimates are particularly sensitive due to their significance to the financial statements. Actual results may differ significantly from management's estimates.

We believe that the most significant accounting policies that involve the use of estimates and assumptions as to future uncertainties and, therefore, may result in actual amounts that differ from estimates are the following:

- Impairments,

- Business combinations,

- Revenue recognition,

- Gain recognition on sale of real estate assets,

- Consolidation of variable interest entities,

- Allowance for doubtful accounts and

- Stock options

Impairments

Real estate and leasehold improvements are classified as long-lived assets held for sale or long-lived assets to be held and used. In accordance with SFAS No. 144, we record assets held for sale at the lower of carrying value or sales price less costs to sell. For assets classified as held and used, these assets are tested for recoverability when events or changes in circumstances indicate that the estimated carrying amount may not be recoverable. An impairment loss is recognized when expected undiscounted future cash flows from a Property is less than the carrying value of the Property. Our estimates of cash flows of the Properties requires us to make assumptions related to future rental rates, occupancies, operating expenses, the ability of the properties' tenants to perform pursuant to their lease obligations and proceeds to be generated from the eventual sale of our investment in the Properties. Any changes in estimated future cash flows due to changes in our plans or views of market and economic conditions could result in recognition of additional impairment losses.

If events or circumstances indicate that the fair value of an investment accounted for using the equity method has declined below its carrying value and we consider the decline to be "other than temporary," the investment is written down to fair value and an impairment loss is recognized. The evaluation of impairment for an investment would be based on a number of factors, including financial condition and operating results for the investment, inability to remain in compliance with provisions of any related debt

Business Combinations

We allocate the purchase price of acquired businesses to tangible and identified intangible assets acquired based on their fair values in accordance with SFAS No. 141, "Business Combinations." We initially record the allocation based on a preliminary purchase price allocation with adjustments recorded within one year of the acquisition.

In making estimates of fair value for purposes of allocating purchase price, management utilizes sources, including, but not limited to, independent value consulting services, independent appraisals that may be obtained in connection with financing the respective business, and other market data. Management also considers information obtained about each business as a result of its pre-acquisition due diligence in estimating the fair value of the tangible and intangible assets acquired.

The aggregate value of the tangible assets acquired is measured based on the sum of (i) the value of the property and (ii) the present value of the amortized in-place tenant improvement allowances over the remaining term of each lease. Management's estimates of the value of the property are made using models similar to those used by independent appraisers. Factors considered by management in its analysis include an estimate of carrying costs such as real estate taxes, insurance, and other operating expenses and estimates of lost rentals during the expected lease-up period assuming current market conditions. The value of the property is then allocated among building, land, site improvements, and equipment. The value of tenant improvements is separately estimated due to the different depreciable lives.

The aggregate value of intangible assets acquired is measured based on the difference between (i) the purchase price and (ii) the value of the tangible assets acquired as defined above. This value is then allocated among above-market and below-market in-place lease values, costs to execute similar leases (including leasing commissions, legal expenses and other related expenses), in-place lease values and customer relationship values.

Above-market and below-market in-place lease values for acquired properties are calculated based on the present value (using a market interest rate which reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to the in-place leases and (ii) management's estimate of fair market lease rates for the corresponding in-place leases, measured over a period equal to the remaining non-cancelable term of the lease for above-market leases and the initial term plus the term of the below-market fixed rate renewal option, if any, for below-market leases. We perform this analysis on a lease by lease basis. The capitalized above-market lease values are amortized as a reduction to rental income over the remaining non-cancelable terms of the respective leases. The capitalized below-market lease values are amortized as an increase to rental income over the initial term plus the term of the below-market fixed rate renewal option, if any, of the respective leases.

Management estimates costs to execute leases similar to those acquired at the property at acquisition based on current market conditions. These costs are recorded based on the present value of the amortized in-place leasing costs on a lease by lease basis over the remaining term of each lease.

The in-place lease values and customer relationship values are based on management's evaluation of the specific characteristics of each customer's lease and our overall relationship with that respective customer. Characteristics considered by management in allocating these values include the nature and extent of our existing business relationships with the customer, growth prospects for developing new business with the customer, the customer's credit quality, and the expectation of lease renewals, among other factors. The in-place lease value and customer relationship value are both amortized to expense over the initial term of the respective leases and projected renewal periods, but in no event does the amortization period for the intangible assets exceed the remaining depreciable life of the building.

Should a tenant terminate its lease, the unamortized portion of the in-place lease value and the customer relationship value and above-market and below-market lease values would be charged to expense.

Revenue Recognition

The Company records electricity sales under the accrual method and these revenues are recognized upon delivery of electricity to the customers' meters. Electric services not billed by month-end are accrued based upon estimated deliveries to customers as tracked and recorded by the Electric Reliability Council of Texas ("ERCOT") multiplied by the Company's average billing rate per kilowatt hour ("kwh") in effect at the time.

The flow technique of revenue calculation relies upon ERCOT settlement statements to determine the estimated revenue for a given month. Supply delivered to our customers for the month, measured on a daily basis, provides the basis for revenues. ERCOT provides net electricity delivered data in three frames. Initial daily settlements become available approximately 17 days after the day being settled. Approximately 45 days after the day being settled, a resettlement is provided to adjust the initial settlement to

Bilateral wholesale costs are incurred through contractual arrangements with wholesale power suppliers for firm delivery of power at a fixed volume and fixed price. The Company is typically invoiced for these wholesale volumes at the end of each calendar month for the volumes purchased for delivery during the month, with payment due 10 to 20 days after the end of the month.

Balancing/ancillary costs are based on the aggregate customer load and are determined by ERCOT through a multiple step settlement process. Balancing costs/revenues are related to the differential between supply provided by the Company through its bilateral wholesale supply and the supply required to serve the Company's customer load. The Company endeavors to minimize the amount of balancing/ancillary costs through its load forecasting and forward purchasing programs.

The Company's gross revenues for energy management services provided to our customers are recognized upon delivery and include estimated aggregation fees and other services delivered but not billed by the end of the period.

Accrued unbilled aggregation revenues are based on our estimates of customer electricity usage since the date of the last meter reading provided by the independent system operators or electric distribution companies. Volume estimates are based on average daily volumes, estimated customer usage and applicable customer aggregation rates. Unbilled aggregation revenues are calculated by multiplying volume estimates by our estimated rates by customer. Estimated amounts are adjusted when actual usage and rates are known and billed.

Leases with tenants are accounted for as operating leases. Minimum annual rentals are recognized on a straight-line basis over the terms of the respective leases.

Gain Recognition on Sale of Real Estate Assets

We perform evaluations of each real estate sale to determine if full gain recognition is appropriate in accordance with SFAS No. 66, "Accounting for Sales of Real Estate". The application of SFAS No. 66 can be complex and requires us to make assumptions including an assessment of whether the risks and rewards of ownership have been transferred, the extent of the purchaser's investment in the property being sold, whether our receivables, if any, related to the sale are collectible and are subject to subordination, and the degree of our continuing involvement with the real estate asset after the sale. If full gain recognition is not appropriate, we account for the sale under an appropriate deferral method.

Consolidation of Variable Interest Entities

We perform evaluations of each of our investment partnerships, real estate partnerships and joint ventures to determine if the associated entities constitute a Variable Interest Entity, or VIE, as defined under Interpretations 46 and 46R, "Consolidation of Variable Interest Entities," or FIN 46 and 46R, respectively. In general, a VIE is an entity that has (i) an insufficient amount of equity for the entity to carry on its principal operations, without additional subordinated financial support from other parties, (ii) a group of equity owners that are unable to make decisions about the entity's activities, or (iii) equity that does not absorb the entity's losses or receive the benefits of the entity. If any one of these characteristics is present, the entity is subject to FIN 46R's variable interest consolidation model.

Quantifying the variability of VIEs is complex and subjective, requiring consideration and estimates of a significant number of possible future outcomes as well as the probability of each outcome occurring. The results of each possible outcome are allocated to the parties holding interests in the VIE and, based on the allocation, a calculation is performed to determine which party, if any, has a majority of the potential negative outcomes (expected losses) or a majority of the potential positive outcomes (expected residual returns). That party, if any, is the VIE's primary beneficiary and is required to consolidate the VIE. Calculating expected losses and expected residual returns requires modeling potential future results of the entity, assigning probabilities to each potential outcome, and allocating those potential outcomes to the VIE's interest holders. If our estimates of possible outcomes and probabilities are incorrect, it could result in the inappropriate consolidation or deconsolidation of the VIE.

For entities that do not constitute VIEs, we consider other GAAP, as required, determining (i) consolidation of the entity if our ownership interests comprise a majority of its outstanding voting stock or otherwise control the entity, or
(ii) application of the equity method of accounting if we do not have direct or indirect control of the entity, with the initial investment carried at costs and subsequently adjusted for our share of net income or less and cash contributions and distributions to and from these entities.

Our accounts receivable balance is reduced by an allowance for amounts that may become uncollectible in the future. Our receivable balance is composed primarily of billed and unbilled customer retail electricity usage flowed for a given period and billed and unbilled customer management fees based on electricity usage flowed for a given period. The allowance for doubtful accounts is reviewed at least quarterly for adequacy by reviewing such factors as the credit quality of our customers, any delinquency in payment, historical trends and current economic conditions. If the assumptions regarding our ability to collect accounts receivable prove incorrect, we could experience write-offs in excess of the allowance for doubtful accounts, which would result in a decrease in net income. The Company estimated the allowance for doubtful accounts related to W Power's billed account receivables to be approximately 0.2% percent of W Power's retail electricity billed revenue for the period ended June 30, 2008. Due to the limited historical data, the Company regularly reviews the accounts receivable and accordingly makes adjustments in estimating the allowance for doubtful accounts. At June 30, 2008, W Power had a total allowance for doubtful accounts of $27 thousand. Priority Power's trade accounts receivable arise from aggregation fees and other management services. An allowance for uncollectible accounts receivable is provided for amounts not expected to be collectible. As of June 30, 2008 the Company considers Priority Power's accounts receivable to be fully collectible; accordingly, no allowance for doubtful accounts is required.

Stock Options

The Company accounts for its stock-based compensation in accordance with SFAS No. 123R, Accounting for Stock-Based Compensation. In December 2004, the Financial Accounting Standards Board issued SFAS 123(R) effective for small business issuers after December 15, 2005. The new Statement requires mandatory reporting of all stock-based compensation awards on a fair value basis of accounting. Generally, companies are required to calculate the fair value of all stock awards and amortize that fair value as compensation expense over the vesting period of the awards.

Results of Operations

Overview

                                                     Three Months Ended June 30,          Six Months Ended June 30,
                                                         2008               2007             2008             2007
Income from Continuing Operations                  $        339,961       $ 304,677     $    1,218,282     $   425,389

Per Share Income from Continuing Operations                    0.09            0.13               0.32            0.19

Income (Loss) from Discontinued Operations               (1,317,233 )       203,754         (1,218,463 )       591,965

Per Share Income (Loss) from Discontinued Ops                 (0.35 )          0.09              (0.32 )          0.26

Net Income (Loss)                                          (977,272 )       508,431               (181 )     1,017,354

Per Share Net Income (Loss)                                   (0.26 )          0.22               0.00            0.44

2Q08 vs. 2Q07

· The change in 2nd quarter earnings from continuing operations from 2007 to 2008 was caused primarily by increased investment income from the Company's investment in the SFF Group offset by a decrease in Priority Power's income as discussed below.

· Priority Power generated approximately $196 thousand in income for the quarter ended June 30, 2008 as compared to approximately $623 thousand for the same quarter in 2007. The reduction in income is primarily attributable to increased payroll expenses resulting from the addition of sales people.

· W Power incurred a loss of approximately $1.3 million for the quarter ended June 30, 2008 as compared to income of approximately $204 thousand for the same quarter in 2007. The sharp decrease in earnings at W Power was caused primarily by an $800 thousand charge related to the discontinuation of retail electric operations and adjustments in line loss estimates. (See Note R).

In the second quarter of 2008 W Power and Light experienced a significant adverse impact from price escalation in wholesale electricity and natural gas prices. Management determined that the escalation is likely to continue throughout

After noting these structural market changes, and assessing their impact on W Power's retail electricity business unit, management presented a plan to the Board of Directors to discontinue all retail electricity power operations. Recognizing the significant opportunities for business development, acquisitions, and growth in other areas of the Corporation, in addition to the large capital requirements to grow REP operations, the Board of Directors approved the plan to discontinue operations on June 25. The estimated expenses of winding down retail energy operations led to an $800 thousand charge in the current quarter.

Revenues

· The Company's consolidated revenues, after reclassifying W Power to discontinued operations, were approximately $967 thousand for the quarter ended June 30, 2008, compared to $999 thousand for the same quarter in 2007. This slight reduction in revenue was caused by the loss of one of Priority Power's large customers.

Operating Expenses

· Total operating expenses for the quarter ended June 30, 2008 and 2007 were $1.0 million and $725 thousand, respectively; this increase was primarily attributable to growth in general & administrative expenses as described below.

· For the quarter ended June 30, 2008 general and administrative costs increased approximately $300 thousand versus the same quarter in 2007. This increase is primarily associated with growth in the Priority Power sales force.

Other (expense) income

For the quarter ended June 30, 2008 as compared to the same quarter in 2007 the Company experienced an increase of approximately $360 thousand in other income. This increase was caused by the following factors:

· Earnings from the Company's investment in the SFF Group of approximately $567 thousand.

· An increase of approximately $122 thousand in interest expense, primarily related to acquisition related debt.

1H08 vs. 1H07

· The change in earnings from continuing operations from 2007 to 2008 was caused primarily by earnings from the Company's investment in the SFF Group as well as recognition in 2008 of a $535 thousand gain from the final distribution paid to the Company as a unit-holder in the Santa Fe Energy Trust.

· Priority Power generated approximately $904 thousand in net income for the six months ended June 30, 2008 as compared to a net income of approximately $1 million for the six months ended June 30, 2007. The reduction in income is primarily attributable to increased payroll expenses resulting from the addition of sales people.

· W Power incurred a loss of approximately $1.19 million for the six months ended June 30, 2008 as compared to net income of approximately $705 thousand for the six months ended June 30, 2007. The sharp decrease in earnings at W Power was caused primarily by an $800 thousand charge related to the discontinuation of retail electric operations and adjustments in line loss estimates. (See Note R).

Revenues

· The Company's consolidated revenues, after reclassifying W Power to discontinued operations, were approximately $2.4 million for the six months ended June 30, 2008, compared to $1.8 million for the six months ended June, 2007. This change is primarily due to an increase in aggregation fee revenue and $300 thousand earned as part of a power plant development contract recognized in the first quarter.

Operating Expenses

· Total operating expenses for the six months ended June 30, 2008 and 2007 were $2.1 million and $1.4 million, respectively; this increase was primarily attributable to growth in general & administrative expenses as described below.

Other (expense) income

For the six months ended June 30, 2008 as compared to the six months ended June 30, 2007 the Company experienced an increase of approximately $993 thousand in other income. This increase was caused by the following factors:

· The final distribution made to the Company as a unit-holder in the Santa Fe Energy Trust, which resulted in a gain of approximately $535 thousand.

· Earnings from the Company's investment in the SFF Group of approximately $846 thousand.

· The Company also had an increase of approximately $277 thousand in interest expense, primarily related to acquisition related debt.

Book Value per Share

The primary metric that the Company's management uses when making operating and investment decisions is Book Value per Share ("BVPS"). BVPS is calculated as Total Shareholder Equity divided by the Fully Diluted Number of Shares Outstanding as of the measurement date. Management's belief is that if the Company consistently delivers increases in BVPS, it will maximize value to the shareholder over the long term. As of June 30, 2008 the Company's BVPS is $3.93 compared to $2.59 at June 30, 2007.

Analysis of Cash Flows

Operating Activities

During the first half of 2008, net cash provided by operating activities was approximately $316 thousand. This was driven by a number of factors:

-­ A decrease of $432 thousand in accounts receivable and other receivables, due to a decrease in unbilled power at W Power, a decrease in retail electric billing, a write down of W Power receivable accounts, and increased collections at Priority Power.

-­ Earnings of $846 thousand from the Company's investment in SFF Group.

The Company does not expect its investment in SFF Group to generate significant accounting income due to the depletion expense that will be incurred; however, regular cash distributions are expected as discussed in the Investing Activities section below.

Investing Activities

For the first half of 2008, the net cash provided by investing activities was approximately $5.3 million. This was driven by two primary activities:

-­ Liquidation of the Company's available-for-sale securities related to units held in the Santa Fe Energy Trust.

-­ Distributions totaling $1.367 million from the SFF Group.

Based on current commodity prices and production volumes, the Company expects to receive regular cash distributions from SFF Group of approximately $500 - 800 thousand per quarter.

Financing Activities

Net cash used in financing activities for the first half of 2008 was approximately $3.6 million. This is primarily related to repayment of notes for the purchase of Priority Power (the "NEMA" notes - See Note L) and stub financing related to the purchase of an interest in the SFF Group (See Note Q).

Currently, the Company has a net operating tax loss ("NOL") carry forward in excess of $28 million. This NOL is mainly related to the Company's operations prior to the Company presenting the 2002 business plan to shareholders. The Company believes that the utilization, without limitation, of the Company's NOL will be determined by the ability of management to limit the issue of new equity due to IRC Section 382 restrictions.