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Hammered by Prices, TransTexas Files Ch. 11

Hammered by Prices, TransTexas Files Ch. 11

TransTexas Gas Corp. of Houston said following discussions with a group representing a majority of its parent company's note holders it voluntarily filed for Chapter 11 bankruptcy. The company said it believes the filing will allow for completion of its recapitalization involving TransTexas and parent, TransAmerican Energy Corp. Details of the recapitalization plan are expected to be filed in bankruptcy court within 30 days.

TransTexas said it expects to reach agreement with certain note holders for debtor-in-possession financing, subject to approval by the court. Among other capital needs, the financing will allow TransTexas to continue drilling its development areas, including the Eagle Bay gas field, producing fields in Wharton County, TX, and other South Texas properties.

TransTexas said it believes it can improve cash flow through development drilling in proven producing fields and, with the commitment of its major creditors, seek court approval of a restructuring plan. Going forward TransTexas said it will pay all vendors in the ordinary course of business.

For the quarter ended Oct. 31, 1998, TransTexas reported a net loss of $147.8 million on revenues of $32.8 million. The results include the impact of a $164.9 million pre-tax asset write-down to reflect low oil and gas prices. For the quarter ended Oct. 31, 1997, TransTexas reported a net loss of $1.2 million on revenues of $37.2 million.

For the nine months ended Oct. 31, 1998, including the effect of asset impairments of $186.7 million, TransTexas reported a net loss of $155.4 million on revenues of $137.7 million compared to net income of $247 million on revenues of $695 million for the year-ago period, which included a gain of $540.4 million on the sale of the company's Lobo Trend subsidiary

Last month, TransTexas said it hired Jefferies & Co. to review strategic alternatives. At the same time the company said it was seeking concessions from its note holders.

TransTexas Gas is engaged in the exploration, production and transmission of gas and oil, primarily in South Texas, including the Eagle Bay field in Galveston Bay. The first four wells drilled in Eagle Bay are producing about 75 MMcf/d (gross) of gas and 9,500 b/d (gross) of condensate. TransTexas owns an approximate 56.75% net revenue interest in the Eagle Bay field.

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