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Western Collars $7/MMBtu Minimum for Portion of 2007 Production

Western Gas Resources Inc. has hedged 115,000 MMBtu/d of 2007 production using costless collars at a minimum of $7/MMBtu and an average maximum price of $14.90/MMBtu.

In addition to previously announced 2006 hedging of 85,000 MMBtu/d for the full year, Western established an additional 30,000 MMBtu/d for the second through the fourth quarter of 2006, using costless collars with a minimum price of $7.00/MMBtu and a maximum price of $10.25/MMBtu.

"The strong forward market has allowed us to lock in favorable costless collar structures for a significant portion of our 2007 equity production and additional collar positions for our 2006 equity production," said CEO Peter Dea. "At these levels, the minimum prices and basis hedges preserve solid returns and the maximum prices allow meaningful upside exposure. We also hold firm transportation contracts to the Midcontinent and eastern markets, which help us to optimize prices received for our natural gas and avoid transportation bottlenecks."

Additionally, Western has basis swaps in place for 2008 for 102,500 MMBtu/d at various sales points at an average differential to Nymex of $1.09. These positions are intended to minimize price risk as it relates to the change in the basis differential from Nymex to various sales points. The positions are not eligible for hedge accounting treatment and will be market to market. Based on a 10-cent increase in the forward basis differential in the anticipated month of sale, the change in the noncash mark-to-market value of these derivatives will increase pre-tax earnings by $3.7 million, and a 10-cent decrease in the forward basis differential in the anticipated month of sale will decrease pre-tax earnings by $3.7 million.

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