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CNG Buying Share in South Texas Fields

CNG Buying Share in South Texas Fields

Consolidated Natural Gas Co. E&P subsidiary CNG Producing Co. agreed to buy interests in Lopeno and two adjacent South Texas gas fields. Earlier in the year, CNG Producing bought about a 50% interest in the Lopeno field, and together with the most recent purchase, CNG Producing will own nearly 100%. On a combined basis, the company will pay $125 million for the two transactions.

Lopeno and the adjacent fields, located in Zapata County, TX, contain 50 active wells with current working interest production of 56 MMcf/d. The final transaction should be closed by late summer.

"Lopeno is a relatively new field with long-lived reserves that provide a nice balance to our Gulf of Mexico base," said Pat Riley, president of Pittsburgh-based CNG Producing. "The field has numerous development drilling opportunities that will help us to sustain our production growth objectives while maintaining one of the lowest cost structures in the industry."

As a result of the acquisitions, CNG's exploration and production capital spending in 1999 will increase to about $465 million, up $139 million from the originally approved budget of $326 million.

"We are using CNG's financial strength to take advantage of opportunities we see in exploration and production," Riley said. "While many other companies have curtailed capital investments in 1999, we have increased our spending to take advantage of the current environment. At $465 million, CNG will have one of the five largest domestic E&P budgets in the country for an independent oil and gas company."

CNG is now targeting 1999 production at 250 Bcfe, about 25% above 1998's record production level. The increase is attributable to new production from the Nautilus/Nemo/Atlantis complex in the Gulf of Mexico, which came on line during the first quarter; additional production from the previously announced West Cameron Block 76 field development wells in the Gulf of Mexico; as well as the South Texas acquisitions.

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