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CNG Boosting Budget Commitment to E&P

November 16, 1998
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CNG Boosting Budget Commitment to E&P

Consolidated Natural Gas (CNG) is taking advantage of depressed prices in the E&ampP sector and spending more of its money where it sees the most long-term bang for the buck. Having pulled out of the marketing business, CNG's $524.5 million capital budget for 1999 continues the company's focus on expanding its exploration and production business. More than 60% of the 1999 budget is allocated to CNG's E&ampP subsidiary, CNG Producing Co.

"We intend to use CNG's financial strength to press our advantage in E&ampP," said George A. Davidson Jr., CEO of the Pittsburgh-based company. "While many other companies are forced to curtail their drilling programs, the portion of our E&ampP budget dedicated to exploration - the key to future growth - is targeted to go up 25% next year."

CNG's overall 1999 capital budget is down from this year's anticipated spending of $792 million. This is primarily because of $191 million that was invested in projects in 1998 in Australia and Argentina that will not be duplicated. International investments are made on a case-by-case basis as projects are identified. Spending for information systems throughout CNG also is expected to fall by about $30 million as those projects have been finished or are nearing completion.

Spending at CNG Producing is budgeted at $326 million in 1999, compared with an initial 1998 budget of $307 million and expected spending of $354 million. The added E&ampP spending in 1998 was due primarily to increased exploration and developing exploratory successes.

"While we will work with our partners - Shell and Murphy - to develop the recently announced North Marlin deepwater discovery in the Gulf of Mexico, total E&ampP development spending is expected to be down in 1999 because most of the work has been completed on CNG's Nautilus and Nemo discoveries on the continental shelf," Davidson said.

In other business segments, the 1999 capital budget compared with 1998 anticipated spending is: gas distribution, $128 million vs. $147 million; gas transmission, $55 million vs. $58 million; and corporate and other, $16 million vs. $42 million. The segment reductions are generally due to the lower requirements for information systems.

Joe Fisher, Houston

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