Houston Exploration said it has locked in gas prices on additional amounts of its expected 2004 gas production. For the first quarter of 2004, the company has hedged 100 MMcf/d at an effective floor price of $4.70/Mcf (Henry Hub) with no ceiling and from April through December 2004, it has hedged 100 MMcf/d with a floor of $4.50/Mcf and ceiling of $7.00.

“The current market conditions for natural gas allow us to implement our hedging strategy and lock in cash flow returns for the company that will contribute significantly to its performance,” said CEO William G. Hargett.

The additional volumes supplement hedges the company already has in place for next year: 100 MMcf/d in the first quarter with a floor of $3.75/Mcf and a ceiling of $5.05/Mcf; another 100 MMcf/d with a floor of $4.70/Mcf and no ceiling; 200 MMcf/d in the last three quarters of the year with a floor of $4.08/Mcf and a ceiling of $6.02/Mcf.

Houston Exploration, a subsidiary of KeySpan Corp., produces about 271 MMcf/d of gas from the shallow waters of the Gulf of Mexico, South and East Texas, the Arkoma Basin, South Louisiana and West Virginia.

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