Mitchell Energy & Development Corp. completed its previouslyannounced work force reduction and set its capital budget. As aresult of the company-wide downsizing and restructuring effort, 235positions have been eliminated, a 21% reduction in totalemployment. With these changes, the company expects annual salaryand benefits costs savings of about $17 million.

The company will record a one-time pre-tax charge of about $25million ($16 million after tax) in its fourth quarter ended Jan. 31to cover the retirement benefits and severance costs associatedwith the work force reduction.

The company also announced its fiscal 2000 capital budget of$137 million. This represents a 33% reduction from the $205 millionspent in the prior year, excluding asset acquisitions. The currentyear’s budget includes $113 million for exploration and production,$21 million for gas services and $3 million for corporate needs.

Within the exploration and production division, $75 million isearmarked for drilling primarily low-risk gas development wells.These wells are part of a backlog of nearly 1,000 drillablelocations, as currently assessed by the company’s technical staff.

CEO George P. Mitchell said, “Our original plan was to increasethis year’s capital budget, but this is clearly not desirable inlight of today’s low prices. This reduced capital program allowsthe company to prudently manage its capital resources during thisperiod of reduced cash flows. At the same time, the drilling budgetshould enable the company to maintain current production levels.”

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