Mitchell Energy & Development has grown its gas reserves toan all-time high and increased combined oil and gas reserves bynearly 10% over the last six months by acquiring producingproperties in Limestone and Colorado counties in Texas.

The company has spent $71 million for the properties, includingpreviously announced purchases totaling $50 million, andyear-to-date has booked reserves totaling 74 Bcf of gas – anall-time high for gas-and 2.8 million barrels of oil. Acquisitioncosts averaged 79 cents/Mcf of gas equivalent, based only on theseproven reserves.

Because Mitchell is primarily a gas company, it hasn’t sufferedas much from weak oil prices as some other companies, notedspokesman David Peck. Mitchell has not made any downwardadjustments to its 1998 capital program either. “We still makepretty good returns on drilling gas wells.”

The acquired properties currently are producing a combined 9MMcf/d of gas and 350 barrels of oil per day. More than 80re-completions and new well locations have been identified.Mitchell has drilled five new wells and re-completed six with goodresults. Three additional wells and seven more re-completions areplanned by year-end. The company said it believes considerableadditional upside potential exists on the properties.

In Colorado County, Mitchell has now acquired 99.3% of theworking interest in the 5,340-acre Columbus field unit fromOccidental Petroleum and 17 other individual owners. The companyplans to redevelop this old field using advanced completiontechnology similar to that used at its nearby Lake Creek field,purchased in late 1995, where production has been increasedseven-fold to 25 MMcf/d.

“We think the Columbus field has the potential to be anotherLake Creek,” said George P. Mitchell, CEO. “By doing therecompletion work and drilling the new locations we’ve identified,we think production from Columbus could grow to 35 MMcfe/d orbetter over the next two or three years.” Currently this field isproducing 2.9 MMcf/d of gas and 350 barrels of condensate.

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