EDISON, N.J., July 31 /PRNewswire/ -- KCS Energy, Inc. (NYSE: KCS) today
announced it has entered into the eighth in a series of volumetric production
payment (VPP) transactions with Hall-Houston Oil Company (HHOC) of Houston,
Texas.  Under the terms of the most recent agreement, KCS will advance a total
of $17.1 million to HHOC over the next nine months to help fund the
development of certain of HHOC's properties in the Gulf of Mexico.  The first
tranche of $11.0 million was funded today.  In exchange for the payment, KCS
will receive a priority portion of natural gas production from four of HHOC's
offshore properties, all without burden of lease operating expenses.  Under
the terms of the agreement, the exact reserves to be acquired by KCS in each
tranche will be dependent on the gas prices in effect on the date of funding.
KCS' gas from these four blocks is scheduled for delivery over the 1997-1999
period, with more than 90% to be delivered over the 1998-1999 period.
    To date, KCS has invested more than $105 million in 20 separate
transactions to acquire proved oil and gas reserves under the auspices of its
VPP program, acquiring more than 72 Bcf of gas and 1.5 million barrels of oil.
It currently has commitments in place to fund the purchase of an additional
$19.7 million of proved gas and oil reserves.  Through July 31, 1997, KCS has
recovered approximately $70 million of its original investment with 44.8 Bcf
of gas and 1.1 million barrels of oil scheduled for future delivery.
    Commenting on the VPP program, KCS Energy President and Chief Executive
Officer James W. Christmas said, "Since its inception in August 1994, our VPP
program has significantly exceeded all of our expectations.  Not only were we
able to add substantially to our reserve base, particularly in the Gulf of
Mexico, but we were also able to take advantage of the higher oil and gas
prices experienced during much of the 1996-1997 period and, as a result,
exceeded our target returns.  Just as important, we were able to assist a
number of very high-quality, private independent oil and gas companies
successfully develop their oil and gas properties.  We plan to continue to
expand our VPP program, which affords additional opportunities to add to our
oil and gas deal flow, but have elected to currently limit its relative size
to no more than 20% of our proved reserves."
    KCS is an independent energy company engaged in the acquisition,
exploration, development and production of natural gas and crude oil with
operations in the Rocky Mountains, Mid-Continent and Gulf Coast regions.  The
Company also owns oil and gas property interests in the Gulf of Mexico and
Michigan's Niagaran Reef trend.
    To receive KCS' latest news and other corporate developments via fax
at no cost, please call 1-800-PRO-INFO.  Use company code KCS.  Or visit The
Financial Relations Board's web site at http://www.frbinc.com.

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