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| Costilla Cuts Costs; Cost Reduction Initiatives to Save $1.2 Million Quarterly |
MIDLAND, Texas, Jan. 5 /PRNewswire/ -- Costilla Energy, Inc. (Nasdaq: COSE) announced today that it has cut expenses through staff reductions and other savings initiatives brought on by continuing low commodity prices. The reductions are effective as of January 1, 1999, and are expected to reduce quarterly general and administrative expenses by approximately $700,000, geological and geophysical expenses by approximately $100,000, and certain project capitalized costs by about $400,000. "This action is part of our plan to methodically reduce ongoing operating expenses in view of the current commodity price environment," said Mike Grella, president and CEO of Costilla. "The decision to reduce staff is unfortunate but necessary for the long-term health and success of this company." Grella added, "We remain confident in the future of the domestic oil and gas industry as our pending acquisition from Pioneer clearly demonstrates. As we prepare to close this transaction, we are positioning to take full advantage of the strategic synergies available with the addition of the new properties to our portfolio." Costilla Energy, Inc. is an independent energy company actively engaged in the exploration, acquisition and development of oil and gas properties, with operations primarily in the Permian Basin of Texas and New Mexico, South and East Texas, and the Rocky Mountain regions. Headquartered in Midland, Texas, the Company and its predecessors have been in business since 1988. The Company's common stock is traded on the Nasdaq National Market under the symbol COSE. Additional information about Costilla is available on the Internet at http://www.costillaenergy.com. Certain statements in this news release constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties, and other factors which may cause the actual results, performance, or achievements of Costilla Energy, Inc. to be materially different from any future results, performance, or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following: the volatility of oil and gas prices; the Company's ability to replace its oil and gas reserves; the availability of capital resources; the reliance upon estimates of proved reserves; operating hazards and uninsured risks; competition; government regulation; and the ability of the Company to implement its business strategy. Additional information is available in the Company's filings with the Securities and Exchange Commission, which are incorporated by this reference as though fully set forth herein.SOURCE Costilla Energy, Inc.
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CONTACT:
Mike Grella, President & Chief Executive
Officer, or Guy McCrary, Manager, Investor Relations, both of
Costilla Energy, Inc., 915-683-3092
