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| Costilla and ONEOK Join in New Strategic Alliance; ONEOK to Make Substantial Investment in Costilla |
MIDLAND, Texas, Feb. 23 /PRNewswire/ -- Costilla Energy, Inc. (Nasdaq: COSE) reported today that it has joined with ONEOK, Inc. (NYSE: OKE) to form a strategic alliance pursuant to Costilla's pending acquisition from Pioneer Natural Resources Company (NYSE: PXD; Toronto) as well as other potential future transactions. Under the terms of a Letter of Intent executed between ONEOK and Costilla, ONEOK will participate in Costilla's previously announced $335 million acquisition of oil and gas properties from Pioneer through a substantial equity investment in Costilla preferred stock to be described at a later date. ONEOK's level of participation will be $100 million. As part of the agreement, ONEOK will have the option to participate with Costilla in potential future production transactions in the mid-continent region of the U.S. Specific terms of the agreement were not announced pending approval of the companies' respective boards of directors. "ONEOK's investment in Costilla forms the financial cornerstone for our acquisition from Pioneer," said Mike Grella, president and chief executive officer of Costilla Energy. "Just as importantly, this transaction complements our exploration expertise with ONEOK's significant marketing and distribution strengths. We are extremely excited about our alliance because we believe it provides important future opportunities for both companies." David Kyle, president of ONEOK, Inc. said, "This transaction reflects ONEOK's strategy of growing its non-regulated operations by adding value through reserve acquisitions and equity ownership. It is consistent with our geographic interests of moving westward into the Texas Permian Basin where we have been active in gas marketing." The Pioneer transaction is scheduled to close on March 31, 1999. ONEOK (pronounced "One-Oak") is an integrated energy company engaged in the production, processing, transmission and marketing of gas throughout the mid-continent region of the U.S. Based in Tulsa, Oklahoma, ONEOK is the eighth largest natural gas distributor in the United States. 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
