MIDLAND, Texas, March 26 /PRNewswire/ -- Costilla Energy, Inc.
(Nasdaq: COSE) reported today that a majority of the holders of its
10 1/4% Senior Notes had consented to amending the indenture governing the
Notes to allow for the payment of cash dividends on the newly designated
preferred stock of the company.  This consent will allow Costilla to proceed
with plans to issue to ONEOK, Inc. (NYSE: OKE) redeemable preferred stock with
a liquidation value of $65 million which will pay cash dividends rate of
8 1/2% per annum.  The issuance is part of a previously announced strategic
alliance between Costilla and ONEOK pursuant to the pending acquisition of
properties from Pioneer Natural Resources Company (NYSE: PXD; Toronto).
    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.
    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.

Link to this page:

  

http://www.prnewswire.com/comp/126873.html or fax,
800-758-5804, ext. 126873
CONTACT:
Mike Grella, President & Chief Executive
Officer, or Guy McCrary, Manager, Investor Relations, both of
Costilla Energy, Inc., 915-683-3092

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