Costilla and Pioneer Announce New Property Sale Agreement

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Costilla and Pioneer Announce New Property Sale Agreement

    MIDLAND, Texas, April 1 /PRNewswire/ -- Costilla Energy, Inc.
(Nasdaq: COSE) announced today that final preparations are underway to
complete a transaction with Pioneer Natural Resources Company (NYSE, TSE: PXD)
under a new purchase and sale agreement executed April 1, 1999, whereby
Costilla and its alliance partners will acquire 417 of the original 425 oil
and gas properties and other assets related to a prior agreement with Pioneer,
for approximately $250 million.  The new agreement includes a Duval County,
South Texas property which Costilla previously had an option to acquire.  This
agreement replaces the transaction previously scheduled to close on
March 31st.  Closing of the new agreement is now scheduled for April 15, 1999
with an effective date of January 1, 1999.
    As part of the transaction, Pioneer may, at its option, accept as part of
the purchase price, up to $25 million in Costilla convertible preferred stock
which will provide for redemption, dividends payable in either cash or
Costilla common stock, and conversion into Costilla common stock, along with
board representation.  Additionally, Costilla has conveyed one million shares
of its common stock which, if the transaction closes, will be returned by
Pioneer to Costilla.  If the transaction does not close, Pioneer will have the
right to sell these shares as well as the three million shares previously
conveyed by Costilla.
    Since much of the Company's disclosure in its Form 10-K for the fiscal
year ended December 31, 1998, is related to the consummation of the Pioneer
transaction, the filing of the 10-K has been extended until April 15, 1999.
Costilla expects to release results of the fourth quarter ended December 31,
1998 within the week.
    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.

http://www.costillaenergy.com
Company News On-Call:

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, 915-683-3092