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| Costilla Reports Rocky Mountain Property Sales |
Bank Payment Rescheduled;
Strategic Options Under Consideration
MIDLAND, Texas, June 21 /PRNewswire/ -- Costilla Energy, Inc.
(Nasdaq: COSE) reported today that it has reduced its bank debt as a result of
the sale of certain oil and gas properties and that its bank credit facility
has been amended providing for a re-scheduling of principal payments until
August 10, 1999. The Company completed the previously announced divestiture
of its Rocky Mountain properties in four sales transactions totaling
$15.4 million. The properties represented approximately $8.6 million in
SEC PV-10 value at December 31, 1998 with reserve volumes of approximately
22.9 Billion cubic feet of natural gas equivalent. Initial proceeds from the
sales of $13.7 million have been applied to reduce outstanding bank debt to
$26.9 million and to reduce trade accounts payable. The Company is continuing
to work with its trade creditors to manage its working capital position and
its ongoing operations.
Costilla is currently working with its financial advisors, Petrie Parkman
& Co., to put into place a comprehensive plan to restructure its financial
obligations. Among several options being pursued is the conversion of a
portion or all of its $180 million Senior Notes to equity. There can be no
assurances that the Company's efforts will result in the resolution of its
liquidity problems. Costilla plans to maintain its core assets in South Texas
where it has achieved considerable exploration success.
Due to the Company's negative equity and absence of profits, Costilla will
be legally prohibited from paying dividends on its outstanding convertible
preferred stock for the foreseeable future. Further, the Company has
determined that it is unlikely that any comprehensive plan will provide for
the payment of the $9.2 million interest payment due October 1, 1999 on its
10-1/4% Senior Notes due 2006.
Costilla Energy, Inc. is an independent oil and gas company with
operations primarily in the Gulf Coast region of South Texas and the Permian
Basin of West Texas and Southeastern New Mexico. 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.
back to topRelated links:
Company News On-Call:
800-758-5804, ext. 126873
CONTACT:
Guy McCrary, Manager, Investor Relations of
Costilla Energy, 915-683-3092
