Costilla Energy Files Amended Plan of Reorganization

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Costilla Energy Files Amended Plan of Reorganization

    MIDLAND, Texas, July 12 /PRNewswire/ -- Costilla Energy, Inc. reported
today that it has filed an amended plan of reorganization with the U.S.
Bankruptcy Court for the Western District of Texas, Midland Division.  The
amended plan provides for the creation of a trust for the distribution of
proceeds from the sale of Costilla's oil and gas properties to Louis Dreyfus
Natural Gas Corp. (NYSE: LD), and the liquidation of the remaining assets of
the company.  Under the proposed plan, Costilla's existing common and
preferred stock will be cancelled and will receive no distributions.  The
company also filed a proposed disclosure statement, which contains certain
information about the company's plan, including the distribution of estimated
proceeds per the plan.  After the Bankruptcy Court has approved the adequacy
of the information within the disclosure statement, the plan and disclosure
statement will be disseminated for consideration.  The plan is subject to
confirmation by the Bankruptcy Court.
    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:
Guy McCrary of Costilla Energy, Inc.,
915-683-3092