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| Costilla Reports Details of Pioneer Acquisition; Financing Plan Expected to Include Significant Equity to the Company |
MIDLAND, Texas, Sept. 10 /PRNewswire/ -- Costilla Energy, Inc. (Nasdaq: COSE) reported today that the assets involved in the recently announced $410 million acquisition from Pioneer Natural Resources Company (NYSE: PXD; TSE) will include proved reserves of approximately 460 Billion cubic feet of natural gas equivalent, valued at approximately $326 million, present value at 10 percent, using SEC pricing at year-end 1997. The company has allocated $154 million to the other assets included in the acquisition. "The significant added value for Costilla in this transaction is the unproved reserve potential of these assets," said Mike Grella, president and CEO of Costilla Energy. "We believe there are significant unproved properties, many of which are located in the vicinity of our ongoing southeast Texas projects, which will afford Costilla numerous exploration opportunities going forward." Costilla also reported that financing for the acquisition is expected to include a combination of debt and equity, with the largest component being equity, pursuant to the company's objective of reducing leverage. The transaction with Pioneer is scheduled to close in mid-December, with an effective date of October 1, 1998. 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.SOURCE Costilla Energy, Inc.
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Company News On-Call:
fax, 800-758-5804, ext. 126873
CONTACT:
Mike Grella, President & CEO, or Guy McCrary,
Manager, Investor Relations, both of Costilla Energy, Inc.,
915-683-3092
