MIDLAND, Texas, Jan. 8 /PRNewswire/ -- Costilla Energy, Inc.
(Nasdaq: COSE) announced today the private offering of $75,000,000 in
aggregate principal amount of its 10 1/4 percent Senior Notes due 2006 ("New
Notes").  Such offering is being made only to institutional investors under
exemptions from the registration requirements of the Securities Act of 1933,
as amended, including without limitation, Rule 144A.  The New Notes are
expected to have the same terms and be governed by the same indenture as the
outstanding $100,000,000 in aggregate principal amount of the Company's 10 1/4
percent Senior Notes due 2006.  The net proceeds from the offering, which is
expected to close on or about January 16, 1998, will be used by the Company to
reduce existing indebtedness under its bank credit facilities and for general
corporation purposes.
    THE NEW NOTES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR UNDER ANY STATE SECURITIES OR "BLUESKY" LAWS, AND MAY NOT BE
OFFERED OR SOLD IN THE UNITED STATES ABSENT REGISTRATION OR AN APPLICABLE
EXEMPTION FROM REGISTRATION REQUIREMENTS.  THE ABOVE-DESCRIBED OFFERING IS
BEING MADE IN RELIANCE UPON EXEMPTIONS FROM REGISTRATION UNDER THE SECURITIES
ACT FOR AN OFFERING AND SALE OF SECURITIES WHICH DOES NOT INVOLVE A PUBLIC
OFFERING.  THIS NEWS RELEASE SHALL NOT CONSTITUTE AN OFFERING TO SELL OR A
SOLICITATION OF OFFERS TO BUY THE NEW NOTES, AND IS BEING RELEASED FOR
INFORMATIONAL PURPOSES ONLY.
    Costilla Energy, Inc. is an independent oil and gas company headquartered
in Midland, Texas.

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