MIDLAND, Texas., Nov. 25 /PRNewswire/ -- Costilla Energy, Inc.
(Nasdaq: COSE) reported today that the Company's exploration and development
drilling budget for 1998 is projected to be $70 million.  Of the new budget,
the Company has allocated approximately 40 percent for exploration, with
emphasis in South and East Texas and the Rocky Mountains, and 60 percent for
development efforts, primarily in the Permian Basin region.
    Costilla's total developed and undeveloped leasehold acreage has grown
to 1,044,833 gross, or 723,733 net acres.  As of September 30, 1997, the
Company has amassed 649,381 gross, 596,700 net, undeveloped acres.  This
acreage compares to 242,541 gross, 147,742 net, undeveloped acres at
December 31, 1996.
    Additionally, as part of its ongoing 3-D seismic program, the Company has
surveyed or acquired by purchase in excess of 1,500 square miles of 3-D data.
Of the 400 square miles of data that has been fully evaluated using 3-D
analysis, Costilla has identified approximately 300 drilling locations out of
a total of the more than 600 locations the Company has identified for
drilling.
    "We intend to take maximum advantage of our acreage position and seismic
inventory to continue an aggressive drilling program throughout 1998, and
beyond," said Mike Grella, Costilla's President and CEO.  "The opportunities
to create and add value to our properties are significant, and we intend to
continue to use our technological edge to explore and exploit these properties
to the advantage of our shareholders."
    Though the nine months ended September 30, 1997, the Company had invested
approximately $44.8 million in exploration and developmental drilling,
approximately 23 percent of which was for exploration, and 77 percent was for
development.  Projected to year-end, total exploration and development
drilling expenditures are expected to be approximately $48.1 million.
    Costilla Energy, Inc. is an independent energy company 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. The Company and its predecessors
have been in business since 1988.
    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 statement.  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 implements business strategy.  These factors are discussed in
more detail in the Company's prospects for its initial implement its business
strategy.  These factors are discussed in more detail in the Company's
prospectus for its initial public offering of common stock.

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