Company Continues Better than 80% Drilling Success Rate

    MIDLAND, Texas, Sept. 17 /PRNewswire/ -- Costilla Energy, Inc. (Nasdaq:
COSE) reported today that current daily production levels have exceeded 15,000
barrels of oil equivalent (BOE), up from approximately 11,700 BOE per
day in the second quarter of 1997.  Continued successful drilling
activities and the completed acquisition of properties from Ballard
Petroleum account for the increase in production levels.
    Costilla's capital expenditures for the second half of 1997 are expected
to total $27.5 million.  For the first two months of the third quarter,
the Company successfully completed 21 of 24 wells drilled, continuing a
success rate of better than 80 percent.
    Recent operating results indicate that the company's lease operating
expenses are expected to decrease to an average of approximately $5.75
per BOE for the third quarter from an average of $6.40 per BOE in the
second quarter.
    In late August, Costilla completed the previously announced acquisition
of properties from Ballard Petroleum LLC, of Billings, Montana.  The
acquisition is being funded in part by an acquisition credit facility
provided by Banker's Trust Company.  In addition, the Company completed
another credit facility with Banker's Trust which provides a revolving
line of credit.
    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, the
Gulf Coast, 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 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. These factors are discussed in more
detail in the Company's prospectus for its initial public offering of
common stock.

    For additional information about Costilla Energy Inc.,
free of charge via fax, dial 1-800-PRO-INFO and use ticker symbol
COSE.q

Link to this page: