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Gas News Release
February 8, 1999
CNG Sets Reserve Addition, Production Records in 1998
- Total reserve additions of 413 Bcfe exceed record of
368 set in 1985
- Reserve additions 204 percent of production, 5th straight
year exceeding 150 percent
- 202 Bcfe produced in 1998, 20 percent increase expected
in 1999
PITTSBURGH - Consolidated Natural Gas Company today announced
company records for both reserve additions and production for 1998. Reserve additions
in its exploration and production segment totaled 413 billion cubic feet equivalent
through additions, revisions, and purchases, topping the company record of 368
set in 1985. Included are 39 billion cubic feet of reserves purchased from The
Peoples Natural Gas Company, a CNG distribution company, late in 1998.
The reserve additions were 204 percent of production, the
fifth straight year additions surpassed 150 percent of production. CNG now has
1.7 trillion cubic feet equivalent of reserves, an increase of about 58 percent
since the end of 1993. CNG produced 202 billion cubic feet equivalent of natural
gas in 1998, topping the company record of 199 Bcfe set in 1997.
The breakdown was 154.9 billion cubic feet of natural gas
and 7.9 million barrels of oil. Production has increased 67 percent the last
three years and CNG expects a 20 percent increase in 1999 as new projects come
on line.
"Our record reserve additions and record production
came primarily from our superb operations in the Gulf of Mexico," said
George A. Davidson, Jr., chairman and chief executive officer. "We've used
the latest technology and our expertise to find energy and produce it economically
in what some call a difficult area to succeed."
Production has begun at a new complex in the Gulf's Main
Pass area, the Nautilus-Atlantis-Nemo complex, with full production expected
by the end of February. The complex has three platforms, eight wells and facilities
designed to handle initial deliverability of 240 million cubic feet of natural
gas and 20,000 barrels of condensate a day. CNG owns 68.5 percent of Nautilus,
75 percent of Atlantis, 100 percent of Nemo and is the operator of the complex.
CNG's finding and development costs of 83 cents per thousand
cubic feet equivalent (Mcfe) for 1998 were lower than the 88 cents per Mcfe
in 1997. The five-year average finding and development costs for the years 1994
through 1998 is 80 cents per Mcfe.
The company's depreciation, depletion and amortization (DD&A)
rate was 89 cents per Mcfe. The DD&A rate has declined from $1.19 in 1992,
including a 13-cent drop due to a write-down of producing properties in 1995.
CNG's average lifting costs were 31 cents per Mcfe in 1998, as the company continues
to have one of the lowest rates in the industry.
"We have put together an efficient E&P operation
that can succeed even when prices are low," said Pat Riley, president of
CNG Producing Company. "We have a quality E&P staff, a growing program
both onshore and offshore, and we believe that the U.S. oil and natural gas
business presents very attractive, long-term opportunities."
CNG Producing Company purchased the reserves from Peoples
Natural Gas for $18.5 million. The reserves were formerly cost-of-service reserves
in CNG's regulated distribution segment. CNG now has no cost-of-service reserves.
Consolidated Natural Gas Company (CNG) is one of the nation's
largest producers, transporters, distributors and retail marketers of natural
gas. The company's natural gas transmission and distribution operations serve
customers in Ohio, Pennsylvania, Virginia, West Virginia, New York and other
states in the Northeast and Mid-Atlantic regions. CNG explores for and produces
oil and natural gas in the United States and Canada, and makes selective investments
abroad.
This press release contains forward-looking statements. The
company wishes to caution readers that the assumptions which form the basis
for forward-looking statements with respect to or that may impact earnings for
fiscal 1999, and thereafter, include many factors that are beyond the company's
ability to control or estimate precisely, such as estimates of future market
conditions and the behavior of other market participants. Other factors include,
but are not limited to, weather conditions, economic conditions in the company's
service territory, fluctuations in energy-related commodity prices, conversion
activity, other marketing efforts and other uncertainties.
CNG's recent news releases are available 24 hours a day on
the Internet, by fax machine, or by voice recording. On the Internet, use CNG's
Web site: www.cng.com. For faxing, call 1-800-758-5804 on a touch-tone phone
and enter CNG's company extension, which is 203456. From a menu, you will then
be able to select releases that will be faxed to you immediately without charge.
For voice recordings, call 1-888-CNG-NEWS. This line is toll-free.
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For further information contact:
Dan Donovan
412-690-1370
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