Seagull's Non-Strategic Properties Bring $52.5 Million

Seagull Energy Corporation announced today that it sold non-strategic oil and gas producing properties at the end of 1998 that brought it approximately $52.5 million in gross proceeds that were then used to reduce long-term debt. The properties were located onshore in several areas of the southwestern United States.

The sales, which included two negotiated sales and three auctions, involved the equivalent of approximately 60 bcf in proven natural gas reserves that produced about 20 million cf/d gas equivalent in 1998. In addition selling these non-strategic producing oil and gas properties, Seagull also sold a small gas gathering pipeline and processing facility for $4 million, and hopes to complete the sale of all remaining gathering and pipeline products assets early this year.

James T. Hackett, Seagull's Chairman, President and Chief Executive Officer, said that the sales were to "…streamline operations and focus more attention on our core operations in today's environment of low commodity prices." He added that these sell-offs were only the beginning of a continuing process of rationalizing non-strategic assets, both in the immediate future and after the pending merger with Ocean Energy, Inc., scheduled to be concluded this quarter.

Hackett said that $100-200 million in asset dispositions during 1999 and 2000 are being contemplated following completion of the merger. Sales of less efficient high cost properties are expected to result in operating efficiencies over and above the $45 million in general and administrative cost reductions the companies expect to realize in their first year as a new entity.

Seagull, based in Houston, is an international oil and gas company engaged in exploration and production in the United States, Cote d'Ivoire, Egypt, Indonesia, and Russian Tatarstan. It also transports and distributes natural gas in the Anchorage, Alaska area.