Houston Exploration Provides Operational Update

During the second quarter, Houston Exploration successfully completed four offshore wells, is completing two additional offshore wells and is currently drilling four offshore wells. The Vermilion 408 A pipeline has been installed and the platform will be set in late July. First production is anticipated in early 2002. Additional development work is schedule to begin in September of this year.

As previously announced, the Company was high bidder on twelve of fourteen leases in the Texas State Waters Oil and Gas Lease Sale. Next on the Company's offshore drilling schedule are wells at: Matagorda Island 652 No. 3, Mustang Island 785 A2-ST, Mustang Island A-22 A-3 and West Cameron 76.

Onshore, Houston Exploration has drilled and successfully completed 7 wells in the Charco field of South Texas with average initial flow rates of 3-5 MMcf/d. The average depth of the wells drilled in Charco is approximately 10,000 feet and targets the Perdido and Lobo trends. The Company has three wells currently drilling with the recent addition of a third rig to operations in the field. In the Arkoma Basin, the Company successfully drilled and completed 10 wells during the second quarter and was successful in adding a second rig to increase the rate of drilling. The average depth of the wells drilled in the Arkoma Basin is approximately 6,500 feet. Average production for the Arkoma wells was approximately 1-3 Mmcf/d.

During the second quarter, a development well was started in South Lake Arthur, Louisiana, which is drilling to a depth of 17,100 feet. A wildcat well will be spudded in Gonzales County, Texas later this week and will be drilled to a depth of 12,000 feet. Additionally, the CG Caillouet No. 1 is being completed and was logged as a gas discovery in Acadia Parish, Louisiana. Hunt Oil Company is the operator.