Pogo to Acquire $189 Million of Natural Gas Properties

Pogo Producing Company has entered into agreements to acquire natural gas properties in the San Juan Basin region for $189 million in two separate transactions. Through these agreements, Pogo will be acquiring an estimated 100 billion cubic feet of gas equivalent proven reserves (bcfe) and current production of 15 million cubic feet of natural gas per day (mmcf/d). Pogo will be the operator of these properties. The proven reserves have a reserves-to-production index of 18 years. Plans for these properties will involve an active 2005-2006 drilling program of approximately 50 wells.

Pogo's Chairman and Chief Executive Officer, Paul G. Van Wagenen, said, "These transactions highlight our efforts to pursue value-creating domestic acquisitions. These particular long-lived assets bolster our growing San Juan Basin presence and fit well with our strategy of acquiring North American reserves."

In conjunction with these two new San Juan Basin transactions, Pogo has acquired costless natural gas collars covering 15 mmcf/d for 2005 and 2006. Pogo entered into collars of $5.50 by $8.00/mcf for 2005, and $5.00 by $7.50/mcf for 2006.

The first of the two acquisitions is expected to close on September 1, 2004 and the second should close on December 1, 2004. The acquisitions are subject to customary closing conditions and will be financed with Pogo's existing credit facilities and cash flow. Upon closing of these two transactions, Pogo will have acquired more than 150 bcfe of proven reserves for approximately $235 million to date in 2004.