Houston Exploration to Spend $270 Million in 2002

The Houston Exploration Company is pleased to report its 2002 financial guidance. The Company has included the impact of its recently announced agreement to acquire South Texas properties from Conoco Inc.

The Company has estimated its 2002 capital program to total $270 million, which includes planned drilling and development of the additional South Texas property acquisition, all of which will be financed through internally generated funds. The Company expects to produce approximately 99 to 105 Bcfe in 2002 from its existing fields and from properties expected to begin production during 2002. Daily rates for the first half of the year will average approximately 270 to 280 MMcfe/d. In the second half of the year, with planned drilling and development in South Texas, the Company anticipates production volumes to average approximately 280 to 290 MMcfe/d. This represents an increase of 14% over 2001.

The Company has hedged 2002 production as part of its risk management strategy to protect the Company's cash flow and capital budget. The current hedged volumes total 210,000 MMBtu/d with an average effective floor of $3.40 and an average effective ceiling price of $4.66. Hedged volumes represent approximately 72% to 77% of 2002 estimated production volumes; of the total hedged volumes 19% is hedged with Enron Corp.

Lease Operating Expenses: The Company's 2002 lease operating expenses are expected to be approximately $35 to $37 million, and Depletion, Depreciation and Amortization is expected to be approximately $150 to $155 million.

Severance Tax: The Company's severance tax for the year is expected to increase in line with production and range from $10.0 to $12.0 million.

Interest Expense: The Company's net interest expense for the year is expected to be approximately $6.0 to $8.0 million.

General and Administrative Expenses: The Company's net G&A expense for the year is expected to be approximately $8.0 to $10.0 million.

Tax Rate: The Company's current tax rate is 35%, and all taxes due for 2002 are expected to be deferred.

Earnings: The Company expects earnings to range from approximately $2.20 to $2.40 per fully diluted share, utilizing an average NYMEX gas price for 2002 of $2.90 per MMBtu. Cash flow will range from approximately $8.00 to $8.45 per fully diluted share. This includes the above sited production volumes and expense items.