St. Mary's Acquires Producing Properties from Burlington Resources

St. Mary Land & Exploration Company's wholly owned subsidiary Nance Petroleum Corporation has signed a Purchase and Sale Agreement to acquire oil and gas properties with an estimated 61 BCFE of proved reserves, 97% developed, from Burlington Resources Oil & Gas Company LP for $76.35 million in cash.

The acquisition is valued effective as of July 1, 2002, with revenues and expenses from the properties from that date until the date of closing to be allocated to Nance Petroleum through a purchase price adjustment. Payment for the properties will be made from cash on hand in addition to funds to be obtained under St. Mary's existing revolving credit facility. The properties are in the Williston Basin of Montana and North Dakota, and currently produce an estimated 3,100 barrels of oil and 3,300 Mcf of gas per day. The acquisition is expected to close December 3, 2002, upon completion of customary due diligence. St. Mary has hedged 100% of the estimated production for calendar years 2003 and 2004. Oil is hedged at an average NYMEX price of $26.63 and $23.87 per barrel, respectively, and natural gas is hedged at an average price of $3.04 per Mcf, indexed to CIG Rockies for the two-year period.

"These properties add quality long-term production and are an excellent geographical fit to our existing properties in the Williston Basin. We believe competition for oil properties at this time is diminished due to higher oil prices. By hedging prices for the next two years of production, we are eliminating price risk during the period of higher price assumptions. The high working and revenue interests (in some cases both 100%) will extend property lives and in some cases will enhance the potential to develop secondary reserves. Our high working interest position will also allow us to initiate 3-D seismic surveys and apply our distinctive expertise where this was not possible previously. The addition of this significant production to our existing production will add to our marketing strength in the Basin," said Mark Hellerstein, Chairman and CEO.