3TEC Energy Corporation Announces Closing of Magellan Exploration, LLC Acquisition.

Business/Energy Editors

HOUSTON--(BUSINESS WIRE)--Feb. 8, 2000

3TEC Energy Corporation (&uot;3TEC&uot;) (Nasdaq:TTEND) announced today that it has closed the previously announced acquisition of Magellan Exploration, LLC (&uot;Magellan&uot;). Magellan is a privately owned exploration and production company based in Houston. 3TEC's shareholders approved the issuance of 3TEC securities in the transaction at a special meeting of shareholders held on Jan. 31, 2000.

The acquired properties are located in South Louisiana in the Breton Sound, Bay de Chene and Garden City fields. As of Dec. 31, 1999, 3TEC estimates that the acquired properties had total net proved reserves of 26.7 Bcfe with a PV 10 value of $40.1 million, using constant pricing of $2.48 per Mcf for gas and $24.20 per barrel for oil. The estimated reserves are 66% gas on an equivalent basis and the majority of the properties are operated. Also included are over ten exploration prospects that 3TEC believes have substantial reserve potential as well as a natural gas gathering system.

As consideration, 3TEC issued 1,085,934 common shares and warrants to purchase 333,333 shares of common stock with an exercise price of $30.00 per share for four years. 3TEC also issued 617,008 shares of Series D convertible preferred stock with a stated value of $24.00 per share, dividend rate of 5% per annum with an option for three years for 3TEC to pay the dividends in additional Series D shares and with each Series D share convertible at any time into 3TEC common on a one-for-one basis. 3TEC may redeem the Series D shares upon 30 days written notice and there are no rights of the holders to &uot;put&uot; the Series D shares to 3TEC.

Floyd C. Wilson, president and chief executive officer of 3TEC, stated, &uot;This transaction adds significant proved reserves to our asset base and further establishes South Louisiana as a core operating area for 3TEC. In addition, Magellan's properties contain a large number of exciting exploration prospects that have been identified using 3-D seismic technology. We expect to begin drilling on these properties in March with approximately $6 million in capital expenditures budgeted for 2000.&uot;

3TEC Energy Corporation is engaged in the acquisition, development, production and exploration of oil and natural gas, with properties geographically concentrated in East Texas and the Gulf Coast regions. 3TEC also owns significant properties in the Permian and San Juan basins and in the Mid-Continent region.

The information contained in this press release may contain projections, estimates and other forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Although the Company believes that its expectations are based on reasonable assumptions, it can give no assurance that its goals will be achieved. Important factors that could cause actual results to differ materially from those included in the forward-looking statements include the timing and extent of changes in commodity prices for oil and gas, environmental risks, drilling, producing and operating risks, risks related to exploration and development, uncertainties about the estimates of reserves, government regulation, competition and the ability of the Company to meet its stated business goals.