Belco Announces Recent Drilling Successes; Outlines 1999 Price Risk Management Position.

NEW YORK--(BUSINESS WIRE)--Dec. 8, 1998--Belco Oil & Gas Corp. (NYSE:BOG) today announced participation in recent horizontal drilling successes targeting the Austin Chalk formation in the Brenham Dome area of the Giddings Field in Texas. The Hahn No. 1 well (Belco 37.2% working interest) has produced over 4.8 BCFE in its first 4 months of production and is currently producing at a rate of 27 million cubic feet of gas per day ("MMCFD"). The Hahn No. 2 well (Belco 37.2% working interest) began flowing to sales in mid-November is currently producing at a pipeline-curtailed rate of 35 MMCFD. The Jaster No. 1 well (Belco 25.6% working interest) was recently placed on line and is currently producing at a rate of 21 MMCFD with 7,300 lbs. flowing tubing pressure. The Salem No. 1 well (Belco 37.2% working interest), located near the Jaster No. 1 and Hahn No. 1 wells, is scheduled to be placed on line at approximately year-end, with a fifth well in the area (also Belco 37.2% working interest) about to be spudded. Union Pacific Resources and Chesapeake Energy hold the remaining working interests in these wells.

Chairman & CEO Robert A. Belfer commented, "We are very pleased that Belco and its partners have found such a prolific area in the gas-prone deep Austin Chalk trend and we will be working to delineate the boundaries of this exciting area in the coming year."

1999 Price Risk Management Position

Belco currently has in place crude oil hedge transactions covering approximately 9,500 barrels of oil per day at an average NYMEX price of $19.25 per barrel for the entire calendar year of 1999 (as well as the fourth quarter of 1998) as part of its ongoing dynamic hedging program. These crude oil hedges cover approximately 80% of current oil production. In addition, Belco has in place natural gas hedge transactions for all of calendar 1999 covering approximately 60,000 MMBTU per day protecting the Company below an average price of approximately $2.25 per MMBTU and approximately 20,000 MMBTU per day of collar transactions with a $2.00 floor and a $2.60 ceiling.

Collectively, these swap and collar transactions cover approximately 80% of current natural gas production. All of Belco=s price risk management transactions are based on agreements entered into with financially responsible counterparties referencing NYMEX prices. Belco currently has certain crude oil and natural gas hedge transactions in place for the year 2000 as well, though covering lesser amounts of production.

Chairman & CEO Robert A. Belfer stated, "As a Company run by owner/managers, Belco has always felt it prudent to engage in an active price risk management program in order to mitigate the downside risk associated with oil and gas prices, and to generate a more predictable cash flow stream. Given the existing weak commodity price environment, Belco is extremely well-positioned not only to weather the current storm but also to capitalize on opportunities created by the current pricing levels."

Belco is an independent energy company engaged in the exploration, development, acquisition and production of natural gas and oil.

This press release includes forward looking statements within the meaning of Section 27A of the Securities Act of 1993 and Section 21E of the Securities Exchange Act of 1934. Although BOG 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 in the forward looking statements herein include the timing and extent of changes in commodity prices for oil and gas, the need to develop and replace reserves, environmental risks, drilling and operating risks, risks related to exploration and development, uncertainties about the estimates of reserves, competition, government regulation and the ability of the Company to meet its stated business goals.