Belco Oil & Gas Corp. Agrees To Acquire Coda Energy, Inc. For $324 Million Plus Warrants.

NEW YORK--(BUSINESS WIRE)--Nov. 3, 1997--Belco Oil & Gas Corp. (NYSE:BOG) announced today that it has entered into a definitive merger agreement to acquire all of the outstanding stock of Coda Energy, Inc. from an affiliate of Enron Capital & Trade Resources Corp. holding 95% of the common stock of Coda, and certain members of Coda's senior management.

Belco will pay the selling stockholders a total of $149 million in cash and assume approximately $175 million of Coda debt. Belco will also issue three year Warrants to purchase 1,666,667 shares of Belco common stock at an exercise price of $27.50 per share. The Warrants become exercisable following the first anniversary of issuance.

Belco will fund approximately $130 million of the transaction with cash on hand and the remainder with drawings under its existing credit facility. The transaction is expected to close in late-November. Belco is also reviewing the possible sale of certain non-strategic assets to reduce its debt level following the closing of the transaction. Belco expects the transaction to be significantly cash flow accretive to shareholders in its first year.

Coda, based in Dallas, is a geographically focused oil and gas company with operations primarily in two core areas: the Permian Basin of west Texas and the Mid-Continent region. Coda's May 1, 1997, proven reserves were estimated to be 55.5 MMBOE (million barrels of oil equivalent) of which 86% is oil with approximately 12% of the reserves classified as proved undeveloped. Properties containing 92% of these reserves were estimated by Belco's independent reservoir engineering firm, Miller and Lents. The total reserve quantity represents a reserve life of about 14 years at current production rates and translates to a per barrel cash cost to Belco of $6.01 for proved reserves only, without giving any value to associated probable and possible reserves. Current Coda production rates are over 10,000 BOE per day. Coda operates 95% of its total proved reserves.

Robert A. Belfer, Chairman and CEO of Belco said, "Coda represents a major strategic acquisition for the Company and brings to Belco both an excellent asset base and a group of outstanding energy professionals. Coda's proven reserves extend Belco's reserve life from 5.3 years to approximately 8 years and more than double Belco's year-end 1996 proven reserves to a combined total of over 600 Bcfe balanced almost equally between oil and gas. The transaction will result in approximately 40% growth in Belco's total current production and will increase the Company's oil production by well over 300%. Coda maintains concentrated areas of operation with high working interests which will permit the Company to continue its strategy of maintaining low cost operations. Belco was impressed by Coda's corporate culture and welcomes the addition of Coda's management team whose acquisition orientation complements Belco's historical drillbit focus."

Laurence D. Belfer, President and COO of Belco stated, "In addition to our large existing acreage inventory of over 2.7 million gross acres, Belco is very excited by the numerous exploitation and exploration opportunities which the Company has identified on Coda's property base. These include the potential for infill drilling, expansion of existing waterfloods, unitization and implementation of new secondary recovery projects, as well as exploration of deeper zones on certain producing properties. Equally as important, we are encouraged by Coda management's commitment to continuously improving operating efficiencies, thereby generating the high operating profit margins (approximately $10.71 per BOE in 1996, including G&A) which is consistent with Belco's corporate philosophy."

Jarl P. Johnson, Vice Chairman and Chief Operating Officer of Coda said, "The combination of Belco and Coda's assets and personnel will result in a stronger, more balanced company and all of us at Coda believe that operationally, financially and culturally, this deal represents an excellent fit."

Belco Third Quarter Production and Prices Production

Belco's third quarter 1997 daily production is expected to be approximately 145 MMcfe (million cubic feet of natural gas equivalent), comparable to the third quarter 1996, with oil production up 63% and natural gas production down 5% when compared to the prior comparable period. This excludes the approximately 12.1 MMcfe daily attributable to Belco's 14.9% stock ownership in Hugoton Energy Corporation which is not permitted to be consolidated for accounting purposes (based on Hugoton's reported second quarter 1997 production numbers).

Belco's overall production figures reflected two specific and one general factor: 1) on August 1st, Texas authorities required production from the Company's 50% owned and operated La Brisa Prospect in south Texas to be severely curtailed as these wells were found to be producing gas from on top of an oil column and efficient reservoir management required that those wells be cut back. Belco's three producing La Brisa wells were capable of producing up to approximately 28 MMcfe per day gross (11.2 MMcfe per day net). While in the short-term, production from this prospect has been reduced to less than 1 MMcfe per day, Belco believes that the presence of this oil column beneath the gas cap adds valuable reserves to the prospect and is a positive development; and 2) the Company's Turner 22 NO. 1-H well in St. Landry Parish, Louisiana, which has produced over 365,000 barrels of oil equivalent in a little over four months ended September 30, 1997, did not experience the expected production increase from the second lateral of this dual lateral horizontal Austin Chalk well when it was opened up.

The general factor relates to various operational delays which the Company has been experiencing due to increased difficulty in obtaining oilfield services in a timely manner and of a quality that meets Belco's standards.

Prices

Realized average gas equivalent prices are expected to be approximately $2.02 per Mcfe for the third quarter 1997, comparable to the $2.03 per Mcfe realized during the third quarter of 1996. Due to the sharp rise in natural gas futures at the end of the third quarter, Belco expects to have a net hedge related marked-to-market loss of approximately $4.5 million. This non-cash loss will result in a reduction of earnings per share of approximately $0.09 for the third quarter but will not impact cash flow. Whether or not these marked-to-market losses ultimately will be realized will be a function of future prices.

Belco Oil & Gas Corp. is an independent energy company engaged in the exploration, development and production of natural gas and oil. -0-

This press release includes 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 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.

CONTACT: BELCO OIL & GAS CORP.

www.belcooil-gas.com

Laurence D. Belfer, President & COO, 212/644-0561

Myra E. Turoff, Investor Relations, 212/508-9539