Contour Announces Reserves and Production; Earnings Impact of Enron Hedge Contracts.

Business/Energy Editors

HOUSTON--(BUSINESS WIRE)--Feb. 25, 2002

CONTOUR ENERGY CO. ("Contour" or the "Company") reports estimated proved reserves as of January 1, 2002 of 164.1 billion cubic feet equivalent ("bcfe") as estimated by the Company's independent engineering firm. The future net cash flows discounted at 10% (SEC PV 10) associated with the proved reserves are $176.4 million. Proved reserves are classified as 59% developed and 69% natural gas.

The reported proved reserves and SEC PV10 were based, as required, on year-end NYMEX prices of $2.57 per Mmbtu of natural gas and $19.84 per barrel of oil. This compares to pricing utilized to calculate proved reserves as of January 1, 2001 of $9.775 per Mmbtu and $26.80 per barrel. The 164.1 bcfe of reported proved reserves includes a reduction of approximately 7 bcfe due to the lower price assumptions.

Total production volumes for 2001 totaled 22.3 bcfe or about 61 million cubic feet equivalent per day, of which about 91% was natural gas.

The Company has also finalized the accounting treatment and impact of its derivative hedge contracts with Enron North America ("Enron"). In accordance with Statement of Financial Accounting Standards No. 133 ("SFAS 133"), and because of Enron's bankruptcy filing, the Enron contracts no longer qualify for cash flow hedge accounting treatment and must be adjusted to their fair market value, estimated to be $3.5 million. This treatment will result in a fourth quarter charge to income of approximately $10 million. Furthermore, approximately $12 million representing deferred revenues related to the hedge positions will be reflected in the Company's December 31, 2001 Balance Sheet as accumulated other comprehensive income. This amount will be reclassified to earnings in 2002 monthly as the hedge transactions were originally scheduled to occur. All related charges and revenues are non-cash.

Contour Energy Co. is engaged in the exploration, development, acquisition and production of oil and natural gas. Natural gas represents about 91% of the Company's equivalent production.

Contour Energy Co. common stock is traded on the OTC Bulletin Board under the symbol CONC.

As used in this Report, "Mcf" means thousand cubic feet, "Mmcf" means million cubic feet, "Bcf" means billion cubic feet, "Bbl" means barrel or 42 U.S. gallons liquid volume, "Mbbl" means thousand barrels, "Mcfe" means thousand cubic feet of natural gas equivalent using the ratio of six Mcf of natural gas to one Bbl of crude oil, condensate and natural gas liquids, "Mmcfe" means million cubic feet of natural gas equivalent, "Bcfe" means billion cubic feet of natural gas equivalent, and "Mmbtu" means million British thermal units. This Report includes various other capitalized terms that are defined when first used.

Cautionary Statement as to Forward-Looking Information

Statements made herein (as well as information included in oral or other written statements made or to be made by the Company or its representatives) that are forward-looking in nature are intended to be "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, relating to matters such as anticipated operating and financial performance, business prospects, future reserves, cash flow and value, developments and results of the Company. Actual performance, prospects, reserves, cash flow and value, developments and results may differ materially from any or all anticipated results due to economic conditions and other risks, uncertainties and circumstances partly or totally outside the control of the Company, including rates of inflation, natural gas prices, uncertainty of reserve estimates, rates and timing of future production of oil and gas, exploratory and development activities, acquisition risks, changes in the level and timing of future costs and expenses related to drilling and operating activities and those risk factors described in the Company's Annual Report on Form 10-K, including the amendment thereto, for the fiscal year ended December 31, 2000.

Words such as "anticipated", "expect", "estimate", "project" and similar expressions are intended to identify forward-looking statements. Forward-looking statements include the risk factors described in the Company's Form 10-K mentioned above.