Contour Updates Status of Second Half Drilling Activities.

HOUSTON--(BUSINESS WIRE)--Aug. 20, 1999--

CONTOUR ENERGY CO. (Nasdaq SmallCap: CONCC) ("Contour" or the "Company"), formerly Kelley Oil & Gas Corporation, announces further information with regard to the Harry S. Bourg No. 2 well. Contour's independent engineering firm, after reviewing the data obtained from the No. 2 well, has confirmed 15 billion cubic feet of natural gas equivalent (BCFE) of proved reserves associated with the Harry S. Bourg No. 1 discovery well. An adjustment in the location of the fault controlling the limits of proved reserves resulted in a revision from the originally reported 21 BCFE. The seismic data over the entire prospect area is now being reinterpreted to include the data obtained from the No. 2 well logs. Computerized reprocessing of the seismic data may be necessary to obtain a clearer understanding of the geology of the field. The Bourg No. 2 well has been temporarily abandoned such that it can be re-entered for sidetracking or other uses, if determined appropriate. The time required to reassess the geological interpretation and the total prospect potential, in conjunction with the other parties involved, may delay any additional drilling activity in this field beyond 1999.

In south Louisiana, Contour will continue its drilling program with the commencement of additional exploratory tests during the remainder of 1999. The Company has committed to participate in the drilling of the following three wells, with additional projects under evaluation:

- The Lake Billiot No. 1 (Contour's working interest 33.3%) is

projected to a true vertical depth (TVD) of 3,300'. This well

will test a seismically defined untested fault block on the

southwest flank of the Golden Meadow field in the 2,700' oil

sand, a zone producing in other areas of the field.

- The Contour-operated Walker No. 1 (Contour's working interest

50%), projected to a TVD of 10,600', will test a seismic

amplitude (bright spot) at the Tex W level in the northwest

Orange Grove area.

- The Landry No. 1 (Contour's working interest 11.5%), projected to

a TVD of 15,000' will penetrate a seismically defined untested

fault block on the north flank of the Lapeyrouse field to test

the multiple Cib carst sand field pays.

Development drilling and recompletion activities continue in the Gulf of Mexico and north Louisiana including the following:

- Contour participated in the drilling and recent completion in the

Gulf of Mexico of the Main Pass 77 A-21 ST (Contour's working

interest 18%) which is now on production at 4.7 million cubic

feet of natural gas equivalent per day at a flowing tubing

pressure of 1,275 pounds per square inch on a 32/64ths-inch

choke.

- The Contour-operated Roberts No. 1 well (Contour's working

interest 49%) in the Sibley field in north Louisiana is currently

being completed. The well has been logged and encountered over

200' of net pay in multiple Hosston sands. Wireline formation

tests indicate original reservoir pressures in a number of sands

in the Roberts No. 1. The Company has additional drilling

locations in this area of the Sibley field.

- The Company is also participating in the Lee No. 1-Alt. well

(Contour's working interest 23%) a Hosston test in the Ada field

in north Louisiana. The well is now drilling at approximately

9,800', toward an expected total depth of 10,100'. Mud log shows

encountered to date have been encouraging.

Contour Energy Co. is engaged in the development, exploration, acquisition and production of oil and natural gas. Natural gas represents about 85% of the Company's equivalent production and proved reserves.

Contour Energy Co. common stock and preferred stock are traded on the NASDAQ SmallCap Market under the symbols CONCC and CONPC.

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 on pages 13, 14 and 15 of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1998.

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.