Coral Energy and Shell Canada Limited Form Natural Gas Marketing Alliance.

HOUSTON, Texas/CALGARY, Alberta--(BUSINESS WIRE)--Sept. 9, 1996-- One of North America's largest natural gas marketers and one of Canada's largest natural gas producers have signed a letter of intent regarding natural gas marketing in North America.

Coral Energy, L.P. of Houston, Texas and Shell Canada Limited of Calgary, Alberta signed a letter of intent whereby Coral would market Shell Canada's natural gas. In return, Shell Canada would obtain an equity ownership in Coral. Closing is subject to completion of definitive agreements between the parties and receipt of all necessary legal and regulatory approvals, which are expected to be in place prior to year-end. No financial terms were announced.

"This agreement will bring new services to Shell Canada's customers and is a major step in positioning Coral as a premier North American energy provider," said Murry Gerber, Coral Energy's Chief Executive Officer. "We foresee having a Coral office in Calgary for Canadian marketing operations before the end of this year."

"The dedication of Shell Canada's natural gas production enhances Coral's supply position to serve markets across North America," added Jay Precourt, Coral Energy's Board Chairman and Chief Executive Officer of Tejas Gas Corporation.

"We are re-focusing our natural gas marketing efforts so that we can be more responsive to our customers' changing needs," says Neal McKim, Shell Canada's Vice President, Resources. "Customers will benefit from the synergy between Shell Canada, a natural gas producer, and Coral, an energy marketing company. Through our participation with Coral, our customers will gain value-added services that are in high demand, such as financial options and expanded North American supply. Shell Canada will continue to focus on being the most cost-effective producer, while Coral focuses on providing outstanding customer service."

Shell Canada currently sells about 800 million cubic feet per day of natural gas into Canadian and U.S. markets. These sales would boost Coral Energy's total gas marketing volumes to nearly 6 billion cubic feet per day and significantly expand its marketing and supply base.

Privately-held Coral Energy is an independent natural gas, power and financial services company formed in 1995 as a limited partnership between Shell Oil Company and Tejas Gas Corporation (NYSE: TEJ, TEJPR, TEJPRA). Coral has average gas sales of about 5 billion cubic feet per day ("Bcf/d"). Resources provided by its parent companies include close to 4 Bcf/d of gas production or gas supplies, more than 5 trillion cubic feet of gas reserves, approximately 12,500 miles of intrastate pipelines with a throughput capacity in excess of 7.8 billion cubic feet per day, 290 interconnections with other interstate and intrastate pipelines, and storage capacity of 155 billion cubic feet.

Shell Canada Limited is one of the largest integrated petroleum and petrochemical companies in Canada and is one of the country's largest producers of crude oil, natural gas, natural gas liquids, sulphur and bitumen. It also manufactures, distributes and markets refined petroleum and chemical products across Canada.

CONTACT: Coral Energy

James W. Whalen, 713/658-0509