Energen Unit Leases Shale Acreage in Alabama.

BIRMINGHAM, Ala. -- Energen Corporation (NYSE:EGN) announced today that its oil and gas acquisition and development company, Energen Resources Corporation, has leased approximately 140,000 acres in order to pursue the exploration and development of the natural gas potential in several shale formations across north-central Alabama.

There are significant quantities of various types of Paleozoic-era, organic-rich shales in Alabama; one of these shales is the Floyd - a Mississippian-period shale that occurs throughout the Black Warrior Basin and is equivalent in age to the Barnett Shale in Texas and the Fayetteville Shale in Arkansas.

Energen Resources has drilled two wells to evaluate the natural gas potential of one of the shale formations in Alabama. While the presence of gas was encouraging, the results were inconclusive as to the formation's productivity due to mechanical problems. The Company plans to drill additional wells across its leasehold over the next 24 months and will be applying various drilling, completion and stimulation techniques in order to ascertain the optimum combination for production.

"Our current lease position spans approximately 140,000 acres, multiple shale formations and a potentially significant amount of gas in place," said James T. McManus, president of Energen and Energen Resources. "We have a lot of work to do, though, before we know exactly what we've got, how viable gas production may be from these various shales and how best to get the gas out of the ground.

"We have known for some time that various shale formations in the United States contain vast amounts of gas in place," McManus said. "And higher natural gas prices have spurred the pursuit of the Barnett shale play in Texas, the Woodford shale play in Oklahoma, the Fayetteville shale play in Arkansas and others.

"We also know Alabama contains a great deal of shale-rich land. Our challenge at Energen Resources is to unlock this resource," McManus said. "We are excited about the potential but mindful that developing significant shale plays in Alabama likely will happen over a period of years rather than weeks or months.

"This was our experience when we led in the development of another unconventional source of natural gas in Alabama: Coalbed methane," McManus noted. "We believe our coalbed methane experience in the Black Warrior Basin will help us respond to this new natural gas opportunity in our home state.

"Unconventional gas plays are likely to be part of the solution to this nation's energy needs in the coming years," McManus added. "And we are eager to continue our work in this area."

Energen Resources created a niche for itself in the late 1980s and early 1990s after pioneering the development of coalbed methane in the Black Warrior Basin, between Tuscaloosa and Birmingham in west-central Alabama. Energen Resources remains a major player in coalbed methane development in the basin, currently operating some 1,279 wells with annual production of 35.5 billion cubic feet (Bcf). Energen Resources' net production from Black Warrior Basin coalbed methane is estimated to be approximately 14.5 Bcf in 2006.

"As Energen Resources continues to add, subtract and otherwise shape its lease position in Alabama shales, we will not be providing detailed information about our shale-related activities that could place us at a competitive disadvantage," McManus said.

Energen Resources considers reserves associated with this shale opportunity to be a potential resource; as such, these reserves were not included in the Company's recent report of its probable and possible reserve potential.

Energen Corporation is a diversified energy holding company with headquarters in Birmingham, Alabama. Its two lines of business are the acquisition and development of natural gas, oil and natural gas liquids onshore in North America and natural gas distribution in central and north Alabama. Additional information on Energen is available at www.energen.com.

FORWARD-LOOKING STATEMENTS 

This release contains statements expressing expectations of future plans, objectives and performance that constitute forward-looking statements made pursuant to the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995. Except as otherwise disclosed, the Company's forward-looking statements do not reflect the impact of possible or pending acquisitions, divestitures or restructurings. We undertake no obligation to correct or update any forward-looking statements, whether as a result of new information, future events or otherwise. All statements based on future expectations rather than on historical facts are forward-looking statements that are dependent on certain events, risks and uncertainties that could cause actual results to differ materially from those anticipated. In addition, the Company cannot guarantee the absence of errors in input data, calculations and formulas used in its estimates, assumptions and forecasts. A discussion of risks and uncertainties, which could affect future results of Energen and its subsidiaries, is included in the Company's periodic reports filed with the Securities and Exchange Commission.