Middle Bay Oil Company Inc. Announces 1998 Results; Proved Reserves Increase 63%; Production Increases 102%.

HOUSTON--(BUSINESS WIRE)--April 1, 1999--Middle Bay Oil Company Inc. (Nasdaq:MBOC) announced today financial and operating results for the fourth quarter and full year ended December 31, 1998. Revenues totaled $17.7 million, a 55% increase over 1997, while cash flow from operations decreased 63% to $1.6 million ($.20 per share). Oil and gas production increased 105% and 99%, respectively, over 1997 volumes. Primarily due to a $4.2 million ($.52 per share) non-cash impairment charge ($2.7 million after tax, $.34 per share) recorded in 1998, the Company reported a net loss for the year ended December 31, 1998 of $6.7 million ($.83 per share).

MBOC also announced that its proved oil and gas reserves increased by 63% to a record level of 10,589 thousand barrels of oil equivalents (Mboe). Based on SEC reporting guidelines, the pre-tax present value discounted at 10% of those reserves increased 29% over year-end 1997 to $38.9 million using December 31, 1998 prices of $9.50 per barrel (WTI posted) and $2.10 per MCF (Henry Hub). Approximately 79% of the reserves are classified as proved developed producing. The growth in reserves and PV 10 came in spite of oil and gas prices that were 41% and 17% lower, respectively, than at year-end 1997. In 1998, the Company increased proved reserves by 4,082 thousand barrels of oil equivalents (Mboe), 334% of 1998 production. Over the past five years, MBOC's reserve replacement ratio has averaged 375%. Proved gas reserves increased 103% to 43,483 MMCF and proved oil reserves increased 14% to 3,342 MBbls. On an equivalent basis, the proved reserves at December 31, 1998 were 68% natural gas.

Year Ended December 31, 1998

MBOC reported a net loss for 1998 of $6.7 million or $.83 per share compared to a net loss of $16.2 million or $4.76 per share in 1997. These results include a $4.2 million ($.52 per share) non-cash impairment charge ($2.7 million after tax, $.34 per share) in 1998 and a $21.1 million ($6.23 per share) non-cash impairment charge ($14.8 million after tax, $4.36 per share) in 1997 of its oil and gas reserves related to the Statement of Financial Accounting Standards No. 121, Impairment of Long-Lived Assets. The impairment charges recorded by the Company in 1998 are primarily attributable to four fields that declined in value as a result of significantly lower oil prices at year-end 1998 than were realized during most of the year.

During 1998, the Company produced 581,457 barrels of oil and 3,846.7 MMCF of gas, an increase of 105% and 99%, respectively, over 1997. On an equivalent barrel basis, MBOC produced 1,223 Mboe in 1998, an increase of 102% compared to 1997. The increases were primarily due to production from the Enex Resources Corporation and Service Drilling acquisitions closed during 1998 and having a full year of production from the 1997 acquisitions of Bison Energy Corporation, Shore Oil Company and the Riceville field.

The average price received for gas sold in 1998 of $2.00 per MCF was 16% lower than the $2.39 per MCF average price realized in the comparable period. Average oil prices in 1998 of $11.52 per barrel were 36% lower than the $18.06 per barrel average price received in 1997.

Total revenues for 1998 were $17.7 million, an increase of 55% over 1997 revenues of $11.4 million. Cash flow from operations decreased 63% in 1998 to $1.6 million ($.20 per share) from $4.2 million ($1.24 per share) in 1997. The Company set records in 1998 for proved reserves, production and revenues.

Fourth Quarter 1998

The Company reported a net loss for the fourth quarter of $4.1 million or $.48 per share compared to a net loss of $15.8 million or $3.53 per share in 1997. These results include a $3.7 million ($.43 per share) non-cash impairment charge ($2.4 million after tax, $.28 per share) in 1998 and a $21.1 million ($4.71 per share) non-cash impairment charge ($14.8 million after tax, $3.30 per share) in 1997 of its oil and gas reserves related to the Statement of Financial Accounting Standard No. 121, Impairment of Long-Lived Assets.

In the fourth quarter of 1998, MBOC produced 153,000 barrels of oil and 1,133.7 MMCF of gas. Production of oil increased 59% and gas production rose 93% over the comparable period, primarily due to production from the Enex Resources Corporation and Service Drilling acquisitions closed during the past year.

Average product prices for the three month period ended December 31, 1998 were $1.90 per MCF and $10.43 per barrel, a decrease of 29% and 36%, respectively, from the average prices of $2.69 per MCF and $16.25 per barrel received in the fourth quarter of 1997.

Revenues during the fourth quarter totaled $4.4 million, an increase of 26% over the comparable period revenues of $3.5 million. Cash flow from operations declined to $42 thousand ($0.00 per share) versus $.9 million ($0.20 per share) in the fourth quarter of 1997, a decrease of 95%.

Management Comments

John J. Bassett, President and Chief Executive Officer of MBOC stated, "1998 was a difficult year for Middle Bay along with all independent producers. Our financial results were severely impacted by the dramatic drop in oil prices during the year, resulting in a net loss of $6.7 million in 1998. The Company achieved record levels of proved reserves and production while keeping long-term debt at a reasonable 55% of total capitalization. Although 1999 will be another challenging year, we will continue to seek acquisition opportunities that can add shareholder value."

Middle Bay Oil Company Inc. is an independent oil and gas exploration and production company, headquartered in Houston, Texas, with operations in the Gulf Coast and Mid-Continent regions.

The information contained in this press release may contain projections, estimates and other 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 the Company 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 included in the forward-looking statements include the timing and extent of changes in commodity prices for oil and gas, environmental risks, drilling, producing and operating risks, risks related to exploration and development, uncertainties about the estimates of reserves, government regulation, competition and the ability of the Company to meet its stated business goals.

                     Middle Bay Oil Company Inc.
            Summary Consolidated Statements of Operations
                (in thousands, except per share data)

                         For the Three Months        For the Year
                            Ended Dec. 31,           Ended Dec. 31,
                        ---------------------      -------------------
                           1998        1997         1998        1997
                        ---------------------      -------------------
Revenues
 Oil and gas sales
  and plant income         3,933        3,300      15,012      10,213
 Gain on sale of
  properties                 426            3       1,953           7
 Delay rental and lease
  bonus income                 0           85         217         975
 Other                        84          144         521         238
                        ---------------------      -------------------
Total Revenues             4,443        3,532      17,703      11,433
                        ---------------------      -------------------
Costs and Expenses
 Lease operating and
  production taxes         2,262        1,388       7,801       3,849
 Geological and geophysical  (49)          92         878         223
 Dryhole                     172          673         503       1,119
 Impairments               3,672       21,148       4,164      21,148
 Depletion, depreciation
  and amortization         2,145        1,959       7,116       4,567
 Interest                    543          193       1,972         671
 Stock compensation          199          101         266         202
 General and
  administrative           1,031          756       4,267       2,361
 Other                       139          317         139         317
                        ---------------------      -------------------
Total Costs and Expenses  10,114       26,627      27,106      34,457
                        ---------------------      -------------------
Loss Before Income Tax
 Benefit and Minority
 Interest                 (5,671)     (23,095)     (9,403)    (23,024)
Income Tax Expense
 (Benefit)                (1,558)      (7,445)     (2,829)     (7,445)
Minority Interest              9            0          15           0
                        ---------------------      -------------------
Net Loss                  (4,122)     (15,650)     (6,589)    (15,579)
                        ---------------------      -------------------
Dividends to Preferred
 Stockholders                  0         (196)        (68)       (605)
                        ---------------------      -------------------
Net Loss Available to
 Common Stockholders      (4,122)     (15,846)     (6,657)    (16,184)
                        =====================      ===================
Net Loss Per Common
 Share - Basic             (0.48)       (3.53)      (0.83)      (4.76)
Net Loss Per Common
 Share - Diluted           (0.48)       (3.53)      (0.83)      (4.76)
Weighted Average Common Shares
 Outstanding
  Basic                    8,531        4,489       8,050       3,397
  Diluted                  8,531        4,489       8,050       3,397

                     Middle Bay Oil Company Inc.
                 Summary Consolidated Balance Sheets
                        (dollars in thousands)

                                                 December 31,
                                              1998         1997
                                          -------------------------
Assets
 Current Assets                               4,939        4,235
 Property, Plant and Equipment, Net          52,571       32,841
 Other Assets                                   431          177
                                          -------------------------
Total Assets                                 57,941       37,253
                                          -------------------------
Liabilities and Stockholders' Equity
 Current Liabilities                          4,799        2,891
 Long Term Debt                              27,455        9,715
 Deferred Income Taxes                        1,733        4,781
 Other Liabilities                              438            0
 Minority Interest                              958            0
 Stockholders' Equity                        22,558       19,866
                                          -------------------------
Total Liabilities and Stockholders' Equity   57,941       37,253
                                          -------------------------


Selected Operating Data    For the Three Months       For the Year
                             Ended Dec. 31,           Ended Dec. 31,
                           1998         1997        1998        1997
                          ----------------------  --------------------
Oil Production (Mbbls)       153           96         581         284
Gas Production (Mmcf)      1,134          586       3,847       1,929
Oil Equivalents (Mboe)       342          194       1,223         605

Average Oil Price Per
 Barrel                    10.43        16.25       11.52       18.06
Average Gas Price Per
 Barrel                     1.90         2.69        2.00        2.39

Cash Flow From Operations
 - M$ (1)                     42          875       1,571       4,228

Proved Reserve Summary at
 Year-End (SEC Basis):

Oil and NGL's (Mbbls)                               3,342       2,933
Natural Gas (Mmcf)                                 43,483      21,439
Oil Equivalents (Mboe)                             10,589       6,507

PV 10% of Estimated Pre-Tax
 Cash Flows
 (SEC Basis - M$)                                  38,894      30,179

Average Year-End Oil Price (Bbl)                     9.50       16.18
Average Year-End Gas Price (Mcf)                     2.10        2.54

     (1) Total Revenue Less Gain on Sale of Properties, Well Operating
Costs, Interest Expense, G & A Expense and Other Expense.