Pogo Group signs 30-year pact to supply natural gas to Thailand; first production expected in late 1996.

HOUSTON--(BUSINESS WIRE)--Nov. 7, 1995--Pogo Producing Co. ("PPP"-NYSE) and its partners, owners of Tantawan area of Block B8/32 in Gulf of Thailand, have today signed a 30-year agreement with the Petroleum Authority of Thailand (PTT) to supply natural gas to Thailand.

Earlier in the year the Thailand Department of Mineral Resources granted a production license covering the entirety of the Tantawan structure.

The Tantawan area, approximately 70,000 acres in size, is owned by Thailand corporations which are, in turn, owned by Pogo Producing Co. (46.3%), Rutherford-Moran Oil Corp. (46.3%) and The Sophonpanich Co. Ltd. (7.4%).

Paul G. Van Wagenen, Pogo's Chairman and Chief Executive Officer, said, "We are very pleased to have concluded these favorable contract negotiations. We look forward to rapid development of Tantawan and supplying significant quantities of oil and natural gas to Thailand in the coming years."

Van Wagenen noted that initially dedicated field reserves of 300 billion cubic feet are explicity covered by the agreement. Field reserves may be redetermined again approximately every two years under the contract as further delineation and development of this large Tantawan structure is accomplished. New fields or areas within Block B8/32, but outside of Tantawan, also may be included under the contract by future agreement between PTT and these concessionaires.

Pogo anticipates achieving first-production during the fourth quarter of 1996, contingent upon completion of the new pipeline now being constructed by PTT, and ongoing development operations by the concessionaire owners. Development drilling activities are now constant. Initial production is expected to come from the first two platforms which can accommodate 12 wells each. More platforms will be added as and when successful development drilling on Tantawan is accomplished.

Initial minimum daily contract quantities (DCQ) during the first year are 75 million cubic feet per day (Mmcf/d) with the DCQ rising to 85 Mmcf/d in the second year. Mutual agreement on reserves would be negotiated as and when the DCQ exceeds 125 Mmcf/d. The DCQ is the minimum daily volume that PTT agrees to take, or pay for if not taken. In fact, the concessionaires hope that successful drilling will enable them to develop actual daily delivery capacity well in excess of DCQ minimums as new wells and platforms are added in the Tantawan area. The physical production facilities will be designed to accommodate maximum total cumulative natural gas production volumes up to 300 Mmcf/d and maximum total cumulative crude oil and condensate volumes of up to 50,000 barrels per day.

Initial base natural gas prices start at $1.90 per million BTU (MMBTU) with at least three price adjustments expected prior to the date of first production in late 1996. Converted to a price based upon 1,000 cubic feet (Mcf) the price would be about 10 cents per Mcf higher than on a BTU basis. Crude oil and condensate will be produced at Tantawan simultaneously with natural gas production, and will be sold at competitive world prices, in Thailand, according to Pogo.

Pogo explores for, develops, produces and sells crude oil and natural gas. Headquartered in Houston, Pogo owns interests in 77 federal and state lease blocks offshore Louisiana, Texas, Mississippi and Alabama in the Gulf of Mexico. Pogo also owns approximately 125,000 gross leasehold acres in major oil and gas provinces onshore in the United States and approximately 1.3 million gross acres in the Kingdom of Thailand. Pogo is listed on the New York and Pacific Stock Exchanges under the symbol PPP.

CONTACT: Pogo Producing Company

Paul G. Van Wagenen, 713/297-5001