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AMERICAN EXPLORATION COMPANY INCREASES OWNERSHIP OF SUBSIDIARY AND REACHES AGREEMENT TO PREPAY DEBT

 AMERICAN EXPLORATION COMPANY INCREASES OWNERSHIP OF SUBSIDIARY
 AND REACHES AGREEMENT TO PREPAY DEBT
 HOUSTON, Sept. 1 /PRNewswire/ -- American Exploration Company (AMEX: AX) today announced that it has reached an agreement in principle with The Prudential Insurance Company of America to acquire Prudential's equity stake in Canadian Conquest Exploration Company, a majority owned subsidiary of American. Prudential will transfer its 40 percent stake in Canadian Conquest to American and pay $6.5 million to acquire 2.0 million shares of American common stock and warrants to purchase an additional 2.1 million shares at $3.38 per share.
 In addition, Canadian Conquest has agreed to prepay a portion of its outstanding note to Prudential. In connection with the $6.5 million prepayment that reduces the Canadian Conquest note from $18.5 million to $12.0 million, Prudential has agreed to reduce the interest rate on the balance of the indebtedness to 10 percent from the current rate of 12.76 percent. The agreement is subject to final documentation and is expected to close in early September.
 Commenting on the Prudential agreement, American Exploration's Chairman and CEO Mark Andrews said, "This agreement is another important step in American's plan to strengthen its balance sheet. The lowering of the interest rate on the Canadian Conquest note will save approximately $4.5 million of future interest over the life of the note.
 "We are also pleased to have been able to increase our ownership of Canadian Conquest from 50 percent to 90 percent at such a depressed time in the Canadian energy markets. At year-end 1991, Canadian Conquest had over 8 million BOE of oil and gas reserves and annual revenues of $8.6 million. The Canadian Conquest management team is pursuing an effective strategy and has been able to increase production in a difficult environment. We believe that Canadian Conquest is well positioned for profitable growth."
 American Exploration Company is an independent oil and gas company with production in the United States and Canada and exploratory activities focused in Texas, South Louisiana, Tunisia and the Sultanate of Oman. American's common stock is traded on the American Stock Exchange under the symbol AX.
 NOTE: All amounts are in U.S. dollars.
 -0- 9/1/92
 /CONTACT: Frank Murphy, Vice President-Investor Relations of American Exploration Company, 212-230-0344/
 (AX) CO: American Exploration Company ST: Texas IN: OIL SU: TNM


PS-LR -- NY048 -- 5540 09/01/92 15:26 EDT
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Publication:PR Newswire
Date:Sep 1, 1992
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