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TEXAS COURT UPHOLDS KCS ENERGY ABOVE-MARKET GAS PRICING CONTRACT WITH TENNESSEE GAS PIPELINE CO.

 TEXAS COURT UPHOLDS KCS ENERGY ABOVE-MARKET GAS PRICING CONTRACT
 WITH TENNESSEE GAS PIPELINE CO.
 SAN ANTONIO, Texas, June 24 /PRNewswire/ -- KCS Energy Inc. (NASDAQ: KCSE) today reported that the Bexar County District Court here has ordered Tennessee Gas Pipeline Co., as the gas purchaser, to honor a natural gas sales contract with KCS Energy calling for an above-market price of approximately $6.65 per Mcf plus severance taxes for June 1992. The contract runs until Jan. 16, 1999.
 "This is an important and welcomed decision for us and will substantially enhance our cash flow position," said James W. Christmas, KCS Energy president. "The court's validation of our long-term contract with Tennessee now permits us to continue our development plans and move more aggressively into expansion projects," he added.
 The court also awarded KCS Energy approximately $750,000 for past underpayments and attorneys' fees.
 The trial, before Judge Charles Barrow, began on June 15. The dispute concerned several issues, including the interpretation of pricing provisions for new gas wells under the Natural Gas Policy Act of 1978 (NGPA). The contract calls for pricing calculated under Section 102(b)(2) of the NGPA, plus reimbursement of severance taxes. In addition, it provides that Tennessee will take or pay, at contract prices, for at least 85 percent of the deliverability of gas wells producing from the contract acreage, which includes 352 acres in the Bob West Field and the adjoining 320 acres that are located in Starr and Zapata counties in Texas.
 KCS Energy has indicated that it plans additional drilling to other horizons under the 352 acres where KCS owns a 100 percent working interest and on an additional 320 adjacent acres it owns, also dedicated under the contract. In addition, more wells are expected to be completed on the farmed-out acreage in the Bob West field.
 Current production from wells covered by the contract is approximately 25,000 Mcf per day and is expected to be increased in the near future.
 The company has a 12.5 percent working interest in four of the wells producing in the field and an overriding royalty interest in excess of 4 percent in a fifth well. This royalty interest will convert to a 12.5 percent working interest at payout of the well. Coastal Corporation and Tesoro Exploration and Production Company share operations of the field under a farm-out arrangement with KCS Energy.
 KCS Energy is engaged in oil and gas exploration and production, natural gas transportation, natural gas marketing and energy services with operations in Texas, Louisiana, Mississippi, New York, New Jersey, Virginia and Pennsylvania. It is one of the nation's 100 largest oil and gas producers.
 -0- 6/24/92
 /CONTACT: Henry A. Jurand of KCS Energy, 908-632-1770; or Michael Bourke of Gavin Anderson & Co., 212-921-1060, for KCS Energy/
 (KCSE) CO: KCS Energy Inc.; Tennessee Gas Pipeline Co. ST: Texas IN: OIL SU:


TQ-GK -- NY045 -- 3329 06/24/92 13:42 EDT
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Publication:PR Newswire
Date:Jun 24, 1992
Words:490
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