Peoples Energy Acquires South Texas Properties

Apr 27, 2001, 01:00 ET from Peoples Energy

    CHICAGO, April 27 /PRNewswire/ -- Peoples Energy (NYSE:   PGL) announced
 today that it has purchased from Sierra 1996-I L.P., an EnCap Investments
 affiliate, 100% of its interests in 28 oil and natural gas producing wells
 located onshore in South Texas.  With this purchase, Peoples Energy will
 approximately double its current proved reserve base and level of investment
 in its oil and gas production business.
     "With this acquisition, we have made significant progress toward our
 long-term goal of becoming a top-fifty owner of natural gas reserves," said
 Richard E. Terry, CEO and chairman of Peoples Energy.  "By increasing our
 operations in the Gulf Coast region, we strengthen our business and enhance
 our ability to diversify and capitalize on growth opportunities."
     The acquired properties include interests in approximately 11,500 gross
 acres (8,900 net) of developed and undeveloped oil & gas leasehold, which will
 be operated by Peoples Energy Production, Peoples Energy's oil and gas
 production unit.  The acquired reserves, 91% of which are natural gas, were
 purchased for about $120 million.  The transaction increases the company's
 total proved reserves to approximately 130 billion cubic feet of gas
 equivalent at March 30, 2001, with current net production capability of
 approximately 55 million cubic feet of gas equivalent per day.
     "This transaction is consistent with our overall strategy of purchasing
 properties with proven reserves and upside potential," said Steven W. Nance,
 president of Peoples Energy Production.  "This acquisition is a great
 opportunity to expand our operational activities, and it provides the company
 with significant development and exploitation opportunities."
     Peoples Energy is a diversified energy company comprised of five primary
 business segments: Gas Distribution, Power Generation, Midstream Services,
 Retail Energy Services, and Oil and Gas Production. The Gas Distribution
 business serves about 1 million retail customers in Chicago and northeastern
 Illinois.  Visit the Peoples Energy web site at PeoplesEnergy.com.
 
     Forward-Looking Information.  This press release contains 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, such as expectations of
 development and growth of the company's oil and gas business.  Actual results
 could differ materially from such expectations because of many uncertainties,
 including but not limited to: the company's success in identifying oil and gas
 opportunities on financial acceptable terms; operating hazards; drilling
 risks; the inherent uncertainties in interpreting engineering data relating to
 underground accumulations of oil and gas; general US economic conditions;
 business and competitive conditions resulting from deregulation and
 consolidation of the energy industry; the timing and extent of changes in
 energy commodity prices and interest rates and regulatory development in the
 US and states where the company has business activities.  Some of the
 uncertainties that may affect future results are discussed in more detail
 under "Item 1-Business" of Peoples Energy Corporation's From 10-K for the year
 ended September 30, 2000.  All forward-looking statements included in this
 press release are based upon information presently available and Peoples
 Energy assumes no obligation to update any forward-looking statements.
 
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SOURCE Peoples Energy
    CHICAGO, April 27 /PRNewswire/ -- Peoples Energy (NYSE:   PGL) announced
 today that it has purchased from Sierra 1996-I L.P., an EnCap Investments
 affiliate, 100% of its interests in 28 oil and natural gas producing wells
 located onshore in South Texas.  With this purchase, Peoples Energy will
 approximately double its current proved reserve base and level of investment
 in its oil and gas production business.
     "With this acquisition, we have made significant progress toward our
 long-term goal of becoming a top-fifty owner of natural gas reserves," said
 Richard E. Terry, CEO and chairman of Peoples Energy.  "By increasing our
 operations in the Gulf Coast region, we strengthen our business and enhance
 our ability to diversify and capitalize on growth opportunities."
     The acquired properties include interests in approximately 11,500 gross
 acres (8,900 net) of developed and undeveloped oil & gas leasehold, which will
 be operated by Peoples Energy Production, Peoples Energy's oil and gas
 production unit.  The acquired reserves, 91% of which are natural gas, were
 purchased for about $120 million.  The transaction increases the company's
 total proved reserves to approximately 130 billion cubic feet of gas
 equivalent at March 30, 2001, with current net production capability of
 approximately 55 million cubic feet of gas equivalent per day.
     "This transaction is consistent with our overall strategy of purchasing
 properties with proven reserves and upside potential," said Steven W. Nance,
 president of Peoples Energy Production.  "This acquisition is a great
 opportunity to expand our operational activities, and it provides the company
 with significant development and exploitation opportunities."
     Peoples Energy is a diversified energy company comprised of five primary
 business segments: Gas Distribution, Power Generation, Midstream Services,
 Retail Energy Services, and Oil and Gas Production. The Gas Distribution
 business serves about 1 million retail customers in Chicago and northeastern
 Illinois.  Visit the Peoples Energy web site at PeoplesEnergy.com.
 
     Forward-Looking Information.  This press release contains 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, such as expectations of
 development and growth of the company's oil and gas business.  Actual results
 could differ materially from such expectations because of many uncertainties,
 including but not limited to: the company's success in identifying oil and gas
 opportunities on financial acceptable terms; operating hazards; drilling
 risks; the inherent uncertainties in interpreting engineering data relating to
 underground accumulations of oil and gas; general US economic conditions;
 business and competitive conditions resulting from deregulation and
 consolidation of the energy industry; the timing and extent of changes in
 energy commodity prices and interest rates and regulatory development in the
 US and states where the company has business activities.  Some of the
 uncertainties that may affect future results are discussed in more detail
 under "Item 1-Business" of Peoples Energy Corporation's From 10-K for the year
 ended September 30, 2000.  All forward-looking statements included in this
 press release are based upon information presently available and Peoples
 Energy assumes no obligation to update any forward-looking statements.
 
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 SOURCE  Peoples Energy