Energen To Acquire Proved Wolfberry Properties

Energen Corporation (NYSE: EGN) today announced that its oil and gas exploration and production subsidiary, Energen Resources, has signed a purchase and sale agreement to buy a primarily proved undeveloped Wolfberry package from a private seller for $65.8 million plus standard closing adjustments.

Energen also announced that it is cutting approximately $45 million from Energen Resources’ planned capital investment in the San Juan Basin in 2012. This capital reduction is a direct result of the current outlook for low natural gas prices. The bulk of the company’s natural gas production comes from the San Juan Basin.

PERMIAN BASIN ACQUISITION

Energen’s newest planned acquisition is expected to close by the end of February and will add some 3,200 net acres in Midland County to the company’s extensive Wolfberry position in the Permian Basin. The acquisition package includes 29 producing wells, an estimated 50 undeveloped locations, and approximately 8.5 million barrels of oil equivalent (MMBOE) proved and probable reserves, of which some 80 percent are proved undeveloped. Energen Resources does not plan to begin developing this acreage before 2013. The company’s estimated cost to develop the properties is $115 million.

SAN JUAN BASIN CAPITAL REDUCTION

Energen Resources expects to have completed drilling its highest return wells in the San Juan Basin by mid-year and will cease all drilling activities there after June 30, 2012, in light of continued weakness in natural gas prices. This reduction in natural gas drilling will have a minimal impact on current-year production that will be more than offset by production from the existing wells associated with the company’s latest planned Wolfberry acquisition (see above).

Energen Resources’ revised capital investment plans for 2012 reflect approximately $890 million for drilling and development, with $855 million targeting the oil- and liquids-rich Permian Basin. The largest portion of 2012 capital – approximately $415 million -- will be invested in the company’s Wolfberry play. Energen Resources’ estimated production in 2012 remains 24 MMBOE.