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PrimeEnergy Corporation Forms Oil & Gas Partnership With GE Commercial Finance Energy Financial Services

Posted on: Monday, 22 August 2005, 21:00 CDT

PrimeEnergy Corporation (Prime) announced today that its wholly-owned subsidiary, F-W Oil Exploration L.L.C. (FWOE), has entered into an agreement to contribute substantially all of its offshore proved producing and shut in properties to a newly formed limited partnership in exchange for cash and a 20% general partner interest in the partnership. The sole limited partner is an affiliate of GE Commercial Finance Energy Financial Services.

As a result of this transaction, FWOE will recognize a gain of approximately $10.0 million during the 3rd quarter of 2005. Included in the sale of properties is a well drilled in the 3rd quarter of 2004 at a cost to Prime of $7.5 million, which requires additional expenditures to determine its commercial viability. The financial impact on Prime of such determination has been significantly reduced due to the fact that Prime's effective ownership decreased to 20% as a result of this transaction.

FWOE intends to use the proceeds of the transaction to extinguish debt and to finance further exploration and development in the Gulf of Mexico.

"We at PrimeEnergy are very excited about this transaction, because it enables us to not only monetize some of our reserves during this high price environment but also aligns us with GE's Energy Financial Services unit. By joining the financial strength of GE with the entrepreneurial prowess of FWOE, we create an alliance that is uniquely positioned to capture future opportunities in the Gulf of Mexico," said Charles Drimal, PrimeEnergy's CEO.

PrimeEnergy Corporation (The Company) is an independent oil and gas company actively engaged in acquiring, developing and producing oil and natural gas. The Company's common stock shares are traded in the NASDAQ stock market under the symbol "PNRG." The Company is headquartered in Stamford, Connecticut, with operating offices in Houston and Midland, Texas; Oklahoma City, Oklahoma and Charleston, West Virginia. PrimeEnergy owns leasehold, mineral and royalty interests in producing and non-producing oil and gas properties across the continental United States and in the Gulf of Mexico. The Company operates 1542 wells and owns non-operating interests in 474 additional wells. The Company's offshore operations in the Gulf of Mexico are conducted through its wholly owned subsidiary, F-W Oil Exploration L.L.C. In the year 2004 PrimeEnergy Corporation produced 5,138,000 mcf of natural gas and 371,000 barrels of oil, and as of December 31, 2004, had proved reserves of 44.870 bcf of natural gas and 2.932 million barrels of oil.

If you have any questions about this release, please contact Joan Podlovits at (203) 358-5723.

This Report contains forward-looking statements that are based on management's current expectations, estimates and projections. Words such as "expects,""anticipates,""intends,""plans,""believes", "projects" and "estimates," and variations of such words and similar expressions are intended to identify such forward-looking statements. These statements constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, and are subject to the safe harbors created thereby. These statements are not guarantees of future performance and involve risks and uncertainties and are based on a number of assumptions that could ultimately prove inaccurate and, therefore, there can be no assurance that they will prove to be accurate. Actual results and outcomes may vary materially from what is expressed or forecast in such statements due to various risks and uncertainties. These risks and uncertainties include, among other things, the possibility of drilling cost overruns and technical difficulties, volatility of oil and gas prices, competition, risks inherent in the Company's oil and gas operations, the inexact nature of interpretation of seismic and other geological and geophysical data, imprecision of reserve estimates, and the Company's ability to replace and expand oil and gas reserves. Accordingly, stockholders and potential investors are cautioned that certain events or circumstances could cause actual results to differ materially from those projected.

Source: Business Wire

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