For Release:  Wednesday, January 3, 2007
Contacts:      Julie S. Ryland
                      205.326.8421   
 
BIRMINGHAM, Ala.  -  Energen Corporation (NYSE: EGN) announced today that its oil and gas exploration and production unit, Energen Resources Corporation, last week closed on its purchase of an estimated 30 billion cubic feet (Bcf) of proved and probable natural gas reserves in Carracas Canyon in the San Juan Basin from Dominion Resources Inc.

The San Juan Basin is home to Energen Resources’ largest base of proved and unproved reserves, and this $30 million acquisition in the over-pressured Fruitland Coal is expected to contribute further to the Company’s prospects in this region from the drilling of horizontal wells and sidetracks. 

Approximately 22 percent of the acquired reserves are currently producing, approximately 51 percent are behind-pipe or proved undeveloped, and the remaining 27 percent are classified as probable reserves. Energen Resources estimates that future development costs will total approximately $23.5 million.

“This is a great ‘tuck’ acquisition for Energen Resources,” said James McManus, president of Energen and Energen Resources. “We are very excited about the success we have had with horizontal drilling in the over-pressured Fruitland Coal; in addition, recent success with drilling sidetracks in this region proved up almost 3 Bcf of reserves in this acquisition in the weeks between the signing of the purchase-and-sale agreement and last week’s close.”

"This acquisition brings to a close a highly successful 2006, and we are looking forward to the start of what should be another record earnings year for Energen,” said Mike Warren, Energen’s chairman and chief executive officer. “Some 70 percent of our estimated production in 2007 is already hedged, and that factor alone removes a great deal of uncertainty associated with our earnings potential.”

2007 Hedge Position

Energen Resources’ 2007 hedge position by commodity is as follows:

Commodity	Hedge Vols.	Est. 2007 Production	% Hedged	NYMEX-equiv. price
Natural Gas	42.6 Bcf	62.1 Bcf	69%	$8.93 per Mcf
Oil	2.7 MMBbl	3.8 MMBbl	71%	$69.09 per barrel
NGL	44.9 MMgal	71.0 MMgal	63%	$0.93 per gallon

Energen Resources’ 2007 natural gas hedge position by hedge type is as follows:

Hedge Type	Volumes (Bcf)	Assumed Basis	Price/Mcf (NYMEX equiv)
NYMEX Hedges	13.2	—	$9.27
San Juan Basin-specific	26.0	$1.00	$8.67
Permian Basin-specific	0.4	$0.79	$8.02
SNG-Louisiana	3.0	—	$9.72

Energen Resources’ 2007 oil hedge position by hedge type is as follows:

Hedge Type	Volumes (MBbl)	Assumed Differential	Price/Barrel (NYMEX equiv)
NYMEX Hedges	348	—	$75.42
Sour Oil (WTS)	2,368	$4.78	$68.16

Average oil and gas revenues per unit of production for ERC’s production associated with NYMEX contracts as well as for unhedged production will reflect the impact of basis differentials. Average NGL revenue per unit of production will be net of transportation and fractionation fees.

For production associated with basin-specific contracts, ERC will receive the contracted hedge price. Energen typically hedges basis differentials where applicable. In the tables above, the basin-specific contract prices were converted for comparability purposes to a NYMEX-equivalent price by adding to them ERC's assumed basis differentials.

This release contains statements expressing expectations of future plans, objectives and performance that constitute forward-looking statements made pursuant to the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995. Except as otherwise disclosed, the Company's forward-looking statements do not reflect the impact of possible or pending acquisitions, divestitures or restructurings. We undertake no obligation to correct or update any forward-looking statements, whether as a result of new information, future events or otherwise. All statements based on future expectations rather than on historical facts are forward-looking statements that are dependent on certain events, risks and uncertainties that could cause actual results to differ materially from those anticipated. In addition, the Company cannot guarantee the absence of errors in input data, calculations and formulas used in its estimates, assumptions and forecasts. A more complete discussion of risks and uncertainties that could affect future results of Energen and its subsidiaries is included in the Company's periodic reports filed with the Securities and Exchange Commission.

Energen Corporation is a diversified energy holding company with headquarters in Birmingham, AL. Its two lines of business are the acquisition and development of domestic, onshore natural gas, oil and NGL reserves and natural gas distribution in central and north Alabama. Energen Resources has approximately 1.7 trillion cubic feet equivalent of proved reserves in the San Juan, Permian and Black Warrior basins and in the North Louisiana/East Texas area. More information is available at www.energen.com.