KELLEY OIL & GAS CORPORATION OFFERS $100 MILLION PRINCIPAL AMOUNT OF SENIOR NOTES DUE JUNE 15, 1999; Registration Statement for Four-Year Financing to Repay Bank Debt and Fund Drilling Activities Declared Effective by SEC

Business Wire, June 14, 1995

HOUSTON, Texas--(BUSINESS WIRE)--June 14, 1995--KELLEY OIL & GAS CORPORATIO (Nasdaq:KOGC) announced that the registration statement for $100,000,000 principal amount of its 13-1/2 per cent Senior Notes Due June 15, 1999 was declared effective today by the Securities and Exchange Commission. The Senior Notes are being offered at 99.629 per cent of their face amount to yield 13-5/8 per cent. Salomon Brothers Inc and Bear, Stearns & Co. Inc. are the underwriters for the offering.

Net proceeds from the offering will be used first to repay existing bank debt under the company's $90 million credit facility and then to finance drilling operations. Kelley Oil & Gas Corporation is an independent exploration and production company with oil and gas properties located primarily in Louisiana. The company operates through Kelley Oil & Partners, Ltd. and separate development partnerships in which it owns controlling interests. The company's common and preferred stock are traded on the Nasdaq National Market under the symbols KOGC and KOGCP.

CONTACT: Kelley Oil & Gas Corporation, Houston

Frances Gomulka, (713) 652-5200

or

Media Contact:

Coltrin & Associates

Russ Parker, (713) 759-6052