FOR RELEASE:  February 9, 1994           CONTACT:  John Barclay
                                                 (303) 208-3983

     MMS, IPAA REACH AGREEMENT ON CONTRACT SETTLEMENTS SUIT(#40010)

     The Interior Department's Minerals Management Service (MMS)
and associations including the American Petroleum Institute and the
Independent Petroleum Association of America, which represent most
U.S. oil and gas producers, have reached an agreement on future
proceedings in a lawsuit against the agency involving contract
settlements, MMS officials have announced.

     Industry associations had sued MMS and Interior Department
officials to challenge a May 3, 1993 MMS interpretation of how
royalty regulations apply to payments received under settlements
between producers and purchasers to terminate or revise contracts
for the sale of natural gas.  The industry had also sought to
overturn a June 18, 1993, Department order requiring all Federal
and Indian lessees to submit detailed information regarding
settlement payments.  The suit is in the Federal District Court for
the District of Columbia.

     Under the agreement, signed on February 4, 1993, the industry
associations agreed to withdraw their motion to enjoin the June 18
order while the case is pending.  In return, MMS agreed to replace
the original order with a second order which requires less detailed
information -- specifically, a listing of settlements, settlement
proceeds, and receipt dates.  The associations will not challenge
that order.

     In the next few weeks, MMS officials will select some "test
cases" for administrative review and probable ultimate court
litigation.  the intention is to resolve the main legal issues
which control whether, and to what extent, producers owe royalty on
gas contract settlement payments.  After reviewing the test cases,
the associations will then decide whether to pursue their case in
the District of Columbia court.

     "This administration has pledged to listen to and work with
all of its constituents," said MMS Director Tom Fry.  "That's the
spirit behind this agreement."

     Under the agreement, the agency also agreed to procedures
governing ongoing audits of Federal and Indian royalty payors while
the legal issues are being resolved.

                                -MMS-
Subject: PR-02/09/94 IPAA/MMS, IPAA Reach Agreement on Contract
Settlements Suit (#40010)