Dynegy Completes Acquisition of UK Natural Gas Storage Assets.

Business/Energy Editors

HOUSTON--(BUSINESS WIRE)--Nov. 28, 2001

Dynegy Inc. (NYSE:DYN) today announced the completion of the previously announced acquisition of BG Storage Limited (BGSL) and its natural gas storage facilities and related

assets in the United Kingdom. The transaction has been approved by The Gas and Electricity Markets Authority and The Department of Trade and Industry and has been cleared by the Competition Minister following advice from the Director General of Fair Trading in the UK. Dynegy Europe Limited and BG Group plc (NYSE:BRG.N) originally announced the signing of a definite agreement with respect to the transaction on July 16, 2001.

The acquisition of BGSL's 30 wells with five offshore platforms, nine salt caverns, approximately 19 miles (32 kilometers) of pipelines and an onshore natural gas processing terminal establishes the cornerstone of Dynegy's European physical energy convergence presence. BGSL's 260 employees will remain employed under its new name of Dynegy Storage Limited.

"This acquisition strengthens our competitive position in the UK and is a significant step toward our long-term goal to replicate our North American energy delivery network throughout Europe," said Chuck Watson, chairman and chief executive officer of Dynegy Inc. "When combined with our marketing, risk management and logistics capabilities in the UK, these assets will support the creation of even greater value for our customers and our shareholders."

Rough and Hornsea, two of the facilities included in the transaction, are key providers of physical storage space in the UK natural gas market and are used by approximately half of the UK's natural gas shippers. The deliverability rate of Rough, an offshore depleted natural gas field, is 1.5 billion cubic feet per day (455 GWh/day). The deliverability rate of Hornsea, an onshore salt cavity installation, is 620 million cubic feet per day (195 GWh/day). The two facilities are capable of storing 111 billion cubic feet (Bcf) of natural gas.

As part of this transaction, Dynegy also acquired the Easington natural gas processing terminal. The facility processes Rough and third-party natural gas streams and delivers into the UK natural gas transportation network. BGSL previously announced plans to develop the Aldbrough storage facility, a salt cavern with an expected storage capability of 6 Bcf and deliverability rate of 600 MMcf/day (185 GWh/day). Dynegy Europe will examine the feasibility of Aldbrough's development plans in the future.

Dynegy Europe has already consulted with existing and potential customers on enhancements and additions to the storage services and has established an e-mail address (storage.consultation@dynegystorage.co.uk) to allow customers to provide further views. To request information about storage services, customers can also contact Dynegy at inquiry@dynegystorage.co.uk.

"We are committed to providing flexible and innovative products to meet the special requirements of our new and existing storage customers," said Gary Cardone, president of Dynegy Europe. "We are also committed to working with our customers and incorporating their insight on essential storage needs into our comprehensive product development portfolio."

Under the terms of the purchase agreement, Dynegy paid approximately $600 million (421 million pounds) for BGSL and its assets. Dynegy used a combination of cash on hand and short-term borrowings to complete the purchase. The ownership of BGSL is expected to be accretive to earnings in 2002 and beyond.

Dynegy Inc. is one of the world's premier energy merchants. Through its global energy delivery network and marketing, trading and risk management capabilities, Dynegy provides innovative solutions to customers in North America, the United Kingdom and Continental Europe.

Through Dynegy Europe, Dynegy has been an active participant in UK energy markets since 1994 when it became a leading player in the development of a liberalized natural gas market. In 1999, Dynegy Europe entered the UK and Nord Pool electricity markets. With offices in Austria, Switzerland, Holland, Italy and Spain, Dynegy Europe is one of Europe's largest energy marketers and traders and is a significant participant in the communications marketplace.

Dynegy Inc. and Enron Corp. recently announced the execution of a definitive agreement for a merger of the two companies. Upon completion of the merger, which is expected by the end of the third quarter 2002, the new Dynegy is expected to have revenues exceeding $200 billion and $90 billion in assets. In addition, the new Dynegy's delivery network will include more than 22,000 megawatts of generating capacity and 25,000 miles of pipelines.

Certain statements included in this news release are intended as "forward-looking statements" under the Private Securities Litigation Reform Act of 1995. These statements include assumptions, expectations, predictions, intentions or beliefs about future events. Dynegy cautions that actual future results may vary materially from those expressed or implied in any forward-looking statements. Some of the key factors that could cause actual results to vary from those Dynegy expects include changes in commodity prices for energy or communications products or services; the timing and extent of deregulation of energy markets in the U.S. and Europe; the timing of required approvals for the Dynegy/Enron merger and the success of integration and cost savings measures relating to the merger; the effectiveness of Dynegy's risk management policies and procedures and the creditworthiness of customers and counterparties; the liquidity and competitiveness of wholesale trading markets for energy commodities, including the impact of electronic or online trading in these markets; operational factors affecting Dynegy's power generation or Dynegy's midstream natural gas facilities; uncertainties regarding the development of, and competition within, the market for communications services in the U.S. and Europe; uncertainties regarding environmental regulations or litigation and other legal or regulatory developments affecting Dynegy's business; general political, economic and financial market conditions; and any extended period of war or conflict involving the United States or Europe. Moreover, Dynegy's expectation that the acquisition will be accretive to earnings in 2002 and beyond is based upon achieving certain sales projections, meeting certain cost targets and successfully integrating the acquired assets. More information about the risks and uncertainties relating to these forward-looking statements are found in Dynegy's SEC filings, which are available free of charge on the SEC's web site at http://www.sec.gov.