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SEMCO ENERGY Acquires Kansas City Construction Firm

PORT HURON, Mich., Feb. 4 /PRNewswire/ -- Continuing its focus on expansion and growth in natural gas pipeline engineering and construction, SEMCO ENERGY, Inc. (Nasdaq: SMGS) today announced the purchase of Kansas City- based K&B Construction, Inc.

The company, which provides underground gas distribution pipeline construction services in Kansas and Missouri, was acquired from founders K. Kevin James and Robert H. Waters. The acquisition will be treated as a purchase for accounting purposes. K&B Construction will operate as a construction business unit of SEMCO ENERGY's Sub-Surface Construction Co. James will remain with the firm as president. K&B Construction has 150 employees and approximately $9 million in annual revenues.

William L. Johnson, Chairman, President and Chief Executive Officer of SEMCO ENERGY, Inc., said, "The acquisition of K&B Construction provides SEMCO ENERGY an important opportunity to expand its ability to offer construction services in the Midwest. This acquisition is a continuation of the Company's strategy to become one of the largest providers of underground pipeline construction services in the United States."

K&B Construction is the first 1999 acquisition for SEMCO ENERGY and the third construction/engineering company acquired in nine months. In November, SEMCO ENERGY acquired Oilfield Materials Consultants, Inc., a Houston, Texas- based quality assurance/quality control company serving the natural gas, oil transmission and exploration/production industry. In May, SEMCO ENERGY acquired King Energy & Construction, a small Knoxville, Tennessee-based natural gas, water and sewer infrastructure construction company.

"This is another step forward in our strategy to build a large engineering and construction organization that will offer turnkey services to a broad customer base," Johnson said.

SEMCO ENERGY, Inc. is an energy-focused holding-company with three primary subsidiaries: SEMCO ENERGY VENTURES, an unregulated division which acquires and operates businesses involved in natural gas construction, energy engineering and propane; SEMCO ENERGY SERVICES, Inc., an unregulated division which markets natural gas in parts of the United States and Canada; and SEMCO ENERGY GAS COMPANY, a natural gas distribution company serving 245,000 customers in 24 counties in Michigan.
CONTACT: Media, Francis Lieder, 810-987-2200, ext. 4186, or fax, 810-989-4098, or Analysts, Edric Mason, 810-987-2200, ext. 4104, or fax, 810-989-4098, both of SEMCO ENERGY

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding SEMCO Energy's business which are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see "Risk Factors" in the Company's Annual Report or Form 10-K for the most recently ended fiscal year.

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