SAN DIEGO--(BUSINESS WIRE)--May 6, 1999--Western Water Co. (Nasdaq:WWTR) announced today that it has completed the first sales of water derived from its water rights in the Mojave Basin of Southern California.

This is the most recently adjudicated of Southern California's groundwater basins. It lies beneath portions of San Bernardino County, inland from Los Angeles. The company purchased the underlying water rights during the last year, as part of its plan to expand its participation in the ownership and marketing of water in Southern California.

The water sold is carryover rights for the "water year" which ended Sept. 30, 1998, the year in which the underlying adjudicated rights were purchased by the company. The customers are three water districts that had pumped water from the Basin in excess of their allocation for the water year.

The company anticipates that water sales and trading activity in the Mojave Basin will expand in future years because water users who exceed their annual allotments must either purchase others unused allotments from the Basin or purchase imported water from the State Water Project (at approximately $140/acre foot) to make up the deficit.

Michael Patrick George, president and chief executive officer, said, "We are pleased to have completed our first sales of water in the Mojave Basin. Although the amount of water and revenue is small, this is an important milestone because we have been able to dramatically shorten the cycle time between the acquisition of water rights and the generation of first revenue from the sale of water derived from those rights. Furthermore, owning these water rights allowed us to meet the needs of three new water customers. Expanding our customer base is one of our primary objectives."

Western Water Co. currently owns the right to annual production of 2,996 acre feet (AF) of water from the Mojave Basin. (An acre foot is about 326,000 gallons, enough to serve two average households for a year.) The rights were purchased for $3.3 million, or $1100/AF. The carry over sales of 1998 water were for 1941 AF at $55/AF, generating gross revenue to the company of $107,000.

The purchasers were the San Bernardino County Water Agency (147 AF), the Baldy Mesa Water District (1491 AF), and the Apple Valley Ranchos Water District (303 AF, pending confirmation by the Basin watermaster at its May meeting). The company is currently marketing its 1999 water, with completed sales expected during the current fiscal year.

George went on, "These initial sales validate our view of current demand in the area. We believe that owning water rights in the Mojave Basin will produce long-term value for our shareholders. Since our customers already produce water from the Basin, the company has no infrastructure costs associated with these sales. Over time, we expect to provide both spot sales and long-term contracts to serve a variety of customers with expanding demands for water in the Basin."

Statements contained in this release which are not historical facts are forward looking statements that involve risks and uncertainties that could cause actual results or future events to differ from those contained herein. Factors that could cause actual results or events to differ include the company’s ability to purchase water rights and obtain financing and other factors and considerations detailed in the Company’s Securities and Exchange Commission filings.