8-K

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                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    Form 8-K


                                 CURRENT REPORT


                     Pursuant To Section 13 or 15(d) of the
                        Securities Exchange Act of 1934


Date of Report (Date of earliest event reported) December 24, 1996
                                                 -----------------

                                KCS Energy, Inc.
             (Exact name of registrant as specified in its charter)


          Delaware                      1-11698                  22-2889587
- ----------------------------          ------------           -------------------
(State or other jurisdiction          (Commission            (IRS Employer
     of incorporation)                File Number)           Identification No.)


379 Thornall Street, Edison, New Jersey                             08837
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(Address of principal executive offices)                          (Zip Code)


                                 (908) 632-1770
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               Registrant's telephone number, including area code


                                 NOT APPLICABLE
- --------------------------------------------------------------------------------
         (Former name or former address, if changed since last report.)


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Item 5.         Other Events.

        A settlement was reached between KCS Energy, Inc. ("KCS") and Tennessee
Gas Pipeline Company ("TGT") on all items of litigation between KCS and TGT
concerning KCS' above-market-price, take-or-pay contract with TGT. Included in
the settlement is the disposition of the lawsuit related to the recent verdict
of a jury in a trial in the District Court of Zapata County, Texas, in which
the jury awarded TGT $143.2 million including approximately $114 million for
punitive damages. In addition to the dismissal of their respective claims, KCS
and TGT agreed to terminate the contract effective January 1, 1997, which is
two years prior to its expiration date.

        The press release issued by KCS is attached as an exhibit.

Item 7 Financial Statements and Exhibits.

        (a)  None

        (b)  None

        (c)  Exhibits

        99   Press Release dated December 24, 1996.


                                   SIGNATURES

        Pursuant to the requirements of the Securities Exchange Act of 1934,
the Company has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.

                                        KCS Energy, Inc.

                                    By: /s/ Henry A. Jurand
                                        ---------------------
                                           Henry A. Jurand
                          Vice President, Chief Financial Officer and Secretary

Dated:  December 26, 1996

EX-99

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News Release                                                  KCS ENERGY, INC.
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AT THE COMPANY:               AT THE FINANCIAL RELATIONS BOARD:
Henry A. Jurand, VP & CFO     For General Info: Marianne Stewart (212) 661-8030
                              For Analyst Info: Christina Howard (212) 661-8030
                              For Media Info: Judith Sylk-Siegel (212) 661-8030

FOR IMMEDIATE RELEASE
Tuesday, December 24, 1996


          KCS ENERGY, INC. ANNOUNCES SETTLEMENT OF ALL LITIGATION WITH
                         TENNESSEE GAS PIPELINE COMPANY


Edison, NJ, December 24, 1996 -- KCS Energy, Inc. (NYSE:KCS) today announced it
has reached a settlement with Tennessee Gas Pipeline Company ("TGT") on all
items of litigation between KCS and TGT concerning the Company's above-market-
price, take-or-pay contract with TGT. Included in the settlement is the
disposition of the lawsuit related to the recent verdict of a jury in a trial
in the District Court of Zapata County, Texas, in which the jury awarded TGT
$143.2 million including approximately $114 million for punitive damages.

   In addition to the dismissal of their respective claims, KCS and TGT agreed
to terminate the contract effective January 1, 1997, which is two years prior
to its expiration date. Nothing in the settlement and termination agreements
constitute an admission of liability by KCS or TGT with respect to the
litigation or in any way constitutes an admission against interest of either 
party.

   KCS President and Chief Executive Officer, James W. Christmas said,
"Although we firmly believe we acted fully within our rights under the
contract and that the jury's verdict was not supported by the facts and was
inconsistent with applicable law, it was in the Company's best interest to
terminate this dispute. While we believe that we would have ultimately been
successful through the appellate process, our analysis indicated that we were
much better off to resolve this major uncertainty now and avoid the potential
of posting a supersedeas bond of nearly $150 million. A bond of that magnitude
would have significantly and adversely affected the amount of capital 
available for future investment and therefore constrained our growth."


                                     -MORE-

                     379 Thornall Street, Edison, NJ 08837


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        Commenting on future plans, Mr. Christmas said, "With this major
uncertainty removed, the need for a bond eliminated and the years of litigation
with TGT behind us, we can now go forward and continue the strategic plan which
we put in place in 1994 to rapidly grow and diversify our proved oil and gas
reserves, thereby reducing our dependency on the TGT contract production from
the Bob West Field. In 1995, we more than doubled the size of the Company with
our expansion into the Rocky Mountains and through our volumetric production
payment program. With the pending acquisition of InterCoast Oil and Gas Company
("Medallion"), we will again double the size of the Company. With the
settlement in place, we intend to close the Medallion acquisition as soon as
possible," said Mr. Christmas.

        "The contract with TGT was a springboard to growth for KCS. Through
November 1996, our revenue under the contract totaled $195.5 million, which is
approximately $152 million more than would have been received had we sold the
gas at spot market prices. While we will forego the last two years of the
contract in order to remove this major uncertainty and end the protracted
litigation between the parties, we were able, despite a more than six-year
legal battle in defense of the contract, to retain approximately three-quarters
of the potential value of the contract. During this time, we successfully
redeployed this incremental revenue and were able to increase both our total
proved reserves and our production by more than 400%. Today, on a pro forma
basis reflecting the Medallion acquisition, production from the TGT contract
acreage is less than 7% of our total oil and gas production, and is expected to
be less than 5% in 1997. At its peak in November 1994, the average daily gas
production under the TGT contract attributable to our interests was
approximately 30,700 Mcf per day; current production is down to approximately
11,600 Mcf per day," said Mr. Christmas.

        According to Mr. Christmas, "Notwithstanding the diminishing production
from the contract acreage, the early termination of the above-market-price
contract will have a negative impact on our earnings during 1997 and 1998." The
price for gas delivered under the contract in November 1996 was $8.62 per
MMBtu, compared to an estimated spot market price of $2.58 per MMBtu. "In the
near term, record high gas prices and the accretive benefit of the Medallion
acquisition should partially offset the loss of the contract premium. While the
elimination of the premium pricing will also affect our cash flow, we should be
able to fund more than 70% of our current 1997 capital budget of $140 million
with internally generated cash," said Mr. Christmas. The 1997 budget includes
approximately $70 million for development and exploitation drilling, $25
million for exploration and $45 million for property acquisitions, including
those made under our volumetric production payment program.

        KCS is an independent energy company primarily engaged in the
acquisition, exploration, development and production of natural gas and crude
oil. The Company also operates natural gas transportation and marketing
businesses. 


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