**NICOR      ANNOUNCES THIRD QUARTER EARNINGS AND RAISES ANNUAL EARNINGS GUIDANCE**

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| ·   |                  For the 2006 third quarter, gas distribution operating income increased                to                $5.6 million from $0.4 million in 2005. The quarter                reflected: |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |                      - | The                positive impact of the fourth quarter 2005 base rate increase on                revenues                ($11.3 million); and higher natural gas deliveries due to colder                weather                compared to last year (approximately $1.5                million). |
|--------|-------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |                      - | Partially                offsetting these positive factors were higher operating and maintenance                costs ($5.6 million) including the impact of increased storage-related                natural gas costs, natural gas and fuel costs to operate company                equipment                and facilities and increased bad debt expense; and higher depreciation                ($1.5 million). |
|--------|-------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   |                  For the nine months ended September 30, 2006 gas distribution operating                income increased to $80.2 million from $71.9 million in 2005. The                year-to-date period reflected: |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |                      - | Increased                revenues due primarily to the fourth quarter 2005 base rate increase                ($36.2 million); the mercury-related recovery ($3.8 million); and                increased property sale gains ($3                million). |
|--------|-------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |                      - | Partially                offsetting these positive factors were higher operating and maintenance                costs ($21.5 million) including the impact of increased storage-related                natural gas costs, natural gas and fuel costs to operate company                equipment                and facilities and increased bad debt expense; offset in part by                lower                claims arising from normal operations and lower payroll and                benefit-related costs. |
|--------|-------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |                      - | Lower                natural gas deliveries due to warmer weather compared to last year                (approximately $8 million) and decreased demand unrelated to weather                (approximately $3.2 million); and higher depreciation ($4.4 million). |
|--------|-------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| ·   | For                the 2006 third quarter, shipping operating income increased to $10.5                million from $9.4 million in 2005. For the nine months ended September                30,                2006, shipping operating income was $29.5 million compared to $31.9                million in 2005. Both periods reflected increased revenues resulting                from                higher average rates, offset in part by the impact of lower volumes.                Both                periods were also impacted by higher operating costs relating to                higher                transportation-related expenses (including fuel), employee-related                costs,                repairs and maintenance expense and leased freight equipment cost. |
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| ·   | For                the 2006 third quarter, other energy ventures operating income increased                to $6.9 million from an operating loss of $11.7 million in 2005 due                primarily to reductions in the reported operating loss in the company’s                wholesale natural gas marketing business and improved operating results                in                the company’s retail energy-related products and services businesses. For                the nine months ended September 30, 2006, other energy-related ventures                operating income increased to $0.7 million compared to an operating                loss                of $8.6 million in 2005 due primarily to reductions in the reported                operating loss in the company’s wholesale natural gas marketing business;                partially offset by lower operating results in the company’s retail                energy-related products and services businesses. |
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| ·   | Corporate                2006 third quarter results included an insurance recovery of $5.2                million                pretax related to previously incurred legal expenses. Corporate results                for the 2006 nine-month ended period, included that insurance recovery,                as                well as the previously discussed $10 million charge (non-deductible                for                tax purposes) relating to the SEC inquiry and the favorable weather                impact                associated with certain of the company’s retail energy-related products                and services businesses. Third-quarter 2005 corporate results included                an                insurance recovery of $2.6 million pretax related to previously incurred                legal expenses. Corporate 2005 nine-month results included that insurance                recovery, as well as previously discussed net recoveries of $29.9                million                pretax recorded in the first and second quarters. |
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| ·   | 2006                third-quarter and nine-month financial results were also favorably                impacted by higher pretax equity investment income, due primarily                to a                gain of $2.4 million pretax on a sale of an equity investment interest.                2006 nine-month financial results were also favorably impacted by                tax                adjustments associated with tax audits (approximately $1 million                after-tax). |
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| **·  ** | In                December 2005, the company repatriated $132 million under the American                Jobs Creation Act of 2004 (AJCA). Effective January 2006, the company                reorganized certain of its shipping and related operations. This                reorganization allows the company to take advantage of certain provisions                of the AJCA that provide the opportunity for tax savings subsequent                to the                date of the reorganization. In connection with these activities,                a net                income tax benefit of approximately $6.0 million was recorded in                the first                quarter of 2006 from the elimination of certain deferred taxes. The                company also expects to incur in 2006 approximately $5 million in                current                income tax expense associated with these activities, of which                approximately $3 million has been recognized in the nine-month financial                results of 2006. ** ** |
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**2006      Earnings Outlook**

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**Conference      Call**

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**Caution      Concerning Forward-Looking Statements**

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| **Nicor                Inc.**                                                         |   |                              |   |                             |   |   |   |   |    |
|---------------------------------------------------------------------------------------|--------|-----------------------------------|--------|----------------------------------|--------|--------|--------|--------|---------|
| PRELIMINARY                CONSOLIDATED STATEMENTS OF OPERATIONS                      |   |                              |   |                             |   |   |   |
| *Unaudited                (millions, except per share data)*                          |   |                              |   |                             |   |   |   |   |    |
|                                                                                  |   |                              |   |                             |   |   |   |   |    |
|                                                                                  |   | Three                months ended |   | Nine                months ended |   |
|                                                                                  |   | September                30       |   | September                30      |   |
|                                                                                  |   | 2006                              |   | 2005                             |   | 2006   |   | 2005   |    |
|                                                                                  |   |                              |   |                             |   |   |   |   |    |   |   |   |   |
| **Operating                revenues**                                                 |   | $                                 | 351.1  |                             | $      | 336.0  |   | $      | 2,121.8 |   | $ | 2,000.2 |   |
|                                                                                  |   |                              |   |                             |   |   |   |   |    |   |   |   |   |
| **Operating                expenses**                                                 |   |                              |   |                             |   |   |   |   |    |   |   |   |   |
| **  **Gas                distribution                                       |   |                              |   |                             |   |   |   |   |    |   |   |   |   |
|                      Cost of gas                             |   |                              | 108.0  |                             |   | 134.9  |   |   | 1,258.8 |   |   | 1,202.3 |   |
|                      Operating and maintenance               |   |                              | 56.6   |                             |   | 51.0   |   |   | 199.9   |   |   | 178.4 |   |
|                      Depreciation                            |   |                              | 40.1   |                             |   | 38.6   |   |   | 120.3   |   |   | 115.9 |   |
|                      Taxes, other than income taxes          |   |                              | 17.0   |                             |   | 16.6   |   |   | 123.2   |   |   | 124.0 |   |
|                      Mercury-related costs (recoveries), net |   |                              | -      |                             |   | .1     |   |   | (3.6    | ) |   | .3 |   |
|                      Property sale gains                     |   |                              | (.6    | )                                |   | (.1    | )      |   | (3.2    | ) |   | (.2 | ) |
| ** **Shipping                                                                    |   |                              | 87.8   |                             |   | 82.5   |   |   | 258.6   |   |   | 242.8 |   |
|                  Other energy ventures                                           |   |                              | 27.1   |                             |   | 20.9   |   |   | 134.4   |   |   | 98.3 |   |
|                  Litigation charges (recoveries), net                            |   |                              | -      |                             |   | -      |   |   | 10.0    |   |   | (29.9 | ) |
|                  Other corporate expenses and eliminations                       |   |                              | (13.4  | )                                |   | (9.1   | )      |   | (88.1   | ) |   | (60.1 | ) |
|                                                                                  |   |                              | 322.6  |                             |   | 335.4  |   |   | 2,010.3 |   |   | 1,871.8 |   |
|                                                                                  |   |                              |   |                             |   |   |   |   |    |   |   |   |   |
| **Operating                income**                                                   |   |                              | 28.5   |                             |   | .6     |   |   | 111.5   |   |   | 128.4 |   |
| **Interest                expense, net of amounts capitalized**                       |   |                              | 11.1   |                             |   | 10.6   |   |   | 35.5    |   |   | 32.8 |   |
| **Equity                investment income, net**                                      |   |                              | 5.4    |                             |   | 2.9    |   |   | 9.2     |   |   | 6.8 |   |
| **Interest                income**                                                    |   |                              | 2.5    |                             |   | 1.6    |   |   | 7.9     |   |   | 4.3 |   |
| **Other                income (expense), net**                                        |   |                              | -      |                             |   | (.1    | )      |   | .4      |   |   | .4 |   |
|                                                                                  |   |                              |   |                             |   |   |   |   |    |   |   |   |   |
| **Income                (loss) before income taxes**                                  |   |                              | 25.3   |                             |   | (5.6   | )      |   | 93.5    |   |   | 107.1 |   |
|                                                                                  |   |                              |   |                             |   |   |   |   |    |   |   |   |   |
| **Income                tax expense (benefit)**                                       |   |                              | 7.7    |                             |   | (2.9   | )      |   | 23.5    |   |   | 32.7 |   |
|                                                                                  |   |                              |   |                             |   |   |   |   |    |   |   |   |   |
|                                                                                  |   |                              |   |                             |   |   |   |   |    |   |   |   |   |
| **Net                income (loss)**                                                  |   | $                                 | 17.6   |                             | $      | (2.7   | )      | $      | 70.0    |   | $ | 74.4 |   |
|                                                                                  |   |                              |   |                             |   |   |   |   |    |   |   |   |   |
| **Average                shares of common stock outstanding**                         |   |                              |   |                             |   |   |   |   |    |   |   |   |   |
|                      Basic                                   |   |                              | 44.7   |                             |   | 44.2   |   |   | 44.5    |   |   | 44.1 |   |
|                      Diluted                                 |   |                              | 44.8   |                             |   | 44.5   |   |   | 44.6    |   |   | 44.4 |   |
|                                                                                  |   |                              |   |                             |   |   |   |   |    |   |   |   |   |
| **Earnings                (loss) per average share of common stock**                  |   |                              |   |                             |   |   |   |   |    |   |   |   |   |
|                      Basic                                   |   | $                                 | .39    |                             | $      | (.06   | )      | $      | 1.57    |   | $ | 1.69 |   |
|                      Diluted                                 |   | $                                 | .39    |                             | $      | (.06   | )      | $      | 1.57    |   | $ | 1.67 |   |

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| **Nicor                Inc.**                                        |   |                              |   |                             |   |   |   |   |    |
|----------------------------------------------------------------------|--------|-----------------------------------|--------|----------------------------------|--------|--------|--------|--------|---------|
| PRELIMINARY                FINANCIAL HIGHLIGHTS                      |   |                              |   |                             |   |   |   |   |    |
| *Unaudited                (millions, except per share data)*         |   |                              |   |                             |   |   |   |   |    |
|                                                                 |   |                              |   |                             |   |   |   |   |    |
|                                                                 |   | Three                months ended |   | Nine                months ended |   |
|                                                                 |   | September                30       |   | September                30      |   |
|                                                                 |   | 2006                              |   | 2005                             |   | 2006   |   | 2005   |    |
|                                                                 |   |                              |   |                             |   |   |   |   |    |   |   |   |   |
| **Operating                revenues**                                |   |                              |   |                             |   |   |   |   |    |   |   |   |   |
|                    Gas distribution                   |   | $                                 | 226.7  |                             | $      | 241.5  |   | $      | 1,775.6 |   | $ | 1,692.6 |   |
|                    Shipping                           |   |                              | 98.3   |                             |   | 91.9   |   |   | 288.1   |   |   | 274.7 |   |
|                    Other energy ventures              |   |                              | 34.0   |                             |   | 9.2    |   |   | 135.1   |   |   | 89.7 |   |
|                    Corporate and eliminations         |   |                              | (7.9   | )                                |   | (6.6   | )      |   | (77.0   | ) |   | (56.8 | ) |
|                                                                 |   | $                                 | 351.1  |                             | $      | 336.0  |   | $      | 2,121.8 |   | $ | 2,000.2 |   |
|                                                                 |   |                              |   |                             |   |   |   |   |    |   |   |   |   |
| **Operating                income (loss)**                           |   |                              |   |                             |   |   |   |   |    |   |   |   |   |
|                    Gas distribution                   |   | $                                 | 5.6    |                             | $      | .4     |   | $      | 80.2    |   | $ | 71.9 |   |
|                    Shipping                           |   |                              | 10.5   |                             |   | 9.4    |   |   | 29.5    |   |   | 31.9 |   |
|                    Other energy ventures              |   |                              | 6.9    |                             |   | (11.7  | )      |   | .7      |   |   | (8.6 | ) |
|                    Corporate and eliminations         |   |                              | 5.5    |                             |   | 2.5    |   |   | 1.1     |   |   | 33.2 |   |
|                                                                 |   | $                                 | 28.5   |                             | $      | .6     |   | $      | 111.5   |   | $ | 128.4 |   |
|                                                                 |   |                              |   |                             |   |   |   |   |    |   |   |   |   |
| **Net                income (loss) applicable to common stock**      |   | $                                 | 17.6   |                             | $      | (2.7   | )      | $      | 70.0    |   | $ | 74.4 |   |
|                                                                 |   |                              |   |                             |   |   |   |   |    |   |   |   |   |
|                                                                 |   |                              |   |                             |   |   |   |   |    |   |   |   |   |
| **Average                shares of common stock outstanding**        |   |                              |   |                             |   |   |   |   |    |   |   |   |   |
|                      Basic                  |   |                              | 44.7   |                             |   | 44.2   |   |   | 44.5    |   |   | 44.1 |   |
|                      Diluted                |   |                              | 44.8   |                             |   | 44.5   |   |   | 44.6    |   |   | 44.4 |   |
|                                                                 |   |                              |   |                             |   |   |   |   |    |   |   |   |   |
| **Earnings                (loss) per average share of common stock** |   |                              |   |                             |   |   |   |   |    |   |   |   |   |
|                      Basic                  |   | $                                 | .39    |                             | $      | (.06   | )      | $      | 1.57    |   | $ | 1.69 |   |
|                      Diluted                |   | $                                 | .39    |                             | $      | (.06   | )      | $      | 1.57    |   | $ | 1.67 |   |

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| **Nicor                Inc.**                            |   |                              |    | Preliminary                Operating Statistics Page 1 of 2 |   |
|----------------------------------------------------------|--------|-----------------------------------|---------|-------------------------------------------------------------|--------|
| ***Gas                Distribution***                    |   |                              |    |                                                        |   |   |   |   |   |
| *Unaudited*                                              |   |                              |    |                                                        |   |   |   |   |   |
|                                                     |   | Three                months ended |    | Nine                months ended                            |   |
|                                                     |   | September                30       |    | September                30                                 |   |
|                                                     |   | 2006                              |    | 2005                                                        |   | 2006 |   | 2005 |   |
| **Operating                revenues (millions)**         |   |                              |    |                                                        |   |   |   |   |   |   |   |   |   |
| Sales                - Residential                       |   | $                                 | 136.8   |                                                        | $      | 152.4 |   | $ | 1,207.5 |   | $ | 1,140.7 |   |
| Commercial                                               |   |                              | 29.8    |                                                        |   | 36.0 |   |   | 275.2 |   |   | 255.0 |   |
| Industrial                                               |   |                              | 2.7     |                                                        |   | 4.3 |   |   | 31.9 |   |   | 34.9 |   |
|                                                     |   |                              | 169.3   |                                                        |   | 192.7 |   |   | 1,514.6 |   |   | 1,430.6 |   |
| Transportation                - Residential              |   |                              | 6.1     |                                                        |   | 4.8 |   |   | 21.9 |   |   | 19.1 |   |
|                  Commercial                         |   |                              | 14.7    |                                                        |   | 11.5 |   |   | 57.7 |   |   | 51.0 |   |
|                  Industrial                         |   |                              | 10.7    |                                                        |   | 10.4 |   |   | 29.1 |   |   | 29.4 |   |
|                  Other                              |   |                              | 1.1     |                                                        |   | 1.0 |   |   | 2.0 |   |   | 8.6 |   |
|                                                     |   |                              | 32.6    |                                                        |   | 27.7 |   |   | 110.7 |   |   | 108.1 |   |
| Other                revenues - Revenue taxes            |   |                              | 12.9    |                                                        |   | 12.8 |   |   | 111.5 |   |   | 112.4 |   |
|                   Environmental cost recovery  |   |                              | 0.8     |                                                        |   | 1.4 |   |   | 7.2 |   |   | 15.9 |   |
|                   Chicago Hub                  |   |                              | 8.1     |                                                        |   | 2.4 |   |   | 13.9 |   |   | 7.5 |   |
|                   Other                        |   |                              | 3.0     |                                                        |   | 4.5 |   |   | 17.7 |   |   | 18.1 |   |
|                                                     |   |                              | 24.8    |                                                        |   | 21.1 |   |   | 150.3 |   |   | 153.9 |   |
|                                                     |   | $                                 | 226.7   |                                                        | $      | 241.5 |   | $ | 1,775.6 |   | $ | 1,692.6 |   |
| **Deliveries                (Bcf)**                      |   |                              |    |                                                        |   |   |   |   |   |   |   |   |   |
| Sales                - Residential                       |   |                              | 13.9    |                                                        |   | 12.0 |   |   | 121.6 |   |   | 131.2 |   |
|  Commercial                                         |   |                              | 3.2     |                                                        |   | 3.1 |   |   | 27.9 |   |   | 29.5 |   |
|  Industrial                                         |   |                              | .4      |                                                        |   | .4 |   |   | 3.4 |   |   | 4.1 |   |
|                                                     |   |                              | 17.5    |                                                        |   | 15.5 |   |   | 152.9 |   |   | 164.8 |   |
| Transportation                - Residential              |   |                              | 1.2     |                                                        |   | 1.1 |   |   | 10.7 |   |   | 12.7 |   |
|                  Commercial                         |   |                              | 11.2    |                                                        |   | 8.8 |   |   | 59.5 |   |   | 60.9 |   |
|                  Industrial                         |   |                              | 23.1    |                                                        |   | 25.1 |   |   | 75.2 |   |   | 84.7 |   |
|                                                     |   |                              | 35.5    |                                                        |   | 35.0 |   |   | 145.4 |   |   | 158.3 |   |
|                                                     |   |                              | 53.0    |                                                        |   | 50.5 |   |   | 298.3 |   |   | 323.1 |   |
|                                                     |   |                              |    |                                                        |   |   |   |   |   |   |   |   |   |
| **Degree                days**                           |   |                              | 84      |                                                        |   | 26 |   |   | 3,301 |   |   | 3,572 |   |
| **Colder                (warmer) than normal**           |   |                              |    |                                                        |   |   |   |   |   |   |   |   |   |
| Degree                days                               |   |                              | 14      |                                                        |   | (44 | ) |   | (456 | ) |   | (185 | ) |
| Percent                                                  |   |                              | 20      |                                                        |   | (63 | ) |   | (12 | ) |   | (5 | ) |
|                                                     |   |                              |    |                                                        |   |   |   |   |   |   |   |   |   |
| **Average                gas cost per Mcf sold**         |   | $                                 | 6.05    |                                                        | $      | 8.53 |   | $ | 8.18 |   | $ | 7.22 |   |
|                                                     |   |                              |    |                                                        |   |   |   |   |   |   |   |   |   |
| **Customers                at September 30 (thousands)** |   |                              |    |                                                        |   |   |   |   |   |   |   |   |   |
| Sales                - Residential                       |   |                              | 1,784.5 |                                                        |   | 1,771.2 |   |   |   |   |   |   |   |
|  Commercial                                         |   |                              | 121.6   |                                                        |   | 117.9 |   |   |   |   |   |   |   |
|  Industrial                                         |   |                              | 7.1     |                                                        |   | 7.3 |   |   |   |   |   |   |   |
|                                                     |   |                              | 1,913.2 |                                                        |   | 1,896.4 |   |   |   |   |   |   |   |
| Transportation                - Residential              |   |                              | 161.0   |                                                        |   | 160.0 |   |   |   |   |   |   |   |
|                  Commercial                         |   |                              | 56.6    |                                                        |   | 57.6 |   |   |   |   |   |   |   |
|                  Industrial                         |   |                              | 5.5     |                                                        |   | 5.9 |   |   |   |   |   |   |   |
|                                                     |   |                              | 223.1   |                                                        |   | 223.5 |   |   |   |   |   |   |   |
|                                                     |   |                              | 2,136.3 |                                                        |   | 2,119.9 |   |   |   |   |   |   |   |

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| **Nicor                Inc.**                         |   |                              |   | Preliminary                Operating Statistics Page 2 of 2 |   |
|-------------------------------------------------------|--------|-----------------------------------|--------|-------------------------------------------------------------|--------|
| ***Shipping***                                        |   |                              |   |                                                        |   |   |   |   |   |
| *Unaudited*                                           |   |                              |   |                                                        |   |   |   |   |   |
|                                                  |   | Three                months ended |   | Nine                months ended                            |   |
|                                                  |   | September                30       |   | September                30                                 |   |
|                                                  |   | 2006                              |   | 2005                                                        |   | 2006 |   | 2005 |   |
|                                                  |   |                              |   |                                                        |   |   |   |   |   |   |   |   |   |
| **Twenty-foot                equivalent units (TEU)** |   |                              |   |                                                        |   |   |   |   |   |   |   |   |   |
| **shipped                (thousands)**                |   |                              | 50.0   |                                                        |   | 51.7 |   |   | 147.3 |   |   | 159.6 |   |
|                                                  |   |                              |   |                                                        |   |   |   |   |   |   |   |   |   |
| **Revenue                per TEU**                    |   | $                                 | 1,965  |                                                        | $      | 1,765 |   | $ | 1,956 |   | $ | 1,718 |   |
|                                                  |   |                              |   |                                                        |   |   |   |   |   |   |   |   |   |
| **Ports                served**                       |   |                              | 27     |                                                        |   | 25 |   |   |   |   |   |   |   |
|                                                  |   |                              |   |                                                        |   |   |   |   |   |   |   |   |   |
| **Vessels                operated**                   |   |                              | 18     |                                                        |   | 19 |   |   |   |   |   |   |   |