Lexington Resources Reports CBM Well Production Results

Lexington Resources reports results for the last two weeks in February 2004 that mark the beginning of Coal Bed Methane gas production from its Kellster 1-5 well located on its Wagnon Lease in Pittsburg County, Oklahoma. The well produced gross sales of approximately 8,349,000 cubic feet of 0.92 BTU grade gas and produced gross revenues in excess of $30,000 in the last two weeks of February 2004. After payments of royalty interests, production costs and taxes, resulting net proceeds of almost $21,000 was utilized for the repayment of working interest capital that provided approximately $350,000 for the drilling and establishment of the well. Once the well drilling capital cost is repaid, the Company's operating subsidiary will "back-in" to a residual 53.2% working interest in net proceeds from well production throughout the well life.

The Kellster 1-5 well is the Company's first horizontal CBM gas well drilled, and represents the model for cost effective gas production initiatives that form the core of the Company's current development focus. Current business strategies call for the creation of primarily gas based cash flow, continued land acquisitions for increasing drilling inventory, and low drilling capital costs, combined with rapid repatriation of drilling capital in a low risk drilling domain. The Kellster 1-5 well was drilled to a vertical depth of 2,400 feet with a horizontal section of 2,200 feet and within the budgeted Authority For Expenditure ("AFE"). The well continues to develop as the dewatering process of the gas-producing zone continues.

Two further wells to be drilled on the Wagon Lease are scheduled to begin this month.

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