Houston American Energy to Sell Northern Louisiana Assets

Houston American Energy has reached an agreement to sell its 1,428 net acre leasehold in Northern Louisiana and create a surrounding area of mutual interest covering 7,680 acres for the purpose of exploiting the Hosston and Cotton Valley Formations. Houston American's average cost for the acreage is $83 per acre and it is receiving $144 per acre. In addition HUSA will be carried to sales for a 7.5% Working Interest in the first well and will have a 7.5% Working Interest back in after payout in the second and third wells and will retain Overriding Royalties ranging from 1.35% to 2.5% on leases covering 3,200 of the AMI acreage. HUSA will have the option to participate for its 7.5% Working Interest in the fourth and all subsequent wells. Closing is expected in mid December 2004 and drilling should commence within the next 6 months.

"Houston American Energy Corp. views this acreage as very prospective and in many ways it is geologically similar to a close by field that has produced over 500 bcf of natural gas from our targeted formations and obviously the buyer thinks so as well. This is expected to be a multiple well play and if successful, will result in many additional wells drilled. We are very excited about the prospects covering these 12 square miles. This keeps with Houston American's strategy of participating with large well financed companies in potentially large projects. It also fits our strategy of high potential and low risk because we have taken all our money off the table with a profit and are a non cost partner in the first three test wells."


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