Basic Earth Commences New Exploration in Montana

Basic Earth Science Systems is currently drilling its first horizontal Bakken formation test, the Halvorsen 31X-1, located in Section 1, T22N-R57E in Richland County, Montana. The well is planned as a dual-lateral, horizontal well targeting the Bakken formation at approximately 10,750 feet. Anticipated to have over 8,700 feet of horizontal exposure, the Halvorsen well is situated in the east half of a 1,280 acre spacing unit such that a second horizontal well may be drilled at a later date. Basic has an approximate 26 percent interest in the well and expects to spend $675,000 on drilling and completion costs. The Company paid nothing for land costs in that its interest was derived from a mid-1990's acquisition. The Halvorsen 31X-1 is operated by Headington Oil, L.P.

In addition, following its successful "3-D Bright Spot" test of the Yequa formation in Wharton County, Texas, the Company has moved in a rig to commence drilling a second "3-D Bright Spot" prospect. This new effort is located in Liberty County, Texas and is targeting the Cook Mountain formation at approximately 11,000 feet. The Company has a 7.5 percent working interest in this venture and plans to spend $210,000 on prospect fees, acreage and drilling costs. Basic expects to reach the objective depth in early January 2005.

"Following our successful efforts over the last six months, these two new wells commence a second round of exploration activity that for this Company has been unprecedented in the last twenty years," said Ray Singleton, president of Basic. "With widely dispersed exposure, our efforts over the next several weeks and months will search for both natural gas and oil and involve both exploration and development drilling activities in North Dakota, Montana, Colorado and Texas. We are extremely excited about the significance these opportunities could have on the Company's reserves and future revenues."

Updating previously reported ventures, management disclosed that on its Indian Hill project in Williams County, North Dakota, preliminary tests indicate that the Lynn #2 well is capable of commercial production. Based on these results the Company and its partners expect to begin installing surface facilities and place the well on production by early January. While surface facilities are being installed, efforts may be made to test the productive capacity of other formations in this wellbore. In related efforts, the Lynn #1 well, that began producing this last August, has been placed on artificial lift and is pumping approximately 140 barrel of oil and 75 MCF of gas per day from the Nisku formation. The Company previously reported that the Duperow formation is also capable of commercial production in this wellbore. Basic has an approximate 18 percent working interest in both Lynn wells which are operated by Missouri Basin Well Service, Inc.

Furthermore, in Wharton County, Texas, the Company's Yequa test continues to flow into its second month of production as efforts are made to fine tune surface facilities. The Company expects to receive its first revenue from this well in January 2005.

Basic is an oil and gas exploration and production company with primary operations in south Texas and in the Williston basin. Basic is traded on the "over-the-counter -- bulletin board" under the symbol BSIC.

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