Dune Energy to Acquire Barnett Shale Properties

Dune Energy has signed a Letter of Intent to acquire producing and non-producing natural gas properties from multiple related non-public entities in a privately negotiated transaction. Dune expects the purchase price could approximate or exceed $50 million. Subject to the execution of definitive agreements, it is contemplated that the transaction will close during the second quarter of 2005. Independent engineering firm DeGolyer & MacNaughton has evaluated the proved reserves associated with the properties to be acquired in the transaction.

The properties to be purchased are located in Denton and Wise counties, in the heart of the prolific Barnett Shale in the North Texas Fort Worth Basin. The properties provide Dune with significant production, and high-impact, low-risk extensional drilling opportunities, and establishes a third core producing area for the Company.

Alan Gaines, Chairman and CEO of Dune, stated, "This is a watershed event for Dune. This highly accretive acquisition will greatly expand both our production and inventory of drilling locations. We will continue our efforts to identify additional opportunities for growth, as well as focus on organic growth relating to our existing Welder Ranch and Pearsall projects."

Dr. Amiel David, President and Chief Operating Officer, commented, "The production and drilling activity in the Barnett Shale will balance our present exploration and development efforts, and extend our operating reach well beyond South Texas."

Dune intends to finance the acquisition through a combination of cash, debt and equity. The Company anticipates utilizing derivatives in the form of swaps or costless collars covering a portion of projected production from proved developed reserves for the coming two to three years.

Houston, Texas-based Sanders Morris Harris Inc. is acting as financial advisor/investment banker to the Company for this transaction.


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