Delta Petroleum Acquires Utah Acreage

Covenant Oil Field
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Delta Petroleum has made a significant strategic acquisition in the Rocky Mountain region.

Delta has entered into a definitive purchase and sale agreement with Armstrong Resources, LLC ("Armstrong") to acquire a 65% working interest in approximately 88,000 acres in the central Utah hingeline play. This play was recently established with a major discovery at the Covenant Field, which opened up a new petroleum province. The new thrust belt discovery is widely considered to have the potential for reserves in excess of one billion barrels of oil. The Covenant Field produces from a thrust fault controlled four-way closure. Roger A. Parker, Chairman and CEO of Delta stated, "The Covenant Field is one of the largest and most meaningful discoveries in the continental United States in recent history. The field's shallow depth, thick pay section and high production rates make for exceptionally good economics. This transaction gives Delta significant exposure to one of the most exciting plays in the United States." Thrust belt discoveries such as this tend to occur in a trend with other productive structures. Delta's new land position is on trend with Covenant and is believed to contain numerous undrilled four-way closures, which appear to be the same size or larger than the Covenant Field.

Delta will pay Armstrong a purchase price of $24 million in cash and approximately 673,000 shares of common stock. Armstrong will retain the remaining 35% working interest in the acreage. As part of the transaction, Delta will pay 100% of the drilling costs for the first three wells in the project. Delta will be the operator of the majority of the acreage, and drilling is expected to begin late in the second quarter of 2006. Delta has filed a shelf registration statement with the Securities and Exchange Commission and commenced an offering of up to 1.5 million shares of common stock. The net proceeds from the offering will be used to fund the cash portion of the acquisition purchase price and for general corporate purposes. Coker, Palmer, Phillips & Mullen, Inc. is managing the offering on a best efforts basis.


Delta reaffirms its production forecast of 4.6 to 4.8 billion cubic feet equivalents (Bcfe) for the first quarter of 2006, which was provided in the Company's operational update of January 10, 2006. Production for the month of January is estimated to approximate 1.5 Bcfe, and the current daily rate of production approximates 53 million cubic feet equivalents (Mmcfe). The Company expects that its independent reserve engineers will indicate that Delta's proved reserves approximated 265-275 Bcfe as of December 31, 2005, for an increase of 18-23% when compared with reserves reported as of June 30, 2005.

In the press release dated January 10, 2006, the Company referenced that production for the quarter ended December 31, 2005 would fall below original guidance, and actual production for the quarter approximated 3.1 Bcfe. The production shortfall was largely attributable to the items previously referenced, including additional drilling time associated with the Best Kenesson #1 well, severe weather in the Piceance Basin, periods of shut-in production related to new completion activity at the Newton Field, and substantially lower production related to Delta's interest in the non-operated Baffin Bay Field in Kenedy County, Texas. "While production levels were lower than expected during the fourth quarter of 2005, we are very pleased with the progress we have made in our various development projects so far this year. I believe that 2006 will be a year of significant growth in production and reserves for Delta," concluded Parker.


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