Scarab Closes Acquisition of CBM Property in Coos Bay

Scarab Systems has closed the Lease Purchase and Sale Agreement with GeoTrends-Hampton International LLC to acquire 100% of GHI's petroleum and natural gas rights to a number of oil and gas leases for the Coos Bay Basin prospect, located onshore in the Coos Bay Basin of Oregon. Scarab completed the purchase through its wholly owned subsidiary, Methane Energy Corp. The assets include technical information on the prospects, fee leases, State leases, lease options and agreements controlling mineral rights covering approximately 50,000 acres. As consideration, Scarab has agreed to pay GHI a total of $300,000 USD in cash, and will issue 1,800,000 restricted shares of Scarab's Common Stock in three performance based tranches. The first tranche of 600,000 shares has been issued.

Scarab estimates that up to 100,000 acres in the Coos Bay Basin are potentially prospective for coalbed methane and conventional natural gas production. In 1993, two wells were drilled and tested on the Coos Bay Prospect by Carbon Energy International on lands now under lease agreement by Scarab. The gas in place indicated volumes per 640 acre section, of 12.4 billion cubic feet ("bcf") and 7.6 bcf according to Sproule Associates, Ltd., who reviewed the prospects for Scarab. In comparison to other similar geological areas, according to Sproule, the coals of the Powder River Basin holds an estimated 2 to 4 bcf per section, Horseshoe Canyon in Alberta holds an estimated 2 to 5 bcf per section, the Raton Basin holds an estimated 12.4 bcf per section, and the Warrior Basin coals hold approximately 3.7 bcf per section.

Accordingly, Scarab estimates that there is likely sufficient gas in the Coos Bay Basin to make the project commercially feasible, and could potentially exceed one trillion cubic feet. Additional testing will be required to prove up the Basin's reserves.

Scarab, through its wholly owned subsidiary MEC, is currently finalizing lease commitments for an additional 10,000 acres, and has identified approximately 30,000 to 40,000 additional acres falling within the Coos Bay Basin Prospect. Scarab's objective is to achieve a land lease position of over 100,000 acres before the end of this year, although there is no assurance that it can reach that goal.

"Scarab is pleased to conclude the acquisition of the Coos Bay Basin project and is looking forward to commencing Phase One of its exploration program this fall which is expected to include a multi-hole core drilling program to test the relative coal thickness, permeability and porosity. Scarab is looking forward to acquiring additional evidence further confirming the existence of a large in place gas reserve," stated Mr. Thomas Mills, President of Scarab Systems, Inc.

In other developments, Scarab has completed a private placement raising gross proceeds of $200,000 USD. The proceeds will be used to help fund the acquisition of oil and gas leases for its Coos Bay Basin prospect in Oregon, and for general working capital.

Under this placement, Scarab issued 500,000 units at a price of $0.40 per unit. Each unit consists of a share and a non-transferable share purchase warrant. Each warrant will entitle the holder to purchase an additional share in the capital of Scarab at a price of $0.55 per common share for a period of two years from the date of closing. The shares issued in this private placement have not been registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements of the Securities Act of 1933. The placees were granted registration rights and the units will be registered.

Additionally, Scarab is proceeding with a change of name to "Torrent Energy Corporation", which is subject to shareholder approval at a meeting of shareholders scheduled for July 13, 2004.