Panaco Will Plug and Abandon Umbrella Point Well

INTRO: HOUSTON, Dec. 26 -- PANACO, Inc. announced today that the exploratory Umbrella Point well, State Tract 73 No. 6, in Galveston County, Texas, reached sidetracked total depth of 15,600' (15,089' true vertical depth) on December 20, 2001. The well encountered no productive pay zones and is currently being plugged and abandoned. Robert G. Wonish, President and COO, commented ``This well was drilled with the understanding that it was a very high risk project with a capacity for superior returns. As such, the results are disappointing but not unanticipated. The Company's forward-looking projections did not include production or reserve increases for this well.'' PANACO, Inc. is an independent oil and gas exploration and production Company focused primarily on the Gulf of Mexico and the Gulf Coast Region. The Company acquires producing properties with a view toward further exploitation and development, capitalizing on state-of-the-art 3-D seismic and advanced directional drilling technology to recover reserves that were bypassed or previously overlooked. Emphasis is also placed on pipeline and other infrastructure to provide transportation, processing and tieback services to neighboring operators. PANACO's strategy is to systematically grow reserves, production, cash flow and earnings through acquisitions and mergers, exploitation and development of acquired properties, marketing of existing infrastructure, and a selective exploration program.