Petrogen to Drill First Well on Its Newly Acquired Tiller Ranch Acreage

Petrogen says that it has commenced location preparations to drill its first well, the Tiller Ranch #1, on the Company's newly acquired Texas Gulf Coast property, the Tiller Ranch Lease (the "Lease"). The Lease is located within Tom Graham Field, Jim Wells County, Texas, which has produced over thirteen billion cubic feet of natural gas (13 Bcfg) from twenty-five distinct sands as well as six million eight hundred thousand barrels of oil (6.8 Mmbo) from six sands. The Tiller Ranch #1 will be drilled to test the multiple Frio and Vicksburg age reservoir sands. Extensive subsurface control, provided by approximately twenty-five wells located on or adjacent to the Lease, indicate that potentially up to 18 Bcfe of natural gas reserves could be recovered through the development of up to six new wells.

Petrogen's Chairman and CEO, Sacha H. Spindler stated, "Petrogen's operational focus is to attempt to fully develop Tiller Ranch over the course of the coming two fiscal quarters. With as many as six possible new well drilling locations to spud at Tiller Ranch, we have the potential to increase the Company's reserve base and oncoming revenue stream significantly."

The Lease consists of potential natural gas exploitation opportunities trapped along a north-south striking, underdeveloped, low relief anticline. The majority of wells on the Lease were drilled during the 1940's and 1950's when local natural gas prices were in the $0.02 -- $0.10 per Mcf range. These extremely low gas prices resulted in limited development of the natural gas reserves on the Lease, providing for substantial infill and step out drilling potential. Wells in the area have average production histories of approximately eight to ten years with cumulative production of approximately 3.0 Bcfg per well. Extensive natural gas infrastructure exists within the area providing for immediate transportation and sales of any potential upcoming natural gas production. Current gas prices for potential production from the Tiller Ranch area are approximately in the $11.00 -- $11.50 per Mcf range and will be sold into the Enterprise Products Partners gas pipeline system in South Texas.

Mr. Spindler further stated, "Tiller Ranch is another example of the high caliber opportunities Petrogen strives to develop in the Texas Gulf Coast. It possesses significant geologic data and well control along proven hydrocarbon-producing trends that enables the Company to greatly reduce its geologic risk while increasing its degree of confidence that the 18 billion cubic feet of indicated potential reserves can be readily exploited through our current drilling initiative."