Bayou City Exploration Expands Live Oak Prospect

Bayou City Exploration has leased an additional 964 gross acres (401 net acres) in its Live Oak Prospect area in Live Oak County, Texas. The addition increases the Company's Live Oak Prospect area to 3,734 gross acres and 1,556 net acres.

In September, Bayou City entered into a joint development agreement with Sunray Operating, LLC and other private investors to jointly develop 2,700 leased acres at Live Oak. Based on their analysis of available data, the partners expect that when fully developed the entire project area could potentially hold as much as 100 BCF* and 1 MMBO,* with a total potential gross value of $700 million.

The number of productive and potentially productive reservoirs, combined with the extensive data that Bayou City Exploration has acquired on the prospect, lead management to regard this prospect as a very significant development project that could eventually encompass more than 5000 acres. Bayou City anticipates that it will bring in additional parties to advance project development. Drilling and re-entry are expected to begin in late 2005/early 2006.

Bayou City Exploration, the operator, will re-enter an existing wellbore and fracture stimulate the Wilcox formation on the property. The agreement also calls for drilling two shallow wells, one to the Queen City formation and the other to the Cole sand. A third-party engineering report, based on log analysis, subsurface geology and offset production histories, classifies the Wilcox reserves as probable, and possible, and the Cole and Queen City prospects' reserves as proven undeveloped.

Bayou City Exploration, Inc. is an oil and gas exploration firm focused in proven geologic trends in East Texas, the Gulf Coast of Texas and Louisiana. Based in Houston, Texas, Bayou City leverages its management team's long experience and multidisciplinary expertise in applying advanced 3-D seismic analysis, 3-D processing algorithms, amplitude attribute and imaging technologies to reduce the drilling risks by identifying the presence of economic hydrocarbons. The Company's database has more than 7,200 square miles of 3-D data, most of it covering Bayou City's focus area, as well as 13,000 miles of 2-D data.