Dune Energy Begins Production at Underwood #1

Dune Energy reports that the Underwood #1 well, located in Denton County, Texas, was placed on production on August 28, 2006. For an initial 16 hour period, the Underwood #1 flowed at a rate of 2.4 MMCF/D on an 18/64 inch choke.

Under the terms of Dune's Amended and Restated Asset Purchase and Sale Agreement with Voyager Partners, Ltd., Dune is entitled to purchase 95% of Voyager's interest in the Underwood #1 well and the associated oil and gas lease, subject to the satisfaction of the conditions precedent set out in the Purchase Agreement. Should that purchase not close under the terms of the Purchase Agreement, taking into account Dune's funding of the costs of completion operations in the Underwood #1, Dune will be entitled to receive 40% of Voyager's interest in the Underwood #1 upon any termination of the Purchase Agreement. Current production will accrue to Dune's future interest in the Underwood #1, subject to the company's working interest, and will be paid either at closing or upon termination of the Purchase Agreement, as the case may be.