Panaco, Inc. Voluntarily Files Chapter 11

Panaco, Inc. intends to file a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code. Company President and Chief Executive Officer Ted Stautberg said, "This action will be taken to offer Panaco the most efficient way to restructure its balance sheet and access new working capital while continuing to operate in the ordinary course of business. This action will also enable Panaco to pursue its previously announced strategic alternatives, including a possible sale or merger."

Panaco is an independent exploration and production company with operations focused primarily offshore in the Gulf of Mexico and onshore in the Gulf Coast Region. Panaco operates approximately 75% of its offshore and onshore wells as well as operates 12 offshore platforms and owns interests in 109 miles of offshore oil and natural gas pipelines greater than 10" diameter. The Company's daily production is currently averaging 32 MMCFE.

The company 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.