Particle Drilling Reports Another Successful Trial, Wins New Contract

Particle Drilling Technologies, Inc. announced that it has completed another successful trial of the Particle Impact Drilling (PID) technology and completed the longest ever footage run with PID. During this trial, the Company drilled a 120 foot interval in approximately eight hours of on-bottom drilling time.

Jim Terry, the Company's President and Chief Executive Officer stated, "With the completion of this trial, we have achieved continuously improved results on a well to well basis and thereby demonstrated that the technology works as designed. The fact that we were able to complete the longest footage run to-date while operating for the first time on a rig that was both new to the area and to PID operations, and that we did so in harsh weather conditions, is a credit to our rig-site team and to the improvements made to the PID system over the course of these trials. On the commercial front, we are very pleased that our performance on these trial wells has resulted in a new one-year contract."

The eight hours of drilling time occurred during a 12-hour period during which some issues developed resulting in brief interruptions of continuous operations. The interruptions were related to surface equipment breakdowns, which the Company believes can be eliminated with more experience and equipment improvements. Preceding the successful run, a mechanical failure was experienced with the particle storage drum drive line, which the Company was able to repair with replacement parts. Also, between routine bit runs a standard check valve broke and the resulting debris plugged a nozzle on the new PID bit forcing a second round trip to remove the debris from the PID bit. At this point a decision was made to conclude the trial.

While equipment issues and interruptions occurred, due to the substantial progress of the PID system and operations over the course of these field trials along with the significant potential of PID technology, the Company and its existing customer have entered into a new one year contract in order to continue PID operations. The terms of the contract are confidential but the basis for remuneration is gain-sharing as was the case in the previous contract.

Two additional milestones were achieved during this trial: 1) this was the first time PID operations had been conducted on this particular rig and the integration with the PID system was quick and without any of the integration problems we experienced on the first trial, and 2) this was the first time a PID operation was conducted under weather conditions that included sub- freezing temperatures and high winds. Despite the weather conditions and the challenge of operating on a new rig for the first time, this trial resulted in a record continuous run for the Company and provided further confidence regarding the capabilities of the PID technology.

"We look forward to taking delivery of PID Unit #2 and we expect that many of the modifications incorporated into PID Unit #2 will result in a more continuous operation and a commercial success," added Terry. "Lastly, our prototype extruder injection system went through a successful factory acceptance test in December in the United Kingdom and should clear customs in the next few days. It will be further tested at our Houston research center later this month and if it performs up to our expectations, we will begin field trials utilizing the new injection system in parallel with the existing injector."

PDTI is a development-stage oilfield service and technology company owning certain patents and pending patents related to the Particle Impact Drilling technology. PDTI's technology is designed to enhance the rate-of-penetration function in the drilling process, particularly in hard rock drilling environments. PDTI is headquartered in Houston, Texas.