Teton Updates on Investor Warrant Exchange

Teton Energy Corp.

Teton Energy announced that all of the investors that held warrants to purchase 3,960,000 shares of the Company's common stock at a $5 strike price through May 2012 (the "Warrants") agreed to exchange the Warrants for 990,000 shares of Teton common stock.

The Warrants were originally issued in conjunction with the issuance of the 8% Senior Subordinated Convertible Notes that matured in May 2008 and included a cashless exercise feature at the option of the holders. The Warrants were being carried on the Company's balance sheet at June 30, 2008 as Derivative Contract Liabilities valued at $8.6 million and were subject to the "mark-to-market" accounting required by Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities.

Lonnie Brock, Executive Vice President and Chief Financial Officer, commented, "In order to strengthen our balance sheet and capital structure, we were able to negotiate an exchange of our cashless outstanding warrants for common stock. This greatly reduces the number of common stock equivalents of the Company that are outstanding, and, by eliminating this derivative, we will also help normalize earnings in the future."