Particle Drilling Reviews Year-End Results

As previously disclosed, Particle Drilling Technologies has entered into an agreement whereby it will initially receive $350,000 to fund the design, manufacturing and testing of a new 6 1/2"-size PID bit. This agreement is with a major, multi-national and fully integrated energy company and is for an application in one of its drilling areas in the United States where it will be used for drilling intervals above 10,000 feet, which are shallower than the depths drilled during Company's previous field trials.

The new smaller size bit is to be designed to address a particular drilling application which could lead to additional cooperation between the two companies. The design of these PID bits is underway and they should be ready for internal testing in the next two or three months with a field trial to follow. More details on this contract are set forth in the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on December 8, 2008.

In addition, since the last field trial results were announced in mid- September, the Company has made various modifications to its surface equipment that are intended to improve the system's performance under a broader range of fluid properties encountered in the field.

As previously announced, the Special Committee of the Board of Directors has retained Parks Paton Hoepfl & Brown, LLP to serve as the Special Committee's financial advisor in connection with its evaluation and review of any potential strategic alternatives, including a strategic industry joint venture, technology licensing arrangement, sale of the company and any other available alternatives. We have yet to determine which particular strategic alternative to pursue, if any, and do not intend to disclose developments with respect to this evaluation unless and until the Board of Directors has approved a course of action or otherwise deemed disclosure appropriate.

Lastly, the Company completed the sale of its frac-pump which is no longer a core-asset needed as a component to the PID injector system. The Company has now rented a more cost-effective mud pump for testing purposes.

Jim B. Terry, the Company's President and CEO stated, "We have been focused on readying our surface equipment to return to the field and simultaneously seeking industry support for our development efforts. We believe the contract we secured represents yet another meaningful industry endorsement of our efforts and also demonstrates the potential value that end users see in our technology. With the assistance of the Special Committee's financial advisor, we continue to evaluate and pursue any potential strategic alternatives that are in the best interests of our stockholders."