Empyrean Energy

Web site : http://www.empyreanenergy.com

cynic post 213 your wrong no fixed price drilling.
EME picked up 50% till $2.3 approx spent then reverts to 38.5% cost of future work.

My best Guess is that Vic have stuffed up and are haveing to re-drill the end section with the Coiled tube unit.

As for economics lets wait for the oil to show but they sure as hell are makeing us sweat for what a month ago looked like a walk in the park.

Regards

Thanks for putting me right Doc ...... At least we know, or I think we do, that Eagle1 is intrinsically a viable site, and sp seems to have taken most of the uncertainties out of the equation .... but the waiting sure is tiresome

I think the whoosh will be with RIFT today and their gas find. Just read the LKO update on current projects today (Link : http://www.asx.com.au/asxpdf/20060601/pdf/3wzvxdngk8jmx.pdf )

Ummmm not very encouraging when they say costs have blown out, but keep that horrible "UP TO" 1000 bopd, which means nothing, as 1 bopd and 10 bopd are all part of the vague "up to 1000bopd".............. and they are still only "hopeful" of any flow at all.

Never mind, more wild swings and rough times to come I think until some real news get released.

Empyrean Energy PLC
01 June 2006

Final Results
For the period 10 March 2005 to 31 March 2006

Portfolio expansion with the Company acquiring two additional energy exploration projects within politically stable regions;

Net cash position over 3.2 million following successful placing with institutional investors in March 2006;

Further testing of Glantal Gas Project (Germany), following initial drilling and gas shows;

Encouraging oil shows have instigated flow testing of Eagle Oil Pool Development Project (California);

Drilling planned at Sugarloaf Hosston Prospect (Texas) in Q3 2006.

Chairman's Statement

It is with pleasure that I am able to report on a very successful first year as a listed company.

Empyrean Energy Plc was admitted to AIM on 27 July 2005 having completed a successful IPO process based on our first project - the Glantal Gas Project in Germany.

Since listing on AIM we have acquired interests in two further projects that fulfil the overall strategy of investing in energy projects within politically stable regions, providing ready access to energy hungry markets. We have also undertaken an additional capital raising to assist the Company with the exploration and development of all three projects.

Our second project, the Eagle Oil Pool Development Project in California, is now at the production testing stage and we are eagerly awaiting the outcome of this testing to determine the production rates.

In keeping with our investment strategy, the Company recently acquired an interest in the Sugarloaf Hosston Prospect (Cretaceous) in Texas. This prospect is a 20,000 acre 4-way closure with multi trillion cubic feet ('TCF') gas potential in one of the most prolific hydrocarbon provinces in the world. An independent expert has estimated that the Sugarloaf Hosston Prospect could contain a P50 (probability 50% unrisked) reserve of 0.97 TCF gas, with the P10 assessment estimated at 2.3 TCF gas.

In conclusion, I am pleased to report that in its first year of operation, the Company has successfully acquired a portfolio of three strong projects, all in regions free from political risk. Drilling has given strong encouragement with the first two projects gaining enough support from electric log data to necessitate further testing with the third project set to commence drilling in the second half of 2006. The three projects provide the Company with a good balance of risk versus reward, and the Board will continue to look actively for additional attractive opportunities which complement this portfolio and continue to deliver strong capital growth to shareholders.

Patrick Cross
Chairman
26 May 2006

Operations Report

Empyrean Energy Plc ('Empyrean') has been actively involved in two operations since it was admitted to AIM on the 27th July 2005. The first operation at the Glantal Gas Project located onshore southwest Germany has involved the drilling and appraisal of the Glantal-1 well. The second operation involves the drilling of Eagle North-1 well which is part of the Eagle Oil Pool Development Project located onshore in the prolific oil and gas producing San Joaquin Basin, California. Both operations are still in progress at the time of writing.

Glantal Gas Project
This is the first project entered into by Empyrean. It involves the drilling of the exploration well Glantal-1 in the Neues Bergland permit near Frankfurt in Germany and has the potential of discovering important accumulations of gas measuring in the trillions of c.ft. The operator is Pannonian International Ltd ('Pannonian') a wholly-owned subsidiary of the US-based Galaxy Energy Corporation. Empyrean has the opportunity to earn a 52% working interest.

The well was spudded on the 29th November 2005. The vertical well was slightly deviated after reaching 650m, as planned, and the angle gradually increased to 30 degrees with a northeast bearing. Electric logs were run prior to the setting of the 7 inch casing at 1022.5 metres in the 'Dilsburger' seal.

After some delays due to weather and technical set backs, the Gottelborn Formation, the first of the proposed reservoirs, was intercepted at 1054 metres measured depth (MD).

A total depth of 1687 metres (MD) was reached on the 25th January 2006, 340 metres short of the proposed total depth of 2025 metres. This premature termination was due to the presence of a granitic type igneous rock intercepted at 1632 metres (MD) underlying the sedimentary section.

During drilling there were increases from time to time in gas readings. There was also a substantial fracture zone identified at 1450 metres when the drill string fell 20cm. The electric logs indicated the presence of at least 20 intervals of porosity and permeability which could be potential gas filled reservoirs.

It was unanimously decided to suspend the well to enable testing at a later date. A 5 inch liner was emplaced and a detailed analysis embarked upon of the various logs which included sophisticated fracture detection logs. These studies have resulted in the identification of four zones which will be tested separately for hydrocarbon content.

At present preparations are being made to carry out those tests with a local workover rig expected by the operator to arrive on site in June 2006.

Should these tests prove successful for hydrocarbon content the initial productivity of the reservoirs will be assessed and on the basis of such assessment the operational committee will consider undertaking artificial fracturing enhancement.

Eagle Oil Pool Development Project
The Eagle-North-1 well is an appraisal of an oil discovery made in the Mary Bellocchi-1 well in 1986. The present operator, Victoria Petroleum N.L., was a participant in the oil and gas discovery at the time and has farmed out part of its interest to Empyrean. The farmin agreement allows Empyrean to earn a 38.5% in the Eagle Oil Pool Development Project by contributing 55% to the total cost of Eagle North-1 which involves testing both a vertical and horizontal section of the well.

The well was spudded on the 11th January 2006 and, after several sidetrack operations, reached the TD of 4,219m on the 16th February 2006. Wireline evaluation of the target Gatchell sands indicated oil saturation over a 21 metre interval from 4,143 metres to 4,164 metres with interpreted net oil pay of 13.4 metres. The wireline log character of the pay was similar to that seen in the Gatchel sands that produced oil at Mary Bellochi-1 366 metres to the southeast. Despite an increase in the gas and higher homologues while drilling the pay zone, no fluorescence or traces of oil were recorded. This was to be expected as the (oil based) mud was considerably overbalanced and the PDC drill bit used would have pulverised the sands. The 7 inch production casing was set at 4,217 metres and was perforated over intervals 4,142.8 to 4,152.3 and 4,158.3 to
4,163.0 metres. Testing gave only a small amount of oil (400cc of 29 degrees API) and no water. Inadequate penetration and reservoir damage during drilling were interpreted by the operator to have combined to produce this result, for the logs give a different perspective, and the decision was made to continue drilling the horizontal phase through the pay zone as planned.

Technical breakdowns and delays have severely impeded this phase of the operation. Good oil shows however have been encountered through the Gatchell sands. Poorly consolidated sandstones have prevented both the drilling of any further than 4,386 metres (measured depth) or setting the 2 3/8 inch slotted
liner as originally planned. Instead, an adjusted testing programme is at
present being prepared whereby 72 metres of Lower Bellocchi Gatchell oil sand
cased behind the 4 1/2 inch liner and 105 metres of open hole (barefoot
completion) out of the base of the 4 1/2 inch liner set at 4,386 metres will be
production tested. This makes a total of 177 metres of pay to be tested in the
horizontal part of the well bore.

Sugarloaf Hosston Deal
On the 6th April 2006, Empyrean announced that it had entered into a farmin
agreement with operators, Texas Crude Energy Inc., to participate in the
Sugarloaf Hosston Project located in South Texas, USA.

The prospect covers an area of four way closure of approximately 20,000 acres
which could contain several trillion c.ft of gas. Empyrean is earning a 7.5%
interest until payout where the interest reverts to a 6% working interest after
payout (estimated cost $US 750,000).

The potential main objective Cretaceous Hosston sands occur at approximately
17,000 feet although secondary targets could occur at shallower depths based on
the results of wells in the vicinity. The well is designed to reach a TD of
21,000 feet.

FJ Brophy BSc (Hons)
Technical Director
26 May 2006

Income Statementb for the period ended 31 March 2006

Note 2006

'000

Administrative expenses (760)
---------

Operating loss 2 (760)


Interest receivable 3 71

---------

Loss on ordinary activities before taxation (689)


Taxation on loss on ordinary activities 4 -

---------

Loss for the financial year 13 (689)
=========



Loss per share expressed in pence per share

- Basic 7 (2.5)p



A separate Statement of Recognised Income and Expense is not required.


Balance Sheet
as at 31 March 2006
Note 2006
'000

Assets

Non-current assets

Intangible assets 8 3,860

Plant and equipment 9 7
---------

3,867
---------
Current assets

Other receivables 10 239
Cash at bank 3,210
---------

3,449
---------

Liabilities
Current liabilities
Other payables 11 (123)
---------

(123)
---------

Net current assets 3,326
---------

Net assets 7,193
=========

Shareholders' equity
Ordinary shares 12 70
Share premium 13 7,665
Other reserves 13 147
Retained loss 13 (689)
---------

Total equity 7,193
=========



Cash Flow Statement

for the period ended 31 March 2006
Note 2006
'000

Net cash outflow from operating activities 15 (769)

Return on Investments
Interest received 71
--------

Net cash inflow from returns on investments 71

Capital expenditure
Purchase of tangible fixed assets (12)
Purchase of intangible fixed assets (3,854)
--------

Net cash inflow for capital expenditure (3,866)

Financing
Issue of ordinary share capital 8,146
Expenses relating to share issues (372)
--------

Net cash inflow from financing 7,774
--------

Increase in net cash 16 3,210
========



Notes to the Financial Statements

for the period ended 31 March 2006


1. Turnover and Segmental Analysis

The Company had no turnover during the period.

All the administration costs were incurred by the Company in the United Kingdom

Capitalised exploration, evaluation and development expenditure can be analysed
by the following geographical segments:
2006
'000

Continental Europe 2,027
North America 1,833
---------

3,860
=========

2. Operating Loss

The operating loss is stated after charging:
2006
'000

Auditors' remuneration - audit services 5
- other services 3
Depreciation (note 9) 3
Directors' emoluments (note 6) 88
=========

Auditors' remuneration for non-audit services provided during the period
amounting to 3,000 relates to the provision of general accounting services. A
further charge of 15,000 relates to the provision of an accountant's report for
the purpose of the Company's AIM Admission Document and was charged to the share
premium account as part of share issue expenses.


3. Interest Receivable
2006
'000

Bank interest receivable 71
=========

4. Taxation
2006
'000
Current year taxation
UK corporation tax at 30% on profits for the period -
---------

Factors affecting the tax charge for the period
Loss on ordinary activities before tax (689)
---------

Loss on ordinary activities at the UK standard rate of 30% (207)

Effect of tax benefit of loss carried forward 207
---------

Current period taxation -
=========

5. Staff Costs (including Directors)

The Company had no employees during the year.
2006
'000

Equity-settled share-based payments 127
=========

The Company's equity-settled share based payments comprise incentive options
granted to the Company's Directors. The amount and details of share options
subject to equity-settled share based payments are set out in note 12.

The fair value of these options has been fully expensed during the period, based
on a Black-Scholes model, assuming a risk free rate of 4.7% and expected
volatility of 60%. The value per option ranges from 8 pence to 9 pence. There
are no performance measures attached to the options.

6. Directors' Emoluments
2006
'000
Income statement Intangible assets Total

Non-Executive Directors:
Patrick Cross 24 - 24
Malcolm James 16 - 16

Executive Directors:
Frank Brophy (1) 16 8 24
Christopher Lambert (2) 16 24 40
Thomas Kelly (3) 16 8 24
---------- ---------- ---------

Total 88 40 128
========== ========== =========

1) Services provided by F J Brophy Pty Ltd
2) Services provided by Walkerton Plc
3) Services provided by Apnea Holdings Pty Ltd

No pension benefits are provided for any Director.

The Executive Directors are remunerated for consulting services provided to the
Company in relation to its exploration operations as disclosed above. These
payments are capitalised to licences and deferred exploration costs (note 8).

Directors' Share Options

On 2 November 2005, Patrick Cross was allocated options over 250,000 shares at
an exercise price of 35 pence per share with an expiry date of 31 December 2008,
and options over 250,000 shares at an exercise price of 40 pence per share with
an expiry date of 31 December 2008.

On 2 November 2005, Frank Brophy was allocated options over 1,000,000 shares at
an exercise price of 35 pence per share with an expiry date of 31 December 2008.

7. Loss Per Share

The basic loss per share is derived by dividing the loss for the period
attributable to ordinary shareholders by the weighted average number of shares
in issue.

Loss for the period (689,000)
Weighted average number of Ordinary shares of 0.002 in issue 27,310,455
Loss per share - basic (2.5) pence

Weighted average number of Ordinary shares of 0.002 in issue
inclusive of outstanding options 27,917,129

As the inclusion of the potential ordinary shares would result in a decrease in
the loss per share they are considered to be antidilutive and, as such, a
diluted loss per share is not included.

8. Intangible Assets

Licences and deferred exploration costs
'000
Cost
Additions 3,860
---------
At 31 March 2006 3,860
---------

Amortisation -
---------
Net Book Value
At 31 March 2006 3,860
=========

At 31 March 2006 the Directors undertook an impairment review of the licences
and deferred exploration costs, as a result of which, no provisions were deemed
to be required.

9. Plant and Equipment
Office
Equipment
'000
Cost
Additions 10
---------
At 31 March 2006 10
---------

Depreciation
Charge for the period 3
---------
At 31 March 2006 3
---------

Net Book Value
At 31 March 2006 7
=========

10. Other Receivables
2006
'000

Other receivables 239
---------

239
=========

11. Other Payables
2006
'000

Accruals 123
---------

123
=========

12. Called Up Share Capital

The authorised share capital of the Company and the called up and fully paid
amounts at 31 March 2006 were as follows:-
2006
Authorised
1,000,000,000 ordinary shares of 0.2p each 2,000,000
=========

Issued and fully paid
35,038,671 ordinary shares of 0.2p each 70,077
=========



The Company was incorporated on 10 March 2005 with an authorised share capital
of 2,000,000 divided into 200,000,000 ordinary shares of 1p each, of which 2
shares were issued fully paid to the subscribers to the Memorandum of
Association of the Company.

On 16 March 2005 the authorised share capital of the Company was subdivided into
1,000,000,000 ordinary shares of 0.2p each.

On 23 March 2005 a further 14,999,990 ordinary shares of 0.2p were allotted at
par value, fully paid.

On 4 April 2005 a further 8,500,000 ordinary shares of 0.2p were issued and
allotted at a price of 20p per share.

On 27 July 2005 on admission to AIM, 7,144,282 new ordinary shares of 0.2p were
placed at a price of 35p per share.

On 24 February 2006 a further 778,568 shares were allotted on conversion of
warrants held over ordinary shares of 0.2p at a price of 35p per share.

On 28 February 2006 a further 2,539,350 ordinary shares of 0.2p were placed at a
price of 1.30 per share.

On 31 March 2006 a further 157,143 shares were allotted on conversion of
warrants held over ordinary shares of 0.2p at a price of 35p per share.

On 31 March 2006 a further 686,828 shares were allotted on exercise of options
over ordinary shares of 0.2p at a price of 35p per share.

On 31 March 2006 a further 232,500 shares were allotted on exercise of options
over ordinary shares of 0.2p at a price of 20p per share.

Share Options and Warrants

The following equity instruments have been issued by the Company and have not
been exercised at 31 March 2006:
Number of ordinary shares Exercise price Expires

Incentive 1,250,000 35 pence 31 December 2008
options
Incentive 250,000 40 pence 31 December 2008
options
IPO Warrants 1,445,714 35 pence 27 July 2007

13. Reserves

The movements on reserves during the period
were as follows:
Share premium Other Reserves Retained Loss
'000 '000 '000

Premium on shares issued
during the period 8,076 - -
Share issue expenses (411) - -
Equity-settled share-based
payments - 127 -
Equity-settled share issue
expenses - 20 -
Retained loss for the period - - (689)
---------- --------- ---------

As at 31 March 2006 7,665 147 (689)
========== ========= =========

14. Movement on Equity Shareholders' Funds
2006
'000

Loss for the period (689)
Proceeds from share issue 8,146
Share issue expenses (411)
Equity-settled share-based payments 147
---------

Closing equity shareholders' funds 7,193
=========

15. Reconciliation of Operating Loss to Operating Cash Flows
2006
'000

Operating loss (760)
Increase in debtors (243)
Increase in accrued liabilities 104
Other non-cash charges 127
Depreciation 3
---------

Net cash outflow from operating activities (769)
=========

16. Analysis and Reconciliation of Net Funds

As at 10 March 2005 Cash flow for the period As at 31 March 2006
'000 '000 '000

Cash in
hand - 3,210 3,210
and at --------- ----------- ----------
bank


17. Commitments

As at 31 March 2006, the Company had no material capital commitments.

18. Related Party Transactions

The Executive Directors are remunerated for consulting services provided to the
Company in relation to its exploration operations as disclosed in note 6. These
payments are capitalised to licences and deferred exploration costs

There were no other related party transactions during the period.

19. Post Balance Date Events

Acquisition of Sugarloaf Hosston
On 6 April 2006 the Company entered into a farm-in agreement with local Houston
based operator/explorer Texas Crude Energy Inc to participate in the Sugarloaf
Hosston Prospect located in South Texas, USA. Full details of the participation
are contained in the Operations Report.

Has anyone actually read the above w.r.t. Eagle Oil Pool?

It's a mess IMO.

Anyone got a reply?

This is looking a bit "Keystone Cops"!! - IMO


Empyrean Energy PLC
08 June 2006




Empyrean Energy PLC
('Empyrean' or the 'Company'; Ticker: (EME))


Operations Update
Well Production Test Status Eagle North-1 in California, USA


AIM quoted Empyrean Energy Plc today announces the following update on the Eagle
North-1, San Joaquin Basin, California, USA.

Victoria Petroleum NL as operator for the Eagle North-1 horizontal well in the
Eagle Oil Pool Development Project in the San Joaquin Basin advises that the
securing of all necessary equipment for production testing operations at the
Eagle North-1 horizontal well is continuing.

In order to carry out the production testing operations in a cost effective and
technically efficient manner, a completion rig and coiled tubing unit are
required to work together at the site. A further update will be provided upon
the securing of the equipment.

The time while awaiting the availability of the coiled tubing unit and
completion rig is being utilised to ensure optimum planning of the engineering
program to carry out the forward production testing operations.

The heavy demand for equipment and personnel in the Bakersfield production area
has resulted in the delay experienced to date.

Following the securing of the completion rig and the coiled tubing unit, this
equipment will be moved onto the Eagle North-1 location and production testing
operations will resume immediately.

The information contained in this announcement has been reviewed by the
Technical Director of Empyrean Energy Plc, Mr. Frank Brophy BSc ( Hons), who has
over 40 years experience as a petroleum geologist.

For further information

Angus Prentice/Laurence Read
Conduit PR
Tel: +44 (0) 207 429 6603
Mob: +44 (0) 79974 982512

Imran Ahmad
HB-Corporate
Tel: +44(0) 207 510 8600

Empyrean Energy plc
Tel : +44(0) 207 932 2442

Empyrean Energy PLC
07 June 2006

Empyrean Energy PLC
('Empyrean' or the 'Company'; Ticker: (EME))

Glantal Gas Project, Germany

Completion rig contracted for testing operations at the Glantal-1 well.
Rig expected to be on site mid June - testing operations to commence
shortly after

AIM quoted Empyrean Energy PLC today announced that a completion rig has now
been contracted to test four initial zones for the presence of gas at the
Glantal-1 well, the first well drilled by Empyrean and its partners in the
Glantal Gas Project.

The operator of the Glantal Gas Project, Pannonian International Ltd
('Pannonian'), a wholly owned subsidiary of U.S.-based Galaxy Energy
Corporation (Amex: GAX) has advised that Koller Workover and Drilling GmbH,
a German contractor, has been chosen to provide the completion rig and
associated services for the testing operations at the Glantal-1 well. The
operator advises that the contract with Koller is now executed and that the
rig is expected to mobilise to site mid June for an anticipated start to
testing operations on or around the 19th June 2006.

The information contained in this announcement was completed and reviewed by the
Technical Director of Empyrean Energy Plc, Mr Frank Brophy BSc (Hons) who has
over 40 years experience as a petroleum geologist.

Glantel-1 well in Germany due start testing today, possible huge Gas find.

REUTER'S ARTICLE...........Surprised that this Reuters article has not been suppressed or derided by the Bush government. Bad news for us all unless you hold shares in oil and gas companies. Maybe part of the reason for today's rally in oil/gas shares:-

http://money.cnn.com/2006/06/20/markets/oil_intl_outlook.reut/index.htm

Oil consumption seen soaring - June 20, 2006: 9:34 AM EDT

Much of world's growth will take place in Asia, although U.S. will still use the most; OPEC needed to meet bulk of demand, EIA says.

WASHINGTON (Reuters) - World oil demand should soar from this year's almost 86 million barrels per day to 118 million bpd by 2030, even though higher fuel prices will cut back some petroleum usage, the U.S. government's top energy forecasting agency predicted Tuesday.

Much of the growth in global oil consumption over the next quarter century will come from the non-industrialized nations in Asia, where the strong economies of China and India will gobble up more barrels, according to the Energy Information Administration, the statistical arm of the Department of Energy.

"Much of the world's incremental oil demand is projected for use in the transportation sector, where there are few competitive alternatives to petroleum," EIA said in its annual long-term international energy supply and demand forecast.

The Organization of Petroleum Exporting Countries will provide a large chunk of the additional oil supplies that will be needed to meet demand in 2030, the EIA said.

However, the agency said OPEC's total share of global supply will fall from 39.7 percent (34 million bpd) of this year's world oil demand to 38.4 percent (45.3 million bpd) of global oil demand in 2030.

While worldwide oil consumption rises, expected high crude prices will reduce demand by some 8 million bpd more than forecast last year in 2025 to 111 million bpd, EIA said. This year's forecast has projections out to 2030 for the first time.

Oil production from non-OPEC countries in West Africa and the Caspian Sea region is forecast to increase sharply and grab a larger share of the global oil market over the next 25 years.

Oil output is expected to decline in Norway, Europe's largest producer, from a peak of 3.6 million bpd this year to 2.5 million bpd in 2030.

Despite President Bush's call for the United States to end its addiction to oil, Americans will use more crude and retain the title of the world's biggest energy consumers.

U.S. oil demand is forecast to jump from 20.8 million bpd this year to 27.6 million bpd in 2030, still accounting for about one out of every four barrels of crude consumed each day in the world.

The EIA's long-term forecast to 2030 also predicted:

- Global natural gas consumption will jump from 95 trillion cubic feet in 2003 to 182 trillion cubic feet.

- Coal use will grow at an average annual rate of 2.5 percent.

- High oil prices will raise concerns about the security of energy supplies and will increase nuclear power generating capacity.

- Carbon dioxide emissions linked to global warming will rise from 25 billion tons in 2003 to 43.7 billion tons. Non-industrialized nations will account for 75 percent of the increase in emissions by 2030.

- Renewables, like solar and wind power, will meet 9.1 percent of U.S. energy demand in 2030, almost double from 5.7 percent in 2003.

SP has bolted today (+10p) though there seems no volume nor announcement ...... Fingers crossed that it is not another false dawn

Up 17% today, and as you say cynic..not a huge volume. It's number 3 on the risers table at the moment. Wonder what has caused this?? Fair amount of rumour speculation chatter over on iii....I guess we'll have to wait and see. Looking forward to a rise back to 1.30....

Obvious but not necessarily accurate guess would be a leak of news on Glantal and/or positive up-date from Eagle1 .... bear in mind that average daily volume is only about 750k so 400k so far is prob rather heavier than the norm

ttt

;-)

This is taken from www.galaxyenergy.com - looks like testing at Glantal is coming up soon (see below)


June, 27, 2006
Galaxy Energy Provides Financing and Operational Update

Denver, Colo. June 27, 2006 - Galaxy Energy Corporation (Amex: GAX) announced today that, pursuant to its business plan as submitted to the American Stock Exchange, it has closed a $2.5 million financing. The Company also provided an update on its activities in both the Piceance Basin in Colorado and the Glantal Project in Germany.

Completion of $2.5 million financing

The Company has closed a $2.5 million financing with institutional and other accredited investors for the private placement of Subordinated Convertible Debentures.

The Debentures are subordinated to the Companys previous senior financings, have a 30-month maturity, which will extend under the terms of the financing until all of the Companys senior debt has been retired, accrue interest at 15% per annum and are payable at maturity. In the event the Debentures are retired at maturity, the holders are entitled to an additional payment equal to the sum of 25% plus .75% for each month (or part thereof) in excess of 30 months that the Debentures have remained outstanding. The Debentures are convertible into 1,602,564 shares of common stock based on a conversion price of $1.56 per share. In addition purchasers of the Debentures received five-year warrants which allow the holders to purchase 480,769 shares of common stock at $1.60 per share.

The proceeds from the financing will be used to reduce debt as well as for other corporate purposes.

The Piceance Basin

The Company controls approximately 6,000 (1,500 net) undeveloped acres in the Piceance Basin through its wholly owned subsidiary, Dolphin Energy Corporation and in partnership with Exxel Energy Corp.

The Company currently has drilling or completion operations underway on four of its wells in the basin.

In the Biscuit Ranch 10-31D well, all completed zones within the overall interval from 7294 to 8462 have now been commingled, 2 3/8 production tubing has been installed, and fracture treatment fluids have been partially recovered while flaring gas coming from the well. Flow periods during the next two to three weeks will force the remaining treatment fluids from the completed zones and the measurement and announcement of producing gas rates from the well will be made after this occurs. The Company has a 25% working interest in this well.

Completion activities are underway in the Mulvihill 15-32D well, with the first interval having been perforated. The fracture treatment for this interval is being designed based on initial pump-in tests. The Company will have an 18.75 to 25% working interest in this well, depending upon a participation election by an unrelated working interest owner.

The Purkey Ranch 13-31B well is currently drilling near total depth after experiencing some rig mechanical problems for a few days last week. Finalization of the drilling, completion of open hole logs and the installation of production casing is expected this week. The Company has a 25% working interest in this well

The Company is currently rigging up a drilling rig at the site of the BR 03-03B Biscuit Ranch well. Drilling of this well will commence as soon as rigging up is complete. The Company has a 25% working interest in this well.

In addition to the interests owned in these four operated wells, the Company through Dolphin has varying working interests in additional non-operated wells. These non-operated wells include one producing well operated by Williams Production RMT Company, two wells operated by Bill Barrett Corporation which are in the completion phase, as well as one well in the completion and evaluation phase, which is operated by Antero Resources Company.

Germany

Koller Workover and Drilling GmbHs completion rig is expected to arrive at the Glantal-1 well site today if no delays are experienced. This rig will be used to test for the presence of gas in four initial zones of the well, which is the first well drilled by Pannonian International Ltd, a wholly owned subsidiary of the Company and its partners in the Glantal Gas Project.

About Galaxy Energy

Galaxy Energy Corporation, a development stage oil and gas exploration and production company, is focusing on acquiring and developing coalbed methane in the Powder River Basin of Wyoming and Montana and other unconventional natural gas properties in the Piceance Basin of Colorado, in addition to exploration activities in Germany and Romania. The Company conducts its exploration activities through two wholly owned subsidiaries, Dolphin Energy Corporation and Pannonian International, Ltd.

Forward Looking Statement

This press release consists of forward-looking statements regarding the intent, belief or current expectations of the Company and its management. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve a number of risks and uncertainties, and actual results could differ materially from those indicated by such forward looking statements. The Company assumes no obligation to update the information contained in this press release, whether as a result of new information, future events or otherwise. Please refer to the Company's filings with the United States Securities and Exchange Commission for discussions of risks and uncertainties found in Forms 10-K (annual report), 10-Q (quarterly report) and other filings.

Additional information may be found at the Galaxy Energy Corporation Web site, http://www.galaxyenergy.com/ or by calling Brad Long, Investor Relations/Galaxy Energy at (800) 574-4294, Bevo Beaven or Warren Laird of CTA Public Relations at (303) 665-4200, Tina Cameron, Renmark Financial Communications at (514) 939-3989 or Kathleen Heaney (203) 803-3585 of Integrated Corporate Relations.

SP misbehaving quite badly on no apparent news ...... suspect market knows more than us, so take cover

except now, after touching about 79 mid, sp has recovered to 87 mid .... so what do I know? ...... About as much as the England football or cricket teams!

Maybe testing is imminent now.

the share itself is downright testing in its own right!