CREDO Petroleum Corporation Announces Strategic Investment in the Company by RCH Energy Opportunity Fund II, LP

  
    
  
  
    
      CREDO Petroleum Corporation (NASDAQ: CRED), an independent oil and gas 
      company, reported today that the company and certain of its directors 
      have entered into agreements with RCH Energy Opportunity Fund II, LP (“RCH” 
      or the “Fund”) a 
      private investment fund based in Houston, Texas, whereby RCH will 
      acquire approximately 17.5% of CREDO’s 
      outstanding stock. Closing under the agreements is subject to certain 
      customary closing conditions.
    
    
      RCH will acquire a total of 1,837,000 shares of the company’s 
      stock at a price of $14.50 per share, representing a 13% premium to the 
      stock’s 30-day moving average. CREDO will sell 
      1,150,000 newly issued common shares, or approximately 11% of the company’s 
      total outstanding shares on a proforma basis. Directors Huffman, Stevens 
      and Skewes will sell 425,000, 192,000 and 70,000 shares, respectively, 
      or about 40% of the CREDO shares held by Mr. Huffman and his family and 
      approximately 50% of the shares held by Messrs. Stevens and Skewes. CREDO’s 
      Board will be expanded from six to seven members and RCH will nominate 
      two directors, one to fill a current vacancy on the Board and another to 
      fill the newly created Board seat.
    
    
      All of the shares acquired by RCH will initially be restricted and not 
      freely tradable in the open market, however, RCH will have certain 
      future registration rights. The company agreement contains a standstill 
      provision providing that RCH will not purchase additional CREDO stock 
      for a period of two years from the date of the agreement without the 
      consent of the Board of Directors.
    
    
      James T. Huffman, CREDO’s Chief Executive 
      Officer and Chairman of the Board of Directors, stated, “We 
      are very pleased to have RCH as an investor and strategic partner. RCH 
      is a successful and highly regarded investor in oil and gas companies, 
      both public and private. We are excited about the knowledge and 
      experience they will bring to our business.”
    
    
      Mark Meyer, President of RR Advisors, LLC, the General Partner of the 
      Fund, said, “We look forward to entering into 
      a long-term partnership with CREDO and its shareholders. Jim Huffman and 
      his team have built a solid asset base and a company which is uniquely 
      positioned in the industry. We intend to help the company further 
      exploit its existing opportunity set, accelerate growth through the 
      capture of new opportunities, and enhance value for all of its 
      shareholders.”
    
    
      This transaction represents the culmination of an extensive evaluation 
      process started last year whereby the company’s 
      management and directors, in consultation with Merrill Lynch & Co., have 
      thoroughly reviewed and explored strategic options and alternatives 
      available to CREDO. In addition to new capital, this transaction brings 
      directors to CREDO’s Board who have extensive 
      technical engineering, financial and capital market experience in the 
      oil and gas industry.
    
    
      “CREDO has a strong asset base with excellent 
      growth potential in both its conventional oil and gas and intellectual 
      property assets,” Huffman said. “The 
      RCH transaction will allow us to accelerate development of our oil and 
      gas properties and to consolidate our Calliope ownership. In addition, 
      both CREDO and RCH expect this relationship to substantially increase 
      CREDO’s opportunities to monetize Calliope.”
    
    
      Merrill Lynch & CO. represented CREDO in the transaction and Davis 
      Graham & Stubbs LLP acted as legal counsel to CREDO.
    
    
      Proceeds from the RCH investment totaling $16,675,000 will be used, 
      among other things, to fund increased exploration and development of 
      properties where the company currently has unbooked reserves. In 
      addition, the company will consolidate ownership in its Calliope Gas 
      Recovery System by purchasing the Calliope patents together with the 
      13.75% ownership in Calliope and related intellectual property that the 
      company does not already own.
    
    
      CREDO and RCH previously entered into a Calliope joint venture agreement 
      in January of this year. Subsequent discussions ultimately culminated in 
      RCH purchasing a significant stake in the company and becoming part of 
      CREDO’s policy and direction-setting team. 
      The new relationship with RCH as an equity owner and decision making 
      partner is intended to meaningfully expand the existing relationship, 
      creating an enhanced opportunity for CREDO to present, promote and 
      implement Calliope as a growth opportunity to a larger universe of 
      private and public oil and gas companies.
    
    
      About CREDO Petroleum Corporation — 
      CREDO Petroleum Corporation is a publicly traded independent energy 
      company headquartered in Denver, Colorado. The company is engaged in the 
      exploration for and the acquisition, development and marketing of 
      natural gas and crude oil and in application of its patented Calliope 
      Gas Recovery System. CREDO owns working and royalty interests in 
      approximately 1,445 wells. The company’s 
      stock is traded on the NASDAQ System under the symbol “CRED” 
      and is quoted daily in the “NASDAQ Global 
      Market” section of The Wall Street Journal.
    
    
      About RCH Energy Opportunity Fund II, LLP - RCH Energy 
      Opportunity Fund II, L.P. is a private investment fund headquartered in 
      Houston, Texas that focuses exclusively on the oil and gas sector. The 
      Fund’s investment in CREDO Petroleum 
      Corporation is managed by John Rigas and Mark Meyer, both of whom have 
      extensive operating, technical and financial experience in the oil and 
      gas industry.
    
    
      For more information about the company, visit http://www.credopetroleum.com.
    
    
      This press release includes certain statements that may be deemed to 
      be “forward-looking statements” 
      within the meaning of Section 27A of the Securities Act of 1933, as 
      amended, and Section 21E of the Securities Exchange Act of 1934, as 
      amended. All statements included in this press release, other 
      than statements of historical facts, address matters that the company 
      reasonably expects, believes or anticipates will or may occur in the 
      future. Such statements are subject to various assumptions, risks 
      and uncertainties, many of which are beyond the control of the company. 
      Investors are cautioned that any such statements are not guarantees 
      of future performance and that actual results or developments may differ 
      materially from those described in the forward-looking statements. Investors 
      are encouraged to read the “Forward-Looking 
      Statements” and “Risk 
      Factors” sections included in the company’s 
      2007 Annual Report on Form 10-K for more information. Although 
      the company may from time to time voluntarily update its prior forward 
      looking statements, it disclaims any commitment to do so except as 
      required by securities laws.