CREDO Updates Drilling Activity

  
    
  
  
    
      CREDO Petroleum Corporation (NASDAQ: CRED) today updated operational 
      activities.
    
    
      “Since our last report, CREDO has placed nine 
      wells on production and has drilled four new wells that are awaiting 
      completion,” James T. Huffman, President, 
      stated. “We are pleased with the progress on 
      all of our drilling projects. In particular, the success rate on our 
      Kansas project is now up to 40% and we have recently purchased 
      substantial additional acreage on six new prospects. In South Texas, our 
      high potential deep Wilcox test is scheduled to start drilling this 
      week. In addition, we have significantly expanded the acreage we control 
      as operator in the Texas Panhandle in anticipation of horizontal 
      resource drilling plays for the Cleveland and Tonkawa formations.”
    
    
      North-Central Kansas — 
      The company’s Kansas acreage is located in 
      prolific oil producing areas where 3-D seismic has proven effective in 
      identifying undrilled structures. Drilling targets the Lansing-Kansas 
      City and Arbuckle formations at about 4,000 feet, making the cost of 
      drilling very inexpensive in relation to potential reserve value.
    
    
      To date, 20 wells have been drilled on company acreage with a 40% 
      success rate. Four of the eight successful wells had initial production 
      rates of about 100 barrels of oil per day. Average proved reserves are 
      estimated to be 50,000 to 55,000 barrels of oil per well. The company’s 
      first discovery in the play has already produced about 45,000 barrels of 
      oil in 18 months and is still producing 80 barrels of oil per day. That 
      well is expected to produce around 130,000 barrels of oil.
    
    
      CREDO currently owns interests in nine separate projects covering 
      approximately 75,000 gross acres, and plans to expand its acreage 
      position in the play to at least 100,000 gross acres. The company’s 
      interest in the projects varies from 12.5% to 75%. The recent drilling 
      successes have occurred primarily on prospects where the company owns a 
      12.5% interest.
    
    
      “Our drilling success and strong oil prices 
      make the economics for this play outstanding,” 
      Huffman said. “We are seeing substantial 
      improvement in our drilling results as we find the keys to successful 
      seismic and geologic interpretation. For example, four of the last seven 
      wells have been completed as producers, and three of those four 
      successes had excellent production rates.”
    
    
      Huffman further stated, “We are in different 
      stages of acreage acquisition, shooting seismic and drilling, with 10 
      new wells expected to be drilled in the next six months. While our 
      momentum is currently constrained by the availability of seismic crews, 
      we expect Kansas to begin making a major contribution to our reserve and 
      production growth.”
    
    
      South Texas — 
      In South Texas, drilling is expected to commence this week on the company’s 
      17,000 foot Gemini Prospect. The prospect is located in Jim Hogg County 
      and targets the “deep Wilcox” 
      sands which produce prolifically in the area. The 3-D seismic 
      interpretation indicates that the prospect contains 1,200 acres of total 
      closure, making its net reserve potential very substantial in relation 
      to CREDO’s existing proved reserves.
    
    
      At a depth of 17,000 feet, Gemini is a very high cost, rank wildcat 
      drilling prospect. Therefore, the company elected to sell a portion of 
      its interest for cash consideration and a “carried 
      interest” on the two initial wells. The 
      consideration is approximately $1,300,000 cash and an 11.25% “carried 
      interest” before cost recovery on the first 
      two wells (6.75% after cost recovery) including all costs of drilling, 
      completion and connecting the wells for pipeline sales. If drilling is 
      successful, the company expects that its retained interest in the 
      prospects will have a very significant impact on its production and 
      reserve growth.
    
    
      Elsewhere in South Texas, the first well has been drilled on the 2,500 
      gross acre Briggs Ranch Prospect located in Victoria County. The 
      8,600-foot Briggs Ranch #1 encountered 11 feet of Frio sands and is 
      currently producing about 520 Mcf per day (thousand cubic feet of gas 
      per day). The company owns a 9% working interest. Also in South Texas 
      where the company recently purchased a 15.5% working interest in the 
      Escobas Field, a recompletion is underway on an existing well and 
      drilling is underway on a 15,500 foot Wilcox test where the company has 
      a carried interest through the production facilities.
    
    
      Texas Panhandle 
      — In Hemphill County, the company 
      recently purchased interests in over 6,000 gross acres and has taken 
      over as operator of 11 wells. The new acreage complements the company’s 
      Humphreys Prospect and brings its total acreage in the area to 
      approximately 9,000 gross acres.
    
    
      “We are expanding our acreage in the 
      Humphreys area because, in addition to good Morrow sand potential, we 
      see excellent opportunity for horizontal drilling in the Cleveland and 
      Tonkawa formations,” Huffman said. “The 
      majority of this acreage is located in a Tonkawa field that is producing 
      from vertical wells. Horizontal drilling for the Tonkawa is currently 
      being tested in other areas, and there is a Cleveland horizontal 
      resource play underway just to the north of our acreage block. 
      Horizontal drilling has the potential to significantly improve 
      production rates from the Tonkawa formation in our area where vertical 
      wells average 600 MMcf (million cubic feet of gas) and 42,000 barrels of 
      oil.”
    
    
      The second well on the company’s 3,780 gross 
      acre Humphreys Prospect encountered sands in the Tonkawa and Cleveland 
      formations that appear to be productive on electric logs. The vertical 
      well has been completed in the Tonkawa sand and is testing at good rates 
      of both oil and gas. The well is currently waiting on a pipeline 
      connection. The company owns a 25% working interest.
    
    
      Oklahoma — 
      CREDO owns approximately 70,000 gross acres located primarily along the 
      northern portion of the Anadarko Basin where it conducts an active 
      drilling program. Wells generally target the Morrow, Oswego and Chester 
      formations between 7,000 and 11,000 feet.
    
    
      In Southern Oklahoma, the company is participating in three waterflood 
      projects as part of its overall strategy to improve the oil ratio in its 
      reserve base. In Carter County, CREDO owns 17% of the Southeast Hewitt 
      waterflood unit which has already produced 650,000 barrels of oil and is 
      projected to ultimately produce about 1,200,000 barrels. The company 
      also owns about 23% in Phase 1, and 12.5% in Phase 2, of a Martin Deese 
      sand waterflood unit that is being formed and is expected to produce 
      about 1,000,000 barrels of oil. In Love County, CREDO owns 13% in Phase 
      1, and 9.5% in Phase 2, of the Eastman Hills waterflood unit that is 
      expected to produce about 500,000 barrels of oil.
    
    
      Also in Carter County, CREDO is preparing to drill a twin well to its 
      Schaff #1 which has produced 235,000 barrels of oil. The Schaff will 
      become part of the Martin Deese sand waterflood, and the new well will 
      develop three oil sands that the Schaff well logs indicate are 
      productive and which produce in the immediate area. Credo owns a 50% 
      working interest and is the operator.
    
    
      Since the last report, CREDO has placed five wells on production and has 
      drilled two new gas wells in Oklahoma that are awaiting completion for 
      production. The recent drilling includes two new wells on the company’s 
      5,800 gross acre Arroyo Prospect where the first well is now producing 
      750 Mcfd. The company owns varying working interest in the prospect 
      ranging up to 40%. Elsewhere in Oklahoma, the company is preparing to 
      drill on its 1,280 gross acre Pool-Proffitt property where it expects to 
      ultimately drill 10 to 12 wells to develop a thick package of stacked 
      carbonate zones. CREDO owns an approximate 50% working interest in the 
      prospect.
    
    
      Management Comment — “We 
      have been laying the ground work for several years to significantly 
      expand both the breadth and volume of our drilling activities,” 
      Huffman said. “We have made significant 
      investments of both time and resources in the new projects, and we are 
      very excited to see results. The deep drilling in South Texas gives us 
      the opportunity for an immediate and substantial increase in production 
      and reserves. The Kansas project is even more exciting because we have 
      already established excellent results which give us confidence that the 
      project will rise to a level of importance that will rival or surpass 
      our core drilling in Oklahoma.”
    
    
      For more information about the company, visit http://www.credopetroleum.com.
    
    
      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 in the Mid-Continent and Rocky Mountain 
      regions. 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.
    
    
      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.