Eurogas Corporation Announces Financial Results for the Year Ended December 31, 2010

Eurogas Corporation ("Eurogas" or the "Corporation") (TSX:EUG) today announced
its financial results for the year ended December 31, 2010.


During 2010, the Corporation incurred a net loss of $3.8 million, or
approximately $0.02 per share. This compares with a net loss of $3.2 million in
2009. In June 2010, the Corporation successfully completed the acquisition of
oil and natural gas properties in and around Lake Erie, Ontario (the
"Acquisition"). Following the Acquisition, the Corporation began generating
revenues from, and incurring expenses related to the assets acquired. As such,
the nature of the Corporation's operations have changed significantly, impacting
the various components of net earnings when compared with those of the prior
year, where the Corporation's activities were limited to exploration and
development activities.




LAKE ERIE ASSETS                                                            
                                                                            
Revenues from Oil and Gas Sales                                             
Since the Acquisition, Eurogas has earned gross revenues of $19.5 million   
 from the sale of oil and natural gas.                                      
                                                                            
                                              FROM JUNE 29, 2010 TO DECEMBER
                    FOURTH QUARTER                       31, 2010           
---------  --------------------------------  -------------------------------
             ($000's)                         ($000's)                      
                  Oil     Average  Realized        Oil     Average  Realized
                  and  Production    Prices        and  Production    Prices
            Gas Sales     Volumes  per Unit  Gas Sales     Volumes  per Unit
---------  --------------------------------  -------------------------------
Natural                                                                     
gas         $   4,309      10,417 $    4.50  $   9,190      10,435 $    4.79
                           (Mcf/d)                          (Mcf/d)         
Oil             5,342         669 $   86.82     10,141         669 $   82.38
                          (bbls/d)                         (bbls/d)         
Liquids           117          22 $   58.18        189          19 $   55.11
                          (bbls/d)                         (bbls/d)         
---------  --------------------------------  -------------------------------
Total                                                                       
Revenue     $   9,768                        $  19,520                      
---------  --------------------------------  -------------------------------



Revenues from natural gas sales were adversely affected by North American
natural gas prices which, as a result of excess supply, have continued to
decline throughout the second half of 2010. Global natural gas working
inventories at the end of 2010 remain near the record highs set in December
2009. The Corporation realized an average price of $4.79/Mcf, representing a
positive basis differential from the Nymex price of US$4.30/Mcf due to the
Corporation's proximity to the Dawn hub, which is located in southwestern
Ontario. The Dawn hub is a leading provider of natural gas supply to the greater
Toronto market area.


During the six months since the Acquisition, the Corporation realized an average
price of $82.38/bbl on sales of oil. While world oil consumption grew in 2010,
significant uncertainties in world markets continue to cause substantial
volatility in the price of oil.


Since the Acquisition, field level cash flows generated from the Lake Erie
Assets were $10.8 million.




(in thousands                                                               
 except per unit                                    FROM JUNE 29, 2010 TO   
 amount)                  FOURTH QUARTER              DECEMBER 31, 2010     
------------------  ---------------------------  ---------------------------
                       Field                        Field                   
                       Level  ($/bbl)  ($/Mcf)      Level  ($/bbl)  ($/Mcf) 
                        Cash  Oil and  Natural       Cash  Oil and  Natural 
                       Flows  Liquids      Gas      Flows  Liquids      Gas 
------------------  ---------------------------  ---------------------------
Total sales         $  9,768 $  85.91 $   4.50   $ 19,520 $  81.64 $   4.79 
Royalty expense       (1,467)  (12.64)   (0.69)    (3,040)  (12.73)   (0.74)
Cost of sales and                                                           
 transportation                                                             
 costs                (2,926)  (23.29)   (1.51)    (5,719)  (20.42)   (1.63)
------------------  ---------------------------  ---------------------------
Field Netbacks      $  5,375 $  49.98 $   2.30   $ 10,761 $  48.49 $   2.42 
------------------  ---------------------------  ---------------------------



Capital Expenditures

Since the Acquisition, the Corporation invested $3.8 million in the Lake Erie
Assets, including a new compressor at one of its gas plants, as well as pipeline
replacements and upgrades throughout the field. Planned capital expenditures in
2011 are estimated at $8.9 million on a net basis and include approximately $5.1
million for onshore projects and a further $3.8 million for offshore projects.
Capital expenditures in 2011 include the drilling of four infill wells onshore
and three wells offshore, at a cost of approximately $2.6 million and $1.5
million on a net basis, respectively.


Price Risk Management

The Corporation has entered into fixed price derivative contracts for the
purpose of protecting its oil and natural gas revenue from the volatility of oil
and natural gas prices and the volatility in Canadian to US foreign exchange
rates. The Corporation's price risk management strategies assist the Corporation
in securing a more stable amount of cash flows to protect a desired level of
capital spending and for debt management. At February 17, 2011, the Corporation
had locked in pricing for 350 bbl/d of oil production at a weighted average rate
of Cdn$90.40/bbl through to December 2011. It also entered into a commodity swap
on 6.5 million btu/day of natural gas from June 1, 2011 to February 28, 2012 at
a fixed price of Cdn$4.66/MMbtu. With these risk management contracts, the
Corporation has hedged approximately 50% of its oil production and 60% of its
natural gas production during the periods covered by the hedges.


CASTOR UNDERGROUND GAS STORAGE PROJECT

Project financing for the Castor Project was completed in July 2010, providing
the project with a 10-year, EUR1.3 billion project financing through a syndicate
of 19 banks. To provide security for the financing, the Corporation's
subsidiary, Castor UGS Limited Partnership ("CLP") pledged its 33.33% interest
in Escal UGS S.L., the owner of the Castor Project, to the banking syndicate.
Other than the pledging of its shares, CLP will not be required to provide any
equity or debt funds or provide any warranties required by the project finance
lenders as this obligation was assumed by ACS Servicios Communicacions y Energia
S.L. ("ACS"), CLP's partner in this transaction and a 66.67% owner of Escal.
Notwithstanding any form by which ACS may fund Escal during the construction
phase, CLP's interest in Escal will at all times remain at 33.33%, and CLP will
retain the right to 33.33% of all distributable cash flows.


During 2010, project construction and development, including the 12 well
drilling program, continued to advance. The routing of the subsea pipeline from
the shore to the site of the onshore facilities of the Castor Project was
established and the necessary rights of way were granted as part of the
Administrative Authorization Permit received in June 2010.


PREFERRED SHARE INTEREST IN EUROGAS INTERNATIONAL INC.

On January 18, 2011, Eurogas International announced that, together with its
joint venture partner, it has declared a condition of a Force Majeure with
respect to the Sfax Permit and Ras-El-Besh concession. Eurogas International and
its joint venture partner believe that the current political uncertainty and
civil unrest in Tunisia, which have resulted in the collapse of the government,
a declaration of a state of emergency and serious civil disturbance, adversely
affects their ability to continue their exploration and evaluation activities.
Eurogas International believes that the declaration of a Force Majeure will
temporarily suspend activities while the conditions resulting in the Force
Majeure continue.


During 2010, an aggregate of $3.4 million was capitalized by Eurogas
International to deferred exploration costs. In addition, Eurogas International
settled previously announced arbitration proceedings with Seawolf Oilfield
(Cyprus) Limited and Seawolf Oilfield Services Limited for US$12 million, to be
received over an 18 month period. Eurogas International's share of the
settlement proceeds were US$3.6 million and were primarily applied to reduce the
carrying amount of deferred exploration costs.


As a condition of the Sfax Permit, Eurogas International is committed to
drilling one new exploration well. Eurogas International has also committed to
complete the abandonment and reclamation of the REB-3 well, which was drilled in
2008. The estimated budget for the Sfax Permit and the associated Ras-El-Besh
concession during 2011, including these two commitments, is approximately US$25
million, of which Eurogas International is responsible for its net share of
approximately US$8.1 million. In the event that Eurogas International does not
complete its work commitments as outlined in the terms of the extension, a
compensatory payment of up to US$12 million (net US$5.4 million to Eurogas
International) will be payable to the Tunisian regulatory bodies, less any
amounts incurred by the joint venture in respect of the completion of its
obligations. Additional information regarding Eurogas International may be
accessed at www.eurogasinternational.com.


ABOUT THE CORPORATION

Eurogas has filed its consolidated financial statements and related management's
discussion and analysis for the year ended December 31, 2010 with the Canadian
securities regulatory authorities on the System for Electronic Document Analysis
and Retrieval ("SEDAR"). All documentation may be viewed under the Corporation's
profile on SEDAR (www.sedar.com), the Corporation's website www.eurogascorp.com
or by contacting Eurogas. Eurogas Corporation is listed on the Toronto Stock
Exchange under the symbol "EUG" and is engaged in oil and natural gas operations
in Ontario and indirectly in the development of a major underground storage
facility off the east coast of Spain. For more information on Eurogas, visit the
website www.eurogascorp.com.


FOOTNOTES



--  "Field Level Cash Flows" is calculated as revenues from oil and gas
    sales, less royalties, cost of sales and transportation costs. 
--  "Field Netbacks" refers to field level cash flows expressed on a barrel
    of oil equivalent basis. 



"Field Level Cash Flows" and "Field Netbacks" are common benchmarks in the oil
and natural gas industry. However, these measures are not defined by generally
accepted accounting principles, do not have standard meanings and as such, may
not be comparable to similar measures used by other companies.


FORWARD-LOOKING STATEMENTS

Certain information set forth in these documents, including management's
assessment of each of the Corporation's future plans and operations, contains
forward-looking statements. Forward-looking statements are statements that are
predictive in nature, depend upon or refer to future events or conditions or
include words such as "expects", "anticipates", "intends", "plans", "believes",
"estimates" or similar expressions. By their nature, forward-looking statements
are subject to numerous risks and uncertainties, some of which are beyond the
Corporation's control, including: exploration, development and production risks;
uncertainty of reserve estimates; reliance on operators, management and key
personnel; cyclical nature of the business; economic dependence on a small
number of customers; additional funding that may be required to execute on
exploration and development work; the ability to obtain, sustain or renew
licenses and permits; risks inherent to operating and investing in foreign
countries; availability of drilling equipment and access; industry competition;
environmental concerns; climate change regulations; volatility of commodity
prices; hedging activities; no history of earnings; potential defects in title
to properties; potential conflicts of interest; changes in taxation legislation;
insurance, health, safety and litigation risk; labour costs and labour
relations; geo-political risks; risks relating to management of growth;
aboriginal claims; volatility of the Corporation's share price; royalty rates
and incentives; regulatory risks relating to oil and natural gas exploration;
marketability and price of oil and natural gas; failure to realize anticipated
benefits of acquisitions and dispositions; information system risk; and other
risk factors discussed or referred to in the section entitled "Business Risks"
in the Corporation's Management's Discussion and Analysis as at and for the year
ended December 31, 2010. Readers are cautioned that the assumptions used in the
preparation of such information, although considered reasonable at the time of
preparation, may prove to be imprecise and, as such, undue reliance should not
be placed on forward-looking statements. The Corporation's actual results,
performance or achievement could differ materially from those expressed in, or
implied by, these forward-looking statements and, accordingly, no assurance can
be given that any of the events anticipated by the forward-looking statements
will transpire or occur, or if any of them do so, what benefits the Corporation
will derive from them. The Corporation disclaims any intention or obligation to
update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise, except as required by law.