Cygnus Oil and Gas Corporation: Appointment of New CEO and Default on Debt Obligation

  
    
  
  
    
      Cygnus Oil and Gas Corporation (OTCBB:CYNS) announced today that the 
      Company has defaulted on the payment of interest on certain of its 
      senior convertible notes. On April 4, 2006, pursuant to a Securities 
      Purchase Agreement (“Purchase Agreement”) 
      entered into on that date between the Company and certain accredited 
      investors (the "Holders"), Cygnus Oil and Gas Corporation (formerly 
      known as Touchstone Resources USA, Inc.) ("Company”) 
      issued, among other things, $22,000,000 aggregate principal amount of 
      its 7.5% senior convertible notes due April 4, 2009 (“Convertible 
      Notes”) convertible into shares of the Company’s 
      common stock, subject to the terms and conditions of the Convertible 
      Notes and the Purchase Agreement.
    
    
      Under the terms of the Convertible Notes, the Company is required to 
      periodically pay to the Holders interest accruing with respect to the 
      Convertible Notes at a rate of 7.5% per year. On December 31, 2006, the 
      Company failed to make the $412,500 in interest payments required under 
      the terms of the Convertible Notes. Following the expiration of the cure 
      period on January 5, 2007, the failure to make such payment of interest 
      results in an event of default under the terms of the Convertible Notes. 
      As such, the Holders may now exercise various remedies available to them 
      under the Convertible Notes, including requiring that the Company 
      immediately redeem all or a portion of the Convertible Notes at the 
      current aggregate redemption price of $27,500,000, as set forth in the 
      Convertible Notes. The Company is in discussions with the Holders 
      regarding the Convertible Notes.
    
    
      The Company also announced today that on December 29, 2006, the Company’s 
      Board of Directors appointed R. Gerald Bennett as Chairman of the Board, 
      President and Chief Executive Officer to succeed Roger L. Abel who 
      resigned from these positions effective as of the same date. Mr. Abel 
      will continue to serve as a director of the Company.
    
    
      Mr. Bennett has served as a member of our board of directors since 
      November 29, 2005. He has nearly 40 years of experience in the petroleum 
      and related industries. From July 2000 until March 2005, he served as 
      President and CEO of Total Safety, Inc., a safety services provider to 
      the energy industry. From June 1996 until November 1999, he worked for 
      Equitable Resources, Inc. as President and CEO of ERI Supply and 
      Logistics where he directed oil and gas exploration, midstream 
      operations, and wholesale marketing efforts. During his career, Mr. 
      Bennett has served as President of Enron Gas Services, Chairman and CEO 
      of Houston Pipeline Company, President and CEO of Perry Gas Companies, 
      Vice President of Parker Drilling Company, and Manager of Gas Activities 
      for Conoco, Inc. Mr. Bennett is currently a Director of the Memorial 
      Hermann Healthcare System Board, a Texas-based not-for-profit healthcare 
      system, and immediate past Chairman of the Memorial Hermann Hospital 
      Board. Mr. Bennett is a graduate of Oklahoma State University with a 
      B.S. and M.S. in Industrial Engineering and Management, and a graduate 
      of The Harvard Business School Program for Management Development.
    
    
      With his appointment as Chief Executive Officer of the Company, Mr. 
      Bennett resigned as Chairman of the Audit Committee of the Company 
      effective as of December 29, 2006. At that time, the board appointed 
      Alfred J. Moran, Jr., currently serving as a member of the Company's 
      board of directors, to serve as the Company's audit committee chairman. 
      Mr. Alfred J. Moran is Chairman and Chief Executive Officer of the Moran 
      Group, LLC, a Value Creation, Crisis Management and Turnaround 
      consulting firm specializing in strategic, operational and financial 
      turnarounds and Interim CEO engagements. For many years he was a Senior 
      Managing Director and Partner of Kibel Green, Inc., the leading Value 
      Creation, Interim CEO, Turnaround, Restructure, Strategic Breakthrough 
      consulting firm in the Western United States. Alfred Moran is a seasoned 
      Professional Chief Executive Officer and Value Creation Consultant with 
      over 35 years' experience in building and enhancing shareholder value 
      for companies ranging in annual sales of approximately $3.0 Million to 
      approximately $2.3 Billion. He has been CEO of public and private 
      companies and has provided professional assistance to the boards and 
      CEOs of many companies in diversified industries. Mr. Moran has a master 
      of business administration from the Harvard Business School and a 
      bachelor of arts degree in Philosophy from the University of North 
      Carolina at Chapel Hill. He is a Member of World Presidents Organization 
      in Houston, Texas.
    
    
      As of this time, the Company requires additional financing to fund its 
      current and planned operations and meet its capital requirements, to 
      continue operating, exploring and developing oil and gas properties, and 
      to otherwise implement its business plan. As such, the Company is 
      searching for alternative sources of financing. As of the date of this 
      report, the Company has not obtained such financing, and there is no 
      assurance that the Company will obtain such financing.
    
    
      In addition to restructuring its debt obligations, the Company has 
      considered and will continue to consider the following alternatives, in 
      addition to other business strategies available to the Company, if the 
      Company does not secure the additional financing needed to continue its 
      operations as presently conducted: (i) entering into a business 
      combination with another company or selling a portion or all of the 
      Company's assets; (ii) selling at auction certain of the Company's 
      assets; and (iii) reorganization or liquidation proceedings.
    
    
      ABOUT CYGNUS OIL AND GAS CORPORATION
    
    
      Headquartered in Houston, Texas, Cygnus Oil and Gas Corporation is an 
      oil and gas exploration and production company. Primarily a resource 
      player, its key assets consist of shale acreage in Woodruff County, 
      Arkansas and McIntosh County, Oklahoma and it also owns a variety of 
      non-producing assets in Alabama, Louisiana, Mississippi, and New 
      Zealand. Since August 2005, the Company has made significant changes in 
      its management, Board of Directors and the nature of oil and gas assets 
      it acquires to better position itself for future company growth.
    
    
      FORWARD-LOOKING STATEMENTS
    
    
      This news release contains forward-looking statements, including, in 
      particular, statements about Cygnus’s plans 
      and intentions. These have been based on the Company’s 
      current assumptions, expectations and projections about future events. 
      Although the Company believes that the expectations reflected in 
      these forward-looking statements are reasonable, the Company can give no 
      assurance that the expectations will prove to be correct.