American Energy Announces Settlement of Texas Lawsuit.

WESTPORT, Conn. -- The American Energy Group, Ltd. (OTC.BB: AEGG) ["American Energy"] announced today that the litigation in the District Court of Harris County, Texas initiated by M.S. Moin Hussain, Saleem Z. Khan and Khan & Piracha in January, 2006, has been settled by the parties.

The original lawsuit was filed against American Energy, its subsidiary, The American Energy Operating Corp., Hycarbex-American Energy, Inc., Pierce Onthank, Dr. Iftikhar Zahid, and Georg Friedher Von Canal. American Energy Operating Corp. was dismissed from the suit by the plaintiffs shortly after the filing. American Energy, Hycarbex, Pierce Onthank and Iftikhar Zahid all denied liability. Georg Friedher Von Canal was not served and did not make an appearance in the lawsuit.

Plaintiffs' primary allegation was that a written document signed by Georg Von Canal, while claiming to be the President of Hycarbex, promised Khan & Piracha, a Pakistani law firm, a twenty percent (20%) carried working interest in the Yasin Concession for allegedly providing assistance to Hycarbex in extending the exploration license for the Concession in 2003. After the filing, Hycarbex provided the Company with written assurance that the Company's 18% overriding royalty interest in the Yasin Concession would not be impaired by the lawsuit, whatever the lawsuit results. American Energy, Hycarbex and Pierce Onthank also filed a counterclaim against Saleem Khan and Khan & Piracha alleging that the attempt to obtain a 20% carried working interest in the Concession while serving as legal counsel was a breach of fiduciary duty.

Under the terms of the settlement, all parties denied liability to one another. Hycarbex agreed to pay $800,000 to the plaintiffs upon execution of the settlement agreement. American Energy guaranteed collection from Hycarbex of this sum by plaintiffs and the sum has been fully paid by Hycarbex as agreed. Additionally, under the settlement terms, Hycarbex and American Energy have agreed, jointly and severally, to pay $450,000 to the plaintiffs by September 12, 2007. This agreement will be supported by an agreed judgment which will remain in place against each company until the 2007 payment is made. All claims of every character asserted against Pierce Onthank and Iftikhar Zahid have been dismissed. The parties, while denying liability to one another, have executed mutual, general releases, but the settlement documentation specifically excludes a release of Georg Friedher Von Canal by any party.

Commenting on the settlement, Pierce Onthank, President and CEO of American Energy stated, "American Energy is pleased to resolve this matter in a manner which will avoid the very high costs associated with protracted litigation and allow us to focus our resources on the achievement of our business goals, since we are not involved in any other litigation."