American Resources Offshore, Inc. Announces First Quarter 1999 Results of Operations.

VERSAILLES, Ky.--(BUSINESS WIRE)--May 14, 1999--

American Resources Offshore, Inc. (ARO) (NASDAQ Small Cap: GASS) today announced results of operations for its first quarter ended March 31, 1999. Financial highlights were as follows:

ARO-owned production revenues increased 4.3% to $6.5 million as

compared with $6.3 million for the first quarter of 1998. The

increase was due primarily to $1.8 million of revenue generated

by ARO's hedging contracts and was partially offset by a reduction

in production volumes as well as lower oil and gas prices. As a

result, gross revenues for the first quarter of 1999 increased

4.9% to $9.1 million from the $8.7 million reported for the same

period in 1998.

Although EBITDA(1) remained virtually level at $4.8 million for

the quarter ended March 31, 1999 compared with $4.9 million for

the same period in 1998, operating income was $649,000 after

having been $1.4 million for the same period in 1998. Operating

income for the period was negatively impacted by:

a) a 54% increase in administrative expense to $1.2 million

compared with $768,000 for the same period in 1998 due to

the expanded staffing of the Gulf Coast office with

technical personnel experienced in Gulf Coast exploration

and development activities;

b) exploration costs of approximately $480,000 compared with $0

for the first quarter of the previous year; and

c) an 18% increase in depreciation, depletion and amortization

expense to $4.1 million compared with $3.5 million for the

first quarter of 1998 primarily as a result of increased

depletion attributable to properties acquired from TECO Oil

& Gas, Inc. ("TECO").

ARO reports a net loss of ($1.6 million) as compared with net

income of $302,000 for the first quarter of 1998. Contributing to

the net loss for the period was a 146% increase in interest

expense to $2.3 million compared with $921,000 for the first

quarter of 1998, due primarily to additional borrowings to fund

acquisition, exploration and development activities. The resultant

loss per share (diluted) for the first quarter of 1999 was

($0.16) on 10,059,184 shares as compared with a loss per share

for the same period in 1998 of $0.03 on 10,265,748 shares.

During the quarter ended March 31, 1999, ARO produced 2.5 billion

cubic feet of gas equivalent (bcfe) for average daily production

of 28.2 million cubic feet of gas equivalent (mmcfe), compared

with total production of 2.8 bcfe and average daily production of

31.5 mmcfe during the first quarter of 1998.

As of March 31, 1999, ARO had current liabilities in excess of current assets (excluding the current portion of long-term debt) of approximately $5.3 million, was not in compliance with its primary credit facility and bridge loans with DNB Energy Assets, Inc., of approximately $48 million and $15.6 million, respectively, was in default under its $18.5 million loan with TECO and has immediate needs with regard to its capital expenditure budget. As previously reported, this situation is primarily the result of: i) the lack of available outside funding to complete the scheduled refinancing of the interim loans and capital expenditures associated with the acquisition and development of properties from TECO; ii) the decline in oil and gas prices; iii) the decline of production in ARO's two largest producing wells; and iv) trade payables incurred in association with the capital requirements for the development of additional wells.

ARO's management has taken steps in an attempt to remedy its deficiencies, including, but not limited to, the reduction of administrative expenses and settlement of trade creditors for amounts less than face value; and ARO's officers and directors are diligently pursuing additional measures, including the sale of its Appalachian properties and alternatives for debt restructuring.

Rick G. Avare, President and CEO, stated: "Our attentions continue to be focused on finding the best alternative for the restructuring of our company in order to realize the most value for our shareholders." -0-

EARNINGS RECAP:
                                                 Quarter Ended
                                                    March 31
                                                    --------
                                             (Dollars in thousands
                                               except share data)

                                                 1999         1998
                                                 ----         ----

Revenue                                         $9,126        $8,702
                                                ======        ======
Net income (loss) attributable
  to common shares                             $(1,623)         $275
                                               =======          ====
Net income (loss) per share (diluted)           $(0.16)        $0.03
                                                ======         =====
Weighted average number of common
  shares outstanding and dilutive
  potential common shares                   10,059,184    10,265,748
                                            ==========    ==========

OTHER FINANCIAL DATA:

EBITDA(1)                                       $4,772        $4,889
                                                ======        ======

     (1)  EBITDA is earnings before interest, taxes,
          depreciation/depletion and amortization/impairment. EBITDA
          is presented because it is a widely accepted financial
          indication of a company's ability to service and incur debt.
          EBITDA should not be considered as an alternative to
          earnings (loss) as an indicator of the Company's operating
          performance or to cash flow as a measure of liquidity.

American Resources Offshore, Inc. is a fully integrated producer of oil and gas. ARO owns pipelines and production located primarily in the Gulf Coast region. For information, contact ARO's Investor Relations Department at 606/873-5455, or visit our website at www.arisgc.com. -0-

                   AMERICAN RESOURCES OFFSHORE, INC.
                            AND SUBSIDIARY
            CONDENSED, CONSOLIDATED STATEMENT OF OPERATIONS

                                                  Quarter Ended
                                                     March 31
                                                     --------
                                               (Dollars in thousands
                                               except per share data)

                                                 1999          1998
                                                 ----          ----

Revenues                                        $9,126        $8,702
                                                ======        ======

Income (loss) from
 operations                                       $649        $1,425

Other income (expense)                         $(2,268)        $(921)

Income tax expense                                  --         $(202)

Preferred dividends                                $(4)         $(27)

Net income (loss)                              $(1,623)         $275
                                               =======          ====

EARNINGS PER SHARE:

 Diluted:

 Income (loss) from
  operations                                     $0.06         $0.14

 Other income (expense)                         $(0.22)       $(0.09)

 Income tax expense                                 --        $(0.02)
                                                  ----        ------

 Net income (loss)                              $(0.16)       $ 0.03
                                                ======        ======