American Resources Offshore, Inc. Announces Third Quarter 1998 Results of Operations.

VERSAILLES, Ky.--(BUSINESS WIRE)--Nov. 16, 1998--American Resources Offshore, Inc. (the "Company") (NASDAQ:GASS) today announced results of operations for its third fiscal quarter ended September 30, 1998. Total revenues increased 28% to $9 million for the third quarter of 1998 compared with $7.1 million in 1997, due primarily to an increase in production revenues. Company-owned production revenues continued to increase, up 39% to $6.7 million as compared with $4.8 million for the same period in 1997. However, the Company recognized approximately $1.3 million in dry hole and exploration costs during the third quarter of 1998 compared with $381,000 for the same period in 1997. The Company reports a net loss for the quarter of $1.967 million, or $0.20 per share, compared with net income of $187,000, or $0.02 per share, during the third quarter of 1997. The financial results for the third quarter of 1998 were also significantly impacted by increases of:

i) $2.1 million, or 107%, in depreciation, depletion and

amortization expense, a non-cash item;

ii) $1.5 million, or 219%, in interest expense; and

iii) $615,000, or 86%, in oil and gas production expenses.

These increases, totaling $4.2 million, resulted primarily from the Company's acquisition of previously reported offshore Gulf of Mexico properties and the debt incurred to finance the purchases.

The Company further reported that effective October 29, 1998, its wholly-owned subsidiary, American Resources Offshore, Inc., was merged into the Company for the purpose of reducing administrative expenses; and the Company changed its name to American Resources Offshore, Inc.

Additionally, the Company reported that it is currently entertaining bids for the sale of its Appalachian properties. The Company plans to use the proceeds from the sale to reduce its outstanding indebtedness to Den norske Bank which will result in a substantial reduction of interest expense. Further, the sale of these properties will allow the Company to effect an additional reduction of its administrative expenses.

Rick Avare, President and CEO, stated: "As predicted, the third quarter was negatively impacted by the same challenges we saw in the second quarter of this year, particularly in the areas of depletion and interest expense as well as dry hole and exploration costs which must be expensed under our accounting method. Due to the significant increase in our Gulf production, our Appalachian properties are currently generating less than 10% of our total revenues. We believe that the sale of these properties, coupled with the merger of our Gulf subsidiary, will serve to not only sharpen our focus on the development of our offshore properties but streamline our operations as well; and we are constantly reviewing our available alternatives for the generation of funds to meet all of our capital needs." -0-

EARNINGS RECAP:

(In thousands, except per share data)

                                  Quarter Ended   Nine Months Ended
                                  September 30      September 30
                                  1998     1997     1998     1997

Revenue                         $ 9,031  $ 7,080  $28,567  $29,607
Income (loss) from operations      (640)   1,010   (1,374)   3,621
Net income (loss)                (1,967)     187   (4,203)     935
Income (loss) per share         $ (0.20) $  0.02  $ (0.42) $  0.11
Basic weighted average common
 shares outstanding              10,045    9,928   10,022    8,626

OTHER FINANCIAL DATA:

EBITDA/a                        $ 3,521  $ 3,003  $13,489  $ 9,121

     (a) EBITDA is earnings before interest, taxes; depreciation,
depletion and amortization; and impairment of assets. 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.

-0-

American Resources Offshore, Inc. is an independent producer of oil and gas, with production primarily in the Gulf Coast Region.

Statements made herein that are forward-looking in nature are intended 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. Actual performance, prospects, developments and results may differ materially from any and all anticipated results due to the risk factors described in the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 1998 (the "September 30, 1998 Form 10-Q"), which is on file with the Securities and Exchange Commission. For additional information concerning the financial condition of the Company, please see its September 30, 1998 Form 10-Q.

For more information, contact the Company's Investor Relations Department at [phone]; or visit our website at www.arisgc.com.