August Energy Announces Plans to Drill Two New Wells.

PUCKETT, Miss. -- August Energy Corp., (Pink Sheets:AENC) announced today that it has staked two wells and is seeking drilling permits on each in preparation to drill new wells by year end.

At Iowa Field, Jefferson Davis Parish, La., the Company has staked location for the Dennison #2 well; a twin offset to a producing gas well, the Dennison #1. Plans are to drill to 10,200 ft, a depth sufficient to test a high pressure zone that was encountered in the Dennison #1 at approximately 9,100 ft, where extreme pressures required the operator to complete in a higher zone due to lack of capital with which to safely make a completion in the higher pressured zone. Geological evidence, together with seismic data indicate that the new well should encounter up to six productive oil and gas zones in the interval from approximately 8,150 to 10,100 ft, and that these zones could cumulatively contain an estimated 20 billion cubic feet of gas together with 500,000 barrels of oil and/or condensate. Iowa Field, located about 20 miles east of Lake Charles, La., was discovered in the 1930's and developed by major companies such as Shell and Amoco. To date the field has produced over 475 billion cubic ft of gas and over 10,000,000 barrels of condensate and/or oil.

At Puckett Field, Rankin and Smith Counties, Mississippi, the Company has staked a location for the Puckett Oil Unit #2 replacement well. Plans are to drill a well to a depth of 11,500 ft, which should be a depth sufficient to obtain proved reserves left undrained in the original POU # 2 well, estimated to be 400,000 barrels of oil, and also test deeper possible productive zones in the Mooringsport and Rodessa formations in the up thrown side of a known major fault trap. Such formations have produced over 500,000 barrels in a similar fault block to the South. Geological clues from several wells drilled in the area give evidence that these formations will be productive in the up thrown position also, and, if so, significant new reserves could be developed at these deeper depths.

Puckett field has thus far produced approximately 9 million barrels of oil, together with a billion cubic feet of gas from 38 zones, the majority of which were shallower than 10,000 feet. Very little exploration has been carried out to deeper depths in this field, however nearby fields (within 20 miles) have produced as much as 25,000,000 barrels of oil from formations of the same geological age that August Energy will explore.

Certain information included in this communication (as well as information included in oral statements or other written statements made or to be made by August Energy Corp.) contain statements that are forward looking, such as statements related to the future anticipated direction of the oil and gas industry, plans for future expansion, various property development activities, planned capital expenditures, future funding resources, anticipated production and reserve growth. These forward-looking statements are subject to a number of known and unknown risks and uncertainties that could cause actual operations or results to differ materially from those anticipated.