BPI Energy Announces Fiscal First-Quarter 2007 Results.

Quarterly Revenues Advance 40% on Volume Increase of 160%

CLEVELAND -- BPI Energy (BPI), the operating subsidiary of BPI Energy Holdings, Inc. (Amex:BPG), an independent energy company engaged in the exploration, production and commercial sale of coalbed methane (CBM) in the Illinois Basin, today announced financial and operating results for the quarterly period ended October 31, 2006.

BPI received an average price of $5.71 per thousand cubic feet (Mcf) for gas sales of 51.5 million cubic feet (MMcf) during the opening three months of the new fiscal year, versus an average of $10.60 per Mcf on sales of 19.8 MMcf during the same prior-year period.

Fiscal first-quarter 2007 revenues from gas sales increased 40 percent to $294,000 from the $210,000 generated in the comparable period a year ago. This increase was attributable to higher sales volume partially offset by lower prices. A net loss of $2.7 million, or $0.04 per share, recorded during the quarter compared with last year's net loss of $1.2 million, or $0.03 per share.

Project Updates

For the three months, net gas sales volume from the company's Southern Illinois Basin Project reached 51,490 Mcf, versus 19,789 Mcf in the comparable prior-year quarter--an increase of 160 percent. The number of wells in production grew 34 percent, from 64 at October 31, 2005, to 86 at the end of the most recent three months.

On a sequential basis, the net volume of gas sales decreased five percent quarter to quarter. This was primarily due to a pipeline curtailment that began in October and necessitated six days of downtime followed by a period of constrained sales volume. The curtailment was caused by a modest increase in the nitrogen content of the gas sales stream to approximately 5.5 percent, versus a pipeline quality specification of 4.0 percent total inert components. BPI evaluated several cost-effective means to address the situation, choosing a nitrogen rejection unit, which is slated to be installed in February. The pipeline is currently accepting BPI's sales stream at a constrained rate of approximately 550 Mcf per day.

Operating data for the fiscal 2007 first quarter ended October 31, 2006, follows:

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1All producing wells are located at BPI Energy's Southern Illinois Basin Project.

Commenting on the nitrogen situation, Senior Vice President of Operations James E. Craddock said, "We have seen our nitrogen content increase recently, possibly due to new wells and new coal seams coming on-line. Coals preferentially desorb nitrogen first, so the highest nitrogen content is usually found early in a well's life. Production has resumed and the coals are continuing to de-water."

During the fiscal first quarter, BPI completed and tied in 10 pilot wells and one water disposal well at its Northern Illinois Basin Project. All wells are on pump and producing water at rates averaging 120 barrels per well per day. Eight of the 10 wells are flaring modest amounts of gas.

BPI President and CEO James G. Azlein added, "Testing initiated on two new wells at the Northern Illinois Basin Project and three more at the Western Illinois Basin Project during the first fiscal quarter of 2007 will help us quantify production potential and optimize future per-well economics. We cored an average of 17 feet in each well and the coal samples are currently undergoing desorption analysis. Injection/fall off tests for permeability have been conducted in four of the five wells, with the fifth test to be concluded this month."

BPI today filed its Form 10-Q for the period with the Securities and Exchange Commission. Please refer to the Form 10-Q, which can be found on the company's website, for additional information on BPI Energy and its interim results.

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About BPI Energy

BPI Energy (BPI) is an independent energy company engaged in the exploration, production and commercial sale of coalbed methane (CBM) in the Illinois Basin, which covers approximately 60,000 square miles in Illinois, southwestern Indiana and northwestern Kentucky. The company currently controls the dominant CBM acreage position in the Illinois Basin at approximately 500,000 acres.

News releases and other information on the company are available on the Internet at: http://www.bpi-energy.com

Some of the statements contained in this press release may be deemed to be forward-looking in nature, outlining future expectations or anticipated operating results or financial conditions. Such forward-looking statements are subject to known and unknown risks, uncertainties and other factors that could cause actual results or conditions to differ materially from the information expressed or implied by these forward-looking statements. Some of the factors that could cause actual results or conditions to differ materially from our expectations, include, but are not limited to: (a) our inability to generate sufficient income or obtain sufficient financing to fund our operations through July 31, 2007, or our operations after that date, (b) our inability to retain our acreage rights at our projects at the expiration of our lease agreements, due to insufficient CBM production or other reasons, (c) our failure to accurately forecast CBM production, (d) displacement of our CBM operations by coal-mining operations, which have superior rights in most of our acreage, (e) our failure to accurately forecast the number of wells that we can drill, (f) a decline in the prices that we receive for our CBM production, (g) our failure to accurately forecast operating and capital expenditures and capital needs due to rising costs or different drilling or production conditions in the field, (h) our inability to attract or retain qualified personnel with the requisite CBM or other experience, and (i) unexpected economic and market conditions, in the general economy or the market for natural gas. We caution readers not to place undue reliance on these forward-looking statements.

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