BPI Energy Announces Fiscal Second-Quarter 2007 Results.

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 quarter and six-month periods ended January 31, 2007.

The average gas price that BPI received for its gas sales declined 45 percent for the quarter, while sales volume increased 36 percent, compared with the second quarter of fiscal 2006. BPI received an average of $6.61 per thousand cubic feet (Mcf) for gas sales of 37.4 million cubic feet (MMcf) during the three-month period, versus an average of $11.97 per Mcf on sales of 27.4 MMcf during the same period one year ago.

Fiscal second-quarter 2007 revenues from gas sales declined 25 percent to $247,000 from the $328,000 generated in the comparable year-ago period. This decrease is attributable primarily to the lower sales prices, partially offset by the sales-volume increase. A net loss of $1.8 million, or $0.03 per share, was recorded during the quarter, compared with last year's net loss of $0.9 million, or $0.01 per share.

For the six-month period, revenues increased modestly to $541,000 from last year's level of $538,000. Gas sales volume increased 88 percent, reaching 88.8 MMcf, versus 47.2 MMcf in the first half of fiscal 2006. Average selling price declined 47 percent to $6.09 per Mcf, from the $11.39 per Mcf realized in last year's comparable period. Sales were negatively impacted during the period by the previously announced pipeline curtailment related to increased nitrogen levels, necessitating sales volumes to be constrained. A net loss of $4.5 million, or $0.07 per share, was recorded during the fiscal year's first half, compared with last year's net loss of $2.0 million, or $0.04 per share. The net loss for both periods reflects increased expenses related to the establishment of BPI's in-house technical team and the initiation of its second pilot program.

Project Updates

In February the company announced drilling plans for the balance of the fiscal year, which ends July 31, 2007. Included in BPI's drilling program are 29 development wells, 12 pilot wells, three pressure observation wells, one water disposal well and five test wells. The first of the test wells is currently underway in Clinton County.

The number of wells in production at the company's Southern Illinois Basin Project remained at 86 at the end of January. Additional wells are expected to be put into production at this project in the second half of the fiscal year providing additional production and aiding in the dewatering of the producing coalbeds.

Operating data for the fiscal 2007 second-quarter and six-month periods ended January 31, 2007, follows:

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

Commenting on the company's operations, Chief Operating Officer James E. Craddock said, "Our activity in the field has increased recently. We currently have one rig drilling on our Southern Basin Project and another rig is drilling a test well on our Western Basin Project acreage in Clinton County. After the Clinton County well is drilled, that rig will be moving to drill additional test wells at the Northern Basin Project.

"At the Southern Project, we have completed a second water disposal well to provide additional water handling capacity and we are drilling additional production wells. As previously announced, we are currently installing a nitrogen rejection unit at this project, which is expected to be on-line this month. This will have an immediate impact on our sales volume, since we have been selling gas at a constrained rate since early November."

Craddock continued, "At our Northern Project, the Shelby pilot development wells continue to dewater and we have recently drilled two additional pilot wells and a pressure observation well which will be put into operation before the end of March. These new wells will assist our evaluation of this acreage and help determine its development potential. We expect to conclude this phase of our evaluation process by the end of next month."

BPI President and CEO James G. Azlein added, "We have commenced investigating a variety of financing alternatives to fund our fiscal 2008 development plans. We have established a disciplined process to determine which of the options available to BPI represents the lowest cost of capital for the company.

"In addition, we continue to work toward reducing well-drilling and completion costs, increasing proven reserves, growing production and sales volume, and demonstrating the commercial potential of our various acreage blocks."

BPI is filing its Form 10-Q for the interim period with the Securities and Exchange Commission today. 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 or drilling plan through July 31, 2007, (b) our inability to retain our acreage rights at our projects, at the expiration of our lease agreements, due to insufficient CBM production, or for 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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