BPI Energy Files Form 10-Q.

CLEVELAND -- BPI Energy ("BPI") (Amex:BPG), an independent energy company engaged in the exploration, development and commercial sale of coalbed methane (CBM) in the Illinois Basin, today announced that it has filed its Form 10-Q for the quarter ended October 31, 2005, with the Securities and Exchange Commission.

In December 2005, the company's Form S-1 Registration Statements were declared effective by the SEC for various private placements completed during calendar 2005, triggering the requirement to comply with its reporting protocol. As a result, the company was required to file its initial Form 10-Q, which is for the three-month period ended October 31, 2005, on or before January 16, 2006.

BPI Chairman and Chief Executive Officer James G. Azlein stated: "We look forward to meeting or exceeding all reporting requirements in our effort to disclose material information in a manner that is as accurate and timely as possible. BPI's periodic and interim SEC filings provide another opportunity for us to communicate our execution strategies and business objectives.

"We continue to seek additional acreage and mineral rights; however, our drilling and production operations are growing and have become increasingly important. One of our primary goals during 2006 will be transitioning from a company focused primarily on the acquisition of mineral rights to a company focused on drilling for and producing CBM." He added, "This transition will take time to attract and build the right team to help us maximize the value of the assets we have assembled.

"At the end of the fiscal 2006 first quarter, we had 85 wells drilled of which 64 were in production and continue to dewater. It is still too early to characterize BPI as a full-fledged CBM production company since most of these wells are in the early stages of dewatering and represent only a small fraction of our potential drilling locations. Average dewatering times are estimated to be 12 months to reach 95% of peak production and 18 months to reach peak." Moreover, he added, "The initial wells drilled are expected to take longer to dewater relative to those drilled after a field or area has been undergoing dewatering by older wells."

He continued, "The rate of wells drilled has slowed in recent weeks. The transfer of coal ownership at our Delta Project by our original lessor to various transferees has tempered BPI's pace of development. We are working assiduously with these new transferees to extend the lease on mutually satisfactory terms.

"Calendar 2006 is off to a very busy start," Azlein concluded. "We are upbeat about our prospects for the new year and look forward to reporting our progress."

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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 418,435 acres.

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 the Company's expectations include: (1) inability to obtain financing to fund its current plan of operations; (2) failure of wells drilled by BPI to be commercially productive; (3) unexpected drilling conditions; (4) inability to obtain drilling equipment; (5) inability to maintain acreage rights in the Illinois Basin or to avoid disputes over the extent of its property rights; and (6) an unexpected decline in natural gas prices. Any forward-looking statements made by the Company in this press release or elsewhere are based on currently available information and speak only as of the date hereof and thereof. Readers are cautioned not to place undue reliance on these forward-looking statements. Except as required by applicable law, the Company undertakes no duty to update these forward-looking statements due to new information or as a result of future events.

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