Carbon Energy Corporation Announces New Mexico Oil Discovery; Third Quarter Production Increases.

Business Editors

DENVER--(BUSINESS WIRE)--Sept. 13, 2000

Carbon Energy Corporation (AMEX:CRB) today announced significant increases in daily net production due to new well discoveries and well re-completions in its Permian Basin operating area and connection of previously shut-in gas wells in Utah.

The activities are expected to increase production, revenues and cash flow during the third quarter of 2000 and are also expected to increase proven reserves.

Carbon drilled and completed the Avalon Federal No. 2 (Carbon working interest 50%), Eddy County, NM, in the Delaware Sand to a depth of approximately 3,500 feet. The well's daily production rate is 130 Bbl of oil and 200 Mcf of natural gas. First sales will be recorded in August 2000. Electric log calculations indicate additional productive intervals within the Delaware Sand. Multi-well development in the Avalon Area is planned for the third quarter of 2000.

The company also added new production from the successful re-completion of two wells in Eddy County and a successful re-completion in Winkler County, TX. The contribution in production from the Avalon Fed. No. 2 and the three re-completions has increased total net daily gas production by 850 Mcf and net daily oil production by 140 Bbl.

The Lakeshore Federal 10-2 (Carbon WI 91%), located in Eddy County and operated by Carbon, was re-completed in the Cisco Formation, adding incremental production of 200 Mcf of gas per day. The well currently produces natural gas from the Morrow and Strawn Formations. Carbon re-completed the Lakeshore Federal 10-3 (Carbon WI 63%) well by fracture stimulation of an existing Strawn producing interval. Incremental production net to Carbon's working interest is approximately 500 Mcf per day.

As reported to the Texas Railroad Commission, the re-completion of the University 32-21 (Carbon WI 25%) located in Winkler County adds a potential 277 Bbl and 269 Mcf to its daily production rate. Texaco Inc. operates the well.

The Company also connected to a gathering pipeline six previously shut-in natural gas wells located in Utah. The wells have added incremental production of 1,000 Mcf of gas per day. Carbon holds a 100% working interest in these wells. Additional natural gas development activity is planned for the area during the remainder of 2000.

Prior to these activities, Carbon's net daily production from its U.S. operations was approximately 10,150 thousand cubic feet (Mcf) of natural gas and 200 barrels (Bbl) of oil. Production from Carbon's Canadian operations is approximately 5,000 Mcf of gas per day and 160 Bbls of oil and liquids per day.

Carbon's U.S. production operations consist of working interests in 241 producing oil and gas wells of which 145 are operated by Carbon. Carbon has an interest in over 150,000 net acres of oil and gas leases located in the Piceance Basin of Colorado, the Uinta Basin of Utah, the San Juan and Permian Basins of New Mexico and the Hugoton Basin of southwest Kansas. Proved reserves at year end 1999 of Carbon's U.S. unit, Bonneville Fuels Corporation, totaled 31 billion cubic feet (Bcf) of natural gas and 228,000 Bbl of crude oil and natural gas liquids. Proven natural gas reserves increased 20% or 5.2 Bcf from year-end 1998. Proven crude oil and natural gas liquids increased 38% or 62,000 Bbl from year-end 1998.

Carbon's Canadian unit, CEC Resources Ltd., owns working interests in 61 producing oil and natural gas wells located in Alberta and Saskatchewan of which 28 are operated by CEC. CEC has an interest in over 28,000 net acres of oil and gas leases. CEC's proved reserves at year end 1999 totaled 15.7 Bcf and 483,000 barrels of crude oil and natural gas liquids. Proved natural gas reserves increased by 180% or 10.1 Bcf from year end 1998. Proved crude oil and natural gas liquids increased by 50% or 161,000 barrels from year end 1998.

Denver-based Carbon Energy Corporation has operations in the U.S. producing regions of southeast New Mexico, Colorado's Piceance Basin, the Uinta Basin of eastern Utah, and in the Canadian provinces of Alberta and Saskatchewan. The company creates shareholder value through a combination of property and leasehold acquisitions, exploration and exploitation drilling, and field development. The company's capital expenditure program allocates dollars for exploration and development activities in its key operating regions for the balance of 2000, with the expectation that reserves and production will rise with drilling and field development success.

This release may contain certain forward-looking statements which are based on assumptions that are subject to a wide range of uncertainties due to several factors which are discussed more fully in the company's periodic filings with the Securities and Exchange Commission (SEC). Factors that could cause actual results to differ materially include, but are not limited to: general economic conditions, the market price of oil and natural gas, the risks associated with exploration, the Company's ability to find, acquire, market and develop and produce new properties, operating hazards attendant to the oil and natural gas business, uncertainties in the estimation of proved reserves and in the projection of future rates of production and timing of development expenditures, the strength and financial resources of the Company's competitors, the Company's ability to find and retain skilled personnel, climatic conditions, labor relations, availability and cost of material and equipment, environmental risks, the results of financing efforts and regulatory developments.