Castle Energy Corporation Sued by ChevronTexaco.

Business Editors

RADNOR, Pa.--(BUSINESS WIRE)--Aug. 21, 2002

Castle Energy Corporation(1) (Nasdaq:CECX) (the "Company") announced that it has learned that certain subsidiaries of ChevronTexaco Corporation ("ChevronTexaco") have filed suit against the Company, two subsidiaries of the Company and three unrelated parties alleging environmental and contractual claims arising from the Indian Refinery, a now dismantled refinery located in Lawrenceville, Illinois ("Indian Refinery"). The ChevronTexaco lawsuit claims that the Company is contractually obligated to indemnify and defend them against all liability and costs incurred as a result of environmental contamination at and around the Indian Refinery, even if created by ChevronTexaco, as well as the related lawsuits, claims and administrative actions initiated by the EPA. The suit also seeks costs, damages and declaratory relief against the Company under the Federal Comprehensive Environmental Response Compensation and Liability Act ("CERCLA"), the Oil Pollution Act of 1990 ("OPA") and the Solid Waste Disposal Act ("RCRA").

The Company continues to believe that ChevronTexaco's underlying claims are utterly without merit, and that the Company has numerous defenses against them. Nonetheless, this litigation will most probably cause the Company to incur substantial legal fees and delay consideration of liquidation by the Company, and if decided adversely to the Company, could present the possibility of an award in excess of the Company's financial capability.

These claims, discussed at length in the Company's annual and quarterly reports, were previously asserted by Texaco, Inc. ("Texaco" - predecessor to ChevronTexaco), which owned and operated the Indian Refinery over 50 years. Following acquisition of the Indian Refinery from Texaco by a third party in 1988, a subsidiary of the Company acquired the refinery in 1989. Indian Refining I Limited Partnership, a subsidiary of the Company, owned and operated the refinery from 1990 to 1995 when it was sold to a third party and subsequently dismantled.

The Company has recently sold all of its domestic oil and gas properties. It continues to hold a fifty percent (50%) interest in two drilling concessions in Romania and a forty-five percent (45%) membership interest in Networked Energy LLC, a private company engaged in the operation of energy facilities that supply power, heating and cooling services directly to retail customers.

Forward-looking statements in this announcement are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that all forward-looking statements involve risks and uncertainty, including - without limitation, the costs of exploring and developing new oil and natural gas reserves, the price for which such reserves can be sold, environmental concerns effecting the drilling of oil and natural gas wells, as well as general market conditions, competition and pricing. Please refer to the Company's Securities and Exchange Commission filings for additional information.

(1)Castle Energy Corporation is not affiliated with Castle Oil Corporation.