Castle Energy announces status of matters relating to Metallgesellschaft.

RADNOR, Pa.--(BUSINESS WIRE)--April 3, 1995--Castle Energy(a) (NASDAQ/NNM:CECX) (the "Company") announced the following in response to reports that Metallgesellschaft Corp. and its affiliates will cease to provide working capital financing to the Company's refining subsidiaries, Indian Refining Limited Partnership ("IRLP") and Powerine Oil Co. ("POC"):

1. Advances under the financing were due as of March 31, 1995.

Metallgesellschaft has stated that it will not continue financing

under the facilities beyond that date and has sued for recovery of

the claimed outstanding balances.

2. IRLP and POC have and intend to continue to take steps to

reduce their respective inventories and thereby reduce outstanding

balances under the working capital facilities. The Company has

provided Metallgesellschaft with business plans in this regard, and

expects to be able to fully repay MG within the next 30 days,

assuming a reasonable level of cooperation from MG. Outstanding

balances were substantially reduced during the month of March. The

value of the liquid collateral assets of IRLP and POC is

substantially in excess of the outstanding balances of the loans.

3. Metallgesellschaft has committed material defaults with

respect to certain obligations owing to the Castle Energy group of

companies, including but not limited to defaults under the prior

offtake arrangement respecting the Powerine facility. Further,

Shell Canada, a supplier of certain condensate feedstock to the

Indian facility under 10-year agreement, has filed litigation to

terminate that agreement based on an alleged failure of

Metallgesellschaft to provide "adequate assurances" of its

performance obligations under that agreement (Metallgesellschaft has

agreed to act as "alternate purchaser" of the condensate). The

Company shall pursue its legal remedies with respect to these

matters. MG's defaults, and its actions with respect to the Shell

Canada supply agreement, have adversely affected the Company's

ability to repay the indebtedness due to MG, and the Company intends

to take all appropriate actions to protect its interest with respect

to these matters including legal remedies. In this regard and based

on the Metallgesellschaft defaults, the Company has recently taken

steps to terminate certain arrangements entered into last October

which were supposedly designed by Metallgesellschaft and its lending

creditors to provide protective mechanisms for Metallgesellschaft as

a secured creditor of IRLP and POC.

4. IRLP and POC have taken steps to materially reduce their

operating costs, including personnel and wage/salary reductions and

operating run cuts, in order to reduce cash and financial

requirements. These steps should enable IRLP and POC to internally

finance limited operations with the intent to sell the refining

operations in an orderly manner. IRLP and POC are in the

process of conducting active negotiations concerning the sale of

both facilities. IRLP and POC are also in the process of attempting

to structure interim arrangements and expect favorable results in

this regard over the next several weeks.

The Company owns two refining subsidiaries, IRLP, which owns the 86,000 B/D Indian Refinery in Lawrenceville, Ill. and POC which owns the 49,500 B/D Powerine refinery in Santa Fe Springs, Calif.

The Company, through various subsidiaries and affiliates, also owns a gas sales contract with Lone Star Gas Co., a 77-mile interstate pipeline in Rusk County, Texas and related gas contracts and interests, and operates approximately 450 oil and gas wells nationwide. -0- (a) Castle Energy Corp. is not affiliated with Castle Oil Corp.

CONTACT: Castle Energy Corp., Radnor

Joseph L. Castle II, 610/995-9400