Castleguard Energy Reports Second Quarter Results.

Energy Editors/Business Editors

DALLAS--(BUSINESS WIRE)--Aug. 20, 2003

Dallas-based Castleguard Energy (OTCBB:MOAT) reported earnings for the second quarter ended June 30, 2003, of $26,922 ($0.00 per share) compared to earnings of $30,311 ($0.00 per share) for the second quarter of 2002.

Significantly higher commodity prices and stringent cost controls largely offset a significant decline in natural gas production during the quarter resulting in an 11% decline in net income.

Net income for the six months ended June 30, 2003, was $87,150 ($0.01 per share), up from $43,795 ($0.00 per share) last year as the result of higher prices for natural gas and 84% higher oil production. Higher natural gas prices and lower depreciation, depletion and amortization were responsible for improved net income in spite of a 70% decline in natural gas production.

A portion of the decline in natural gas production is a result of well workovers to cure mechanical problems. Although workovers were successful, the level of natural gas production is currently less than formerly experienced.

"We are optimistic that commodity prices will continue at the higher levels of the second quarter," Scott Heape, Castleguard chairman, said. "While we continue with our long-range program to improve production of our existing reserves, we have committed to participate in a new natural gas well in Minden, Louisiana."

A unitization dispute has resulted in a past production reduction for Castleguard and all working interest owners related to the Hudson Reservoir A Sand of the Youngblood 21-1D well in the Minden Field, Webster Parish, Louisiana. This reduction requires Castleguard to pay to other working interest owners a portion of revenue received attributable to the Hudson A sand from first production and will require those working interest owners to pay to Castleguard an amount for their additional share of well costs. Based on preliminary data from the operator, Castleguard estimates that it will sustain a charge to pretax earnings of from $150,000 to $175,000 and will receive approximately $75,000 for well-cost reimbursements. Castleguard expects to record the appropriate charge less a related tax benefit in the third quarter 2003.

Castleguard Energy holds working interests in properties located in Louisiana and Alabama. Castleguard focuses on development projects, joint working relationships and non-operated properties.

This report includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Although Castleguard believes that its expectations are based on reasonable assumptions, it can give no assurance that its goals will be achieved. Important factors that could cause actual results to differ materially from those in the forward-looking statements include political developments in foreign countries, federal and state regulatory developments, the timing and extent of changes in commodity prices, the timing and extent of success in drilling, discovering, developing and producing or acquiring oil and gas reserves, and conditions of the capital and equity markets during the periods covered by the forward-looking statements. Castleguard's periodic reports filed with the Securities and Exchange Commission include a discussion of important factors that could cause actual results to differ materially from those indicated in forward-looking statements.

                          CASTLEGUARD ENERGY
                         FINANCIAL & OPERATING
                              HIGHLIGHTS
                      Three Months and Six Months
                             Ended June 30
                              (unaudited)

                                    Three Months        Six Months
                               -------------------  ------------------
                                 2003       2002      2003      2002
                              ---------  --------- --------- ---------
INCOME STATEMENT DATA

  Oil and gas revenue          $118,586   $185,912  $309,375  $355,337
                              ---------  --------- --------- ---------

  Lease operating expense and
   taxes                         22,626     31,315    45,188    60,639
  Depreciation, depletion and
   amortization                  18,991     57,759    47,144   118,656
  General and administrative     31,099     47,183    76,367    94,566
                              ---------  --------- --------- ---------
                                 72,716    136,257   168,669   273,861
                              ---------  --------- --------- ---------

  Income from operations         45,870     49,655   140,706    81,476

  Interest and financing costs    6,448      6,124    14,056    18,681
                              ---------  --------- --------- ---------

  Income before income taxes     39,422     43,531   126,650    62,795

  Income taxes                   12,500     13,220    39,500    19,000
                              ---------  --------- --------- ---------

  Net income                    $26,922    $30,311   $87,150   $43,795
                              =========  ========= ========= =========

  Basic earnings per share        $0.00      $0.00     $0.01     $0.00

  Weighted average shares
   outstanding
   (Thousands)                   17,365     17,285    17,365    17,223


SALES VOLUMES

  Natural gas (Mcf)              16,965     63,118    38,945   129,786
  Crude oil (Bbls)                  905        564     2,195     1,192


AVERAGE SALES PRICE

  Natural gas (per Mcf)           $5.51      $2.73     $6.22     $2.54
  Crude oil (per Bbl)            $27.21     $23.44    $30.09    $21.39