Crimson Exploration Inc. Announces Second Quarter 2007 Financial Results and Operational Update.

HOUSTON -- Crimson Exploration Inc. (OTCBB:CXPO) today announced financial results for the second quarter 2007 and an operational update.

Highlights

* Acquisition in May 2007 of 95 Bcfe of South Texas and upper Gulf Coast onshore properties ("STGC Properties") from EXCO Resources, Inc. for approximately $250.0 million

* Commencement of production from the Rodessa formation of our Madisonville Field in June 2007

* Increase in average daily production from 7,000 mcfed in 2Q06 to current daily rate of approximately 48,000 mcfed; five fold revenue increase compared to 2Q06

* Commencement of non-operated drilling program in the South Texas Lobo trend

* Acquired 12.5% WI in approximately 3,000 gross acres to date in the Fort Worth Barnett Shale play in Johnson and Tarrant Counties, Texas; initial well drilled to total depth, awaiting completion and frac.

Summary Financial Results

Revenues for the second quarter 2007 were $26.7 million compared to $5.2 million in the prior year quarter, an increase due primarily to the acquisition of the STGC Properties in May 2007. For the first six months of 2007, revenues were $31.2 million compared to $10.3 million for the first six months of 2006, due to the higher overall production impact from the acquisition of the STGC Properties in May 2007.

Production for the second quarter 2007 was 3,171,804 mcfe of natural gas equivalents, or 34,855 mcfe per day, compared with production of 636,968 mcfe, or 7,000 per mcfe per day, in the second quarter 2006. Production for the first six months 2007 was 3,714,622 mcfe of natural gas equivalents, or 20,523 mcfe per day, compared with production of 1,229,650 mcfe, or 6,794 mcfe per day, in the first six months 2006.

Average realized prices in the second quarter 2007 (including the effects of realized gains/losses on our commodity price hedges) were $62.66, $7.95 and $8.39 per barrel, mcf and mcfe, respectively. For the second quarter 2006, average realized prices were $60.48, $6.61 and $8.09 per barrel, mcf and mcfe, respectively. Average realized prices for the first six months 2007 were $61.97, $7.86 and $8.38 per barrel, mcf and mcfe, respectively. For the first six months 2006, average realized prices were $64.23, $7.14 and $8.35 per barrel, mcf and mcfe, respectively.

Total Operating Expenses for the second quarter 2007 were $16.8 million compared to $4.8 million in the second quarter 2006. Of the $12.0 million increase in total operating expenses, field operating expenses were up approximately $3.5 million primarily due to the effect of the acquisition of the STGC Properties. Depreciation, depletion and amortization increased by $7.3 million, primarily due to the addition of the STGC Properties. General and administrative costs increased by $0.5 million. Exploration expense was $0.5 million in the second quarter 2007, compared to $47,000 in the second quarter 2006. For the first six months 2007, total operating expenses were $21.9 million compared to $8.9 million in the first six months 2006. Of the $12.9 million increase in total operating expenses, field operating expenses were up approximately $3.7 million, primarily due to the effect of the acquisition of the STGC Properties. Depreciation, depletion and amortization increased by $7.3 million, primarily due to the addition of the STGC Properties.

Other Income (Expense) was a net negative $3.0 million for the second quarter 2007 compared to a net positive of $69,000 in the second quarter 2006. This change is primarily due to interest expense associated with our outstanding debt from the acquisition of the STGC Properties, offset by the change in the mark-to-market valuation on our derivative instruments.

Cash flow from operations for the first six months 2007, exclusive of changes in working capital, was $17.1 million, a $12.4 million increase over the $4.7 million reported for the first six months 2006.

Net income for the second quarter 2007 was $4.3 million compared to $0.2 million for the second quarter 2006. For the second quarter and year-to-date 2007, the changes period over period, net of taxes, were as follows:

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Selected Financial and Operating Data

The following table reflects certain comparative financial and operating data for the three and six month periods ended June 30, 2007 and 2006:

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Non-GAAP Financial Measures

Crimson also presents net cash flow from operations, exclusive of working capital items, which consists of net cash provided by operating activities plus the period change in accounts receivable, other current assets and accounts payable and accrued expenses. Management uses this measure to assess the company's ability to generate cash to fund exploration and development activities. Management interprets trends in this measure in a similar manner as trends in cash flow and liquidity. Net cash flows from operations, exclusive of working capital items should not be considered as an alternative to net cash provided by operational activities as defined by GAAP. The following is a reconciliation of net cash provided by operating activities to net cash flow from operations, exclusive of working capital items:

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Operational Update

Production

Crimson produced approximately 3,172,000 mcfe of natural gas equivalents, or 34,855 mcfe per day, during the second quarter 2007 compared to approximately 637,000 mcfe, or 7,000 mcfe per day, during the second quarter 2006. For the first six months 2007, Crimson produced approximately 3,715,000 mcfe of natural gas equivalents, or 20,523 mcfe per day compared to approximately 1,230,000 mcfe, or 6,794 mcfe per day, in the first six months 2006. As of August 9, 2007, we were producing approximately 48,000 mcfe per day.

The increase in production is primarily due to the impact of the acquisition of the STGC Properties on May 8, 2007. As previously disclosed, production from the recent drilling success on our Madisonville Rodessa project commenced in late June 2007.

Capital Expenditure Programs

General

Capital expenditures for the six months of 2007 were $270.5 million, including $250.9 million related to the acquisition of the STGC Properties and $19.6 million in drilling and development expenditures related primarily to work on our Rodessa project in the Madisonville field as noted below.

Madisonville Area

During the first quarter 2007 we successfully completed the Fuhlberg #1 well (78% WI) in the Rodessa formation in our Madisonville Field in Madison County, Texas. We commenced production from the Fuhlberg #1 well in June 2007. The well which initially tested at a gross rate of approximately 9,000 mcfe per day through two sets of perforations, is currently producing at a curtailed rate of approximately 3,300 mcfe per day due to limited plant capacity. Mechanical problems experienced during the completion of the Johnston #2 well could not be rectified economically; therefore, we recently decided to sidetrack the well. It is estimated that it will take 90 days to sidetrack and recomplete the well.

The acid gas processing plant in this field is being expanded by its owner from a current capacity of approximately 17,000 mcf per day to approximately 70,000 mcf per day. The expansion, previously expected to be completed in December 2006, is now projected to be completed and fully operational by the end of the third quarter 2007.

Fort Worth Barnett Shale, Johnson and Tarrant Counties, Texas

During the second quarter 2007, we continued to acquire acreage related to our 12.5% non-operated working interest in the prolific Fort Worth Barnett Shale play in Johnson and Tarrant Counties. We and our partners have acquired approximately 3,000 gross acres to date and will continue to pursue opportunities to accumulate additional acreage in the area throughout the year. The initial well in the program has been drilled to total depth and is currently awaiting completion. The second and third wells in the program are currently drilling. We expect to participate in seven wells in the program in 2007.

South Texas

We have participated in three wells within the Lobo/Perdido Trend of South Texas. The Gonzales #1 (CXP 15% WI) was drilled and casing has been run to evaluate the shallow objective. The deeper Lobo Sands were not commercial. The Ramirez #1 (CXP 30% WI) was drilled and 100' of probable net gas was found in multiple zones. We expect that the well will be completed during August 2007. The Garcia #1 (CXP 25% WI) was drilled and 60' of probable net gas was found in multiple zones. We expect that the well will be completed during September 2007. The Vielmann #1 (CXP 20% WI) is currently drilling and should reach total depth during September 2007. We expect to participate in two additional wells in the program in 2007.

We also have a 75% working interest in the Cabernet and Merlot prospects in Matagorda County, Texas. We own approximately 900 gross acres covering both prospects.

West Cameron 432

We participated for a 15% WI in a new field discovery with the drilling of the West Cameron 432 #1. The well encountered 200' of apparent net gas in multiple zones and is currently being completed. Upon completion, we expect that offshore facilities and a pipeline will be installed with initial production to commence in Q1'08.

Sabine Lake 

We participated for a 15% non-operated WI in a new field discovery with the drilling of the SL 19095 #1 in Cameron Parish, Louisiana. The well encountered 70' of hydrocarbons and is currently being completed and tested. That well is expected to commence production in Q4'07.

Liberty County, Texas 

Crimson has participated in three wells in Liberty County, Texas as a result of the acquisition of the STGC Properties. The KMG #3 (CXP 9.7% WI) was drilled and completed in the Cook Mountain formation and commenced production in July at an approximate rate of 3 Mmcfpd and 1,000 Bopd. The Kate Dishman #7 (CXP 7.8% WI) was drilled and completed in the EY-1 sand and is awaiting production facilities. The Barrett #2 (CXP 20%WI) was drilled to the Wilcox 12,700' sand where Crimson elected not to participate in a completion attempt.

This press release includes "forward-looking statements" as defined by the Securities and Exchange Commission ("SEC"). Such statements include those concerning Crimson's strategic plans, expectations and objectives for future operations. All statements included in this press release that address activities, events or developments that Crimson expects, believes or anticipates will or may occur in the future are forward-looking statements. These statements are based on certain assumptions Crimson made based on its experience and perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate under the circumstances. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond Crimson's control. Statements regarding future production, revenue and cash flow are subject to all of the risks and uncertainties normally incident to the exploration for and development and production of oil and gas. These risks include, but are not limited to, commodity price changes, inflation or lack of availability of goods and services, environmental risks, drilling risks and regulatory changes and the potential lack of capital resources. Investors are cautioned that any such statements are not guarantees of future performance and that actual results or developments may differ materially from those projected in the forward-looking statements. Please refer to our filings with the SEC, including our Form 10-K for the year ended December 31, 2006 for a further discussion of these risks.