Headwaters Incorporated and CONSOL Energy Form Alliance to Explore Coal-to-Liquids Developments.

SOUTH JORDAN, Utah -- Headwaters Incorporated (NYSE:HW) today announced that it has formed an alliance with CONSOL Energy, Inc. (NYSE:CNX) to investigate development of coal-based liquid fuels refineries utilizing CONSOL Energy's eastern and western coal reserves.

Under the agreement, Headwaters and CONSOL Energy will work together to perform preliminary engineering, environmental and marketing activities related to potential development of several CONSOL Energy sites. These activities would support the construction of one or more coal-based facilities to produce ultra clean liquid transportation fuels such as diesel, gasoline, LPG, and jet fuel. The facilities will be carbon dioxide capture-ready and may produce certain petrochemical feedstocks.

"Coal-to-liquids technologies represent an exciting new market for the American coal industry," said Brett Harvey, President and Chief Executive Officer of CONSOL Energy. "Using our most abundant domestic energy resource to reduce dependence on foreign oil can significantly increase our nation's energy security. CONSOL Energy is proud to work with Headwaters to make that important vision become a reality."

"CONSOL has long been a world leader in coal production and energy technology development," said Kirk Benson, Chairman and Chief Executive Officer of Headwaters. "We are pleased to combine our decades of coal-to-liquids experience with CONSOL Energy's extensive coal reserve base to plan projects that will select the most appropriate technologies for the coal types and market opportunities presented by each site."

With 4.3 billion tons of proven and recoverable coal reserves in the United States, CONSOL Energy is the largest producer of high-BTU bituminous coal in the nation. The company operates 15 mining complexes in six states.

Headwaters has deep roots in coal-to-liquids technologies. The company's proprietary Fischer-Tropsch catalyst can be used in an indirect coal liquefaction plant to convert coal-derived syngas into ultra clean diesel and other fuels. The company is also the owner of direct coal liquefaction technology that is currently being deployed or studied for deployment in China, India and the Philippines. Headwaters is also active in the traditional petroleum refining industry as it deploys its proprietary HCAT(TM) heavy oil upgrading technology.

About CONSOL Energy Inc.

CONSOL Energy Inc., a high-Btu bituminous coal and coal bed methane company, is a member of the Standard & Poor's 500 Equity Index and has annual revenues of $3.7 billion. It has 15 bituminous coal mining complexes in six states and reports proven and probable coal reserves of 4.3 billion tons. In addition, the company is a majority shareholder in one of the largest U.S. producers of coalbed methane gas, CNX Gas Corporation. CONSOL Energy was named one of America's most admired companies in 2005 Fortune magazine. It received the U.S. Department of the Interior's Office of Surface Mining National Award for Excellence in Surface Mining for the company's innovative reclamation practices in 2002, 2003 and 2004. Also in 2003, the company was listed in Information Week magazine's "Information Week 500" list for its information technology operations. In 2002, the company received a U.S. Environmental Protection Agency Climate Protection Award. Additional information about the company can be found at its web site: www.consolenergy.com.

About Headwaters Incorporated

Headwaters Incorporated is a world leader in creating value through innovative advancements in the utilization of natural resources. Headwaters is a diversified growth company providing products, technologies and services to the energy, construction and home improvement industries. Through its alternative energy, coal combustion products, and building materials businesses, the Company earns a growing revenue stream that provides the capital needed to expand and acquire synergistic new business opportunities

Forward-Looking Statements

Certain statements contained in this report are forward-looking statements within the meaning of federal securities laws and Headwaters intends that such forward-looking statements be subject to the safe-harbor created thereby. Forward-looking statements include Headwaters' expectations as to the managing and marketing of coal combustion products, the production and marketing of building materials and products, the licensing of technology and chemical sales to alternative fuel facilities, the receipt of product sales, license fees and royalty revenues, which are subject to tax credit phase out risks, the development, commercialization, and financing of new technologies and other strategic business opportunities and acquisitions, and other information about Headwaters. Such statements that are not purely historical by nature, including those statements regarding Headwaters' future business plans, the operation of facilities, the availability of tax credits in an environment of high oil prices and potential tax credit phase out, the availability of feedstocks, and the marketability of the coal combustion products, building products, and synthetic fuel, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 regarding future events and our future results that are based on current expectations, estimates, forecasts, and projections about the industries in which we operate and the beliefs and assumptions of our management. Actual results may vary materially from such expectations. Words such as "expects," "anticipates," "targets," "goals," "projects," "believes," "seeks," "estimates," variations of such words, and similar expressions are intended to help identify such forward-looking statements. Any statements that refer to projections of our future financial performance, our anticipated growth and trends in our businesses, and other characterizations of future events or circumstances, are forward-looking. In addition to matters affecting the coal combustion product, alternative fuel, and building products industries or the economy generally, factors which could cause actual results to differ from expectations stated in forward-looking statements include, among others, the factors described in the captions entitled "Forward-looking Statements" and "Risk Factors" in Item 7 in Headwaters' Annual Report on Form 10-K for the fiscal year ended September 30, 2006, Quarterly Reports on Form 10-Q, and other periodic filings and prospectuses.

Although Headwaters believes that its expectations are based on reasonable assumptions within the bounds of its knowledge of its business and operations, there can be no assurance that our results of operations will not be adversely affected by such factors. Unless legally required, we undertake no obligation to revise or update any forward-looking statements for any reason. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. Our internet address is www.headwaters.com. There we make available, free of charge, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to those reports, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. Our reports can be accessed through the investor relations section of our web site.