Pure Cycle Corporation Acquires Approximately 60,000 Acre-Feet of Senior Renewable Surface Water.

THORNTON, Colo. -- Pure Cycle Corporation (NASDAQ: PCYO) is pleased to announce the acquisition of a large new surface water supply totaling approximately 60,000 acre-feet of senior 1883 water rights in the Arkansas River Valley through the acquisition of over 21,300 shares of the Fort Lyon Canal Company. As consideration for the water rights, and approximately 17,500 acres of farm land in Bent, Otero and Prowers counties, the Company will issue the seller 2,950,000 shares of restricted common stock and grant the sellers the right to receive 10% of the gross proceeds or the equivalent thereof from the sale of 40,000 water taps.

This acquisition, combined with the Company's existing portfolio, will allow Pure Cycle to supply water service to over 180,000 single family equivalents ("SFE"), up from the approximate 80,000 SFEs the Company could serve prior to this acquisition. "This acquisition is an ideal fit for both parties," commented Mark W. Harding, President of Pure Cycle. "The addition of a large amount of senior surface water to our aggregate portfolio enhances Pure Cycle's service capabilities and increases our capacity to supply water to an additional 100,000 SFEs. Further, the structure of this transaction aligns the interests of the sellers with that of Pure Cycle, in a way which will greatly benefit all our stockholders," continued Mr. Harding.

"This acquisition represents the culmination of many months of negotiations between the parties following many years of hard work by the sellers to assemble this valuable portfolio of water. Pure Cycle looks forward to working with the agricultural community and the Fort Lyon Canal Company to continue to enhance the value of the water rights in the Fort Lyons Canal Company. Additionally, Pure Cycle will work with the newly created Colorado Inter Basin Compact Committee (the "IBCC"), in cooperation with the Colorado Department of Natural Resources, water providers from across the state, environmental and recreational interests to find creative solutions to maintaining farm operations through improved agricultural efficiencies, annual crop rotations and other innovative ideas to allow a portion of the water to be used in metropolitan areas, while continuing to maintain or enhance the local farming interests," Mr. Harding concluded.

The Fort Lyon Canal Company diverts water from the Arkansas River near La Junta, Colorado, and maintains over 100 miles of canals, irrigating 93,000 acres of farm land. The Fort Lyon Canal Company water rights dates back to the early 1880s and its two principal reservoirs, Horse Creek Reservoir and Adobe Creek Reservoir, have over 100,000 acre-feet of decreed storage rights. Pure Cycle's acquisition of over 21,000 shares represent approximately 23% of the outstanding shares in the Canal.

Pure Cycle's water and wastewater activities focus on the sensitivities of the regions' semi-arid climate. Pure Cycle develops its water resources with an emphasis on good environmental stewardship, and conservation of this limited and valuable natural resource. As an example, Pure Cycle was a leading proponent in assisting the drafting and adoption by the Water Quality Control Commission of the Reclaimed Water Quality Control Regulation 84, which governs the use of treated effluent for residential irrigation uses. All of Pure Cycle's water systems employ the use of treated effluent water for irrigation demands through a duel distribution water system thus protecting and reusing our valuable water supplies to their maximum extent.

The Company will hold a web-cast and conference call, hosted by Mr. Harding on May 10, 2006, to discuss this acquisition and its positive impact on the Company, its stockholders, the Denver region and the Arkansas River Valley.

CALL INFORMATION
----------------
    What:           Arkansas River Water Acquisition

    When:           2:30 p.m. (Mountain) on May 10, 2006

    To listen:      Click on the link posted on the Company's website:
                    www.purecyclewater.com
                    Log-on 5 minutes early in case downloads are
                    required.

    To Participate: Dial toll-free: 877-407-9210
                    also log-on to our website to view the slides.

REPLAY INFORMATION
------------------
    The call will be available for replay until 9:59 p.m. Mountain on
May 19, 2006:

    Toll-free:                  877-660-6853
    Playback account number:    286
    Playback conference ID:     202799

A replay will be available on the Company's website through July 1, 2006.

For questions, please contact Investor Relations at [e-mail].