Palo Duro Energy Inc.
TSX VENTURE : PDE

Palo Duro Energy Inc.

February 29, 2008 20:11 ET

Palo Duro Basin Project Update

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Feb. 29, 2008) -

NOT FOR DISSEMINATION IN THE UNITED STATES OR THROUGH US NEWSWIRE SERVICES

Mr. Mark Bush, President of Palo Duro Energy Inc. ("Palo Duro" or the "Company") (TSX VENTURE:PDE), provided the following update on recent activities in the Palo Duro Basin projects. The Company has been actively participating with its joint venture partner Bankers Petroleum (US) Inc. ("Bankers") on the development of the Palo Duro Basin. Palo Duro Energy has a 27% interest with Bankers Petroleum in all exploratory activities in the basin and Bankers has been the most active operator in the Bend Shale play.

Bankers as operator, has drilled and completed testing of the Cogdell #64-1 horizontal well. The Cogdell #64-1 horizontal well, targeting the Atoka sands, tested gas but is deemed non commercial. Further completion designs are underway to exploit the Bend Shale potential reservoirs. A date for this project will be announced as soon as engineering is complete.

Bankers as operator, has drilled and completed testing of the Black #4-1 vertical well in the Atoka Sands and is designing a completion for the Bend shale in this well. Palo Duro is looking at designing a horizontal program utilizing the Black #4-1 wellbore to test the Bend Shale. A date for this project will be announced as soon as engineering is complete.

Palo Duro Energy Inc. is an oil and gas exploration and development company with a fully equipped and staffed operations office in Houston, Texas and corporate offices in Vancouver, British Columbia. The Company holds a 27% interest in over 400,000 net acres of prospective oil and gas leases in the Palo Duro Basin in northwest Texas.

Palo Duro Energy Inc.

Mark A. Bush, President & CEO

Certain statements in this press release constitute forward-looking statements under applicable securities legislation. Such statements are generally identifiable by the terminology used, such as "anticipate", "believe", "intend", "expect", "plan", "estimate", "budget", "outlook", "may", "will", "should", "could" or other similar wording. Forward-looking information includes, but is not limited to, reference to business strategy and goals, future capital and other expenditures, reserves and resources estimates, drilling plans, construction and repair activities, the submission of development plans, seismic activity, production levels and the sources of growth thereof, project development schedules and results, results of exploration activities and dates by which certain areas may be developed or may come on-stream, royalties payable, financing and capital activities, contingent liabilities, and environmental matters. By its very nature, such forward-looking information requires Palo Duro to make assumptions that may not materialize or that may not be accurate. This forward-looking information is subject to known and unknown risks and uncertainties and other factors, which may cause actual results, levels of activity and achievements to differ materially from those expressed or implied by such information.

The forward-looking information contained in this press release is made as of the date of this press release and, except as required by applicable law, Palo Duro does not undertake any obligation to update publicly or to revise any of the included forward-looking information, whether as a result of new information, future events or otherwise. The forward-looking information contained in this press release is expressly qualified by this cautionary statement.

This news release shall not constitute an offer to sell or the solicitation of an offer to buy the securities in any jurisdiction. The securities offered have not and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws and many not be offered or sold in the United States except in certain transactions exempt from the registration requirements of the U.S. Securities Act and applicable states securities laws.

Shares Outstanding: 161,091,844

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

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