SOURCE: ReoStar Energy Corporation

January 29, 2008 08:40 ET

ReoStar Energy Provides 2007 Year-End Operations Review

FORT WORTH, TX--(Marketwire - January 29, 2008) - ReoStar Energy Corp. (OTCBB: REOS) today provided a year-end review of its 2007 operations.

Mark Zouvas, ReoStar Energy CEO, commented, "2007 was a critical year for ReoStar, we achieved many key milestones and accomplishments over the past year which we believe established a foothold for the Company as a viable and growth-orientated, independent oil and gas company. We successfully went public and raised nearly $12 million of capital in the process, which enabled us to accelerate our drilling operations. We also divested our pipeline interest for a significant profit while retaining a favorable contract for future hook-up and gathering fees and practices. In addition, we also commenced an EOR project on our Corsicana acreage, which we plan to expand in 2008. Our transition from a developmental E&P operation to a viable, fundamentally sound development and re-development company laid the ground work for establishing ReoStar as a value oriented growth opportunity, while exposing the company to new prospects for future development."

Operations Milestones:

--  Company went public in February, 2007 forming ReoStar Energy Corp.
    (REOS) and secured approximately $12 million through a private placement
    for working capital and acquisitions.
--  Divested pipeline interest for approximately $15 million, while
    retaining favorable right of passage for the sale of current and future
    production.
--  Increased our average working interest in 59 Barnett Shale wells from
    30% to 42% as a result of increased participation in new wells and the buy-
    back of working interests from investors in older wells.
--  The Company retained Forrest Garb and Associates (FGA), an independent
    petroleum engineering firm, to perform a reserve review analysis and
    develop an initial report, which showed an NPV 10 value of nearly $180
    million proven reserves as of March 31st, 2007. An interim review from the
    initial report issued in March of 2007 was performed in December 2007 and
    the results showed that the Company's discounted present value had
    increased almost four times from the March 2007 valuation, on a well by
    well basis in the Barnett Shale.
--  Acquired Wilson Energy Inc. adding additional production and lease-
    hold acreage in East Texas and Louisiana.
--  Appointed key personnel capital to expand the Corsicana field
    operations with the appointment of Vern Wilson as Vice President of
    Corsicana/EOR operations, along with the addition of Joe Bill Bennett as
    Chief Operating Officer of ReoStar, who is also President of Rife Energy
    Operating, our operating affiliate that oversees all field operations and
    development for Barnett Shale Production.
--  Expanded Barnett acreage with the acquisition of 710 acres that
    Company considers "bolt-on acreage" due to its proximity to our current
    Barnett Shale operations. This acquisition allows us to take advantage of
    certain economies created by our existing field operations and production
    equipment.
    

Outlook for 2008

--  New strategic acquisitions and expansion of our operations in the
    northern Barnett Shale region.
--  Expansion of Corsicana pilot operations to drill 13 new EOR wells
    summer 2008.
--  Drill three deeper test wells on our Corsicana property to ascertain
    the viability of reservoir production beneath our EOR targeted zone.
--  Secure debt financing for new strategic acquisitions and to increase
    the working interest retention in wells we drill in the Barnett Shale.
    Further, additional capital will help increase the efficiencies of our
    operations by acquiring field equipment and other assets that will
    ultimately reduce overall costs.
--  Establish significant proven reserves in high profile untapped
    properties through aggressive acquisitions.
    

Mr. Zouvas concluded by stating, "Management of the Company was attentive throughout 2007 in managing cost while focusing on expanding operations. The company achieved all of its key objectives while exceeding its internal production and reserve projections set in the previous year. We have emerged on the public market with the resources and expertise necessary to excel over the coming year and beyond. We remain focused on driving shareholder value by delivering solid financial performance through the management of costs and selective acquisitions which will further enhance our value as a company. Our focus on mitigating production and development risk coupled with efficient operational control positions ReoStar as a fundamentally solid, growth oriented E & P Company with enormous upside potential in the years to come."

About ReoStar Energy Corporation

ReoStar Energy Corporation (OTCBB: REOS), headquartered in Fort Worth, Texas, is an oil and gas company engaged in the acquisition, development and production of natural gas and oil properties with operations primarily focused on developmental resource plays and enhanced oil recovery projects. The Company has vertically integrated its assets to remove potential obstacles to growth, which will enable it to develop and produce assets without the risk, cost and time involved in traditional exploration.

The Company's strategy is to acquire an attractive portfolio of oil reserves for a low cost, which have a high ratio of possible, probable or proven undeveloped reserves. By converting these undeveloped reserves into proved producing reserves, the Company will continue to realize an increase in the overall value at low risk and cost.

The Company's assets include over 17,000 acres of mineral leasehold located in Texas (Barnett & Corsicana) and Arkansas (Fayetteville). ReoStar's assemblage of E&P assets allows for appreciable, unimpeded growth into the foreseeable future.

Additional information is located on the company's website www.reostarenergy.com.

Certain statements in this news release may contain forward-looking information within the meaning of Rule 175 under the Securities Act of 1933 and Rule 3b-6 under the Securities Exchange Act of 1934, and are subject to the safe harbor created by those rules. All statements, other than statements of fact, included in this release, including, without limitation, statements regarding potential future plans and objectives of the company, are forward-looking statements that involve risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Technical complications which may arise could prevent the prompt implementation of any strategically significant plan(s) outlined above.

Reserve estimates and estimates of reserve potential or upside with respect to the acquisitions were made by our internal engineers without review by an independent petroleum engineering firm. Data used to make these estimates were furnished by the sellers and may not be as complete as that which is available for our owned properties. We believe our estimates of proved reserves comply with criteria provided under rules of the Securities and Exchange Commission.

Contact Information

  • Company Contacts:
    ReoStar Energy Corporation
    Scott Allen
    CFO
    817.989.7367

    For Investors
    Mark McPartland
    817.350.4760