GELLC and WSERC Reach Agreement in Leon Lake Well

April 2, 2004

DENVER, CO – Gunnison Energy LLC (“GELLC”), working in conjunction with the Western Slope Environmental Resource Council (“WSERC”), has agreed to refrain from re-completing the Leon Lake No. 2 natural gas well into the coal layers of the Mesaverde Formation.

Two years ago, the U.S. Forest Service (“USFS”) and the U.S. Bureau of Land Management (“BLM”) approved a sundry notice allowing GELLC to re-complete an existing gas well called Leon Lake No. 2, east of Highway 65 in Delta County. WSERC along with the High Country Citizens Alliance and the Western Colorado Congress filed suit against the USFS and the BLM in an attempt to block re-completion of the well into the coal layer. To settle this dispute, GELLC agreed that for a period of at least nine months, it would not seek to explore for coal bed methane gas at the Leon Lake No. 2 well. GELLC also agreed to advise the USFS and BLM that if required, GELLC would prepare and fund an environmental assessment if the company sought to drill into the coal seams. The environmental groups agreed that GELLC’s concessions were limited to the proposed re-completion of the Leon Lake well and would not bind the Company with regard to future actions. The agreement allows GELLC to directionally drill from the existing Leon Lakes No. 2 well into the sand layers at Leon Lakes.

“We saw this agreement as a means to work more constructively with WSERC,” said GELLC Executive Vice President Brad Robinson.

The U.S.F.S. and B.L.M. conducted an environmental assessment on eight natural gas wells on GELLC’s federal leases in Delta and Gunnison County. Two of those wells are near the Leon Lake No. 2 well. WSERC has appealed the decision to an administrative law judge.