NEWS RELEASE

FOR IMMEDIATE RELEASE	Contact:    John A. Alsko
	Vice President & CFO
	Web Site:  www.credopetroleum.com

CREDO REPORTS $0.61 PER SHARE FISCAL 2001 EARNINGS

DENVER, COLORADO, January 3, 2002—CREDO Petroleum Corporation (NASDAQ: CRED) today reported that higher product prices and rising production volumes resulted in record financial results for its fiscal year ended October 31, 2001. Net income from continuing operations (excluding a non-recurring litigation settlement gain last year) rose 82% to a record $2,002,000 compared to $1,102,000 last year. On a per diluted share basis, net income from continuing operations was a record $.61 compared to $.35 last year. Including the $245,000 (net of tax) non-recurring litigation settlement gain last year, net income increased 49% to $2,002,000, or $.61 per diluted share, compared to $1,347,000, or $.43 per diluted share, last year. Revenue increased 38% to a record $5,807,000 compared to $4,204,000 last year. Cash flow from operating activities (before working capital changes) rose 61% to a record $3,392,000.

RESERVES AND RESERVE ADDITIONS SET NEW RECORDS

The company replaced 236% of reserves produced during fiscal 2001, adding a record 2.1 Bcfge (billion cubic feet of gas-equivalent) to reserves. At fiscal year-end, the company’s reserve base consisted of 82% natural gas and 18% crude oil and condensate.

Total reserves rose 14% to a record 11.1 Bcfge at fiscal year-end 2001 compared to 9.7 Bcfge last year. The undiscounted value of reserves was $21,843,000 at October 31, 2001, and the discounted value (at 10%) was $13,874,000. Average wellhead prices used to calculate reserve values at October 31, 2001 fell over 30% to $2.87 per Mcf and $20.61 per barrel compared to prices of $4.33 per Mcf and $31.82 per barrel last year.

SUCCESSFUL DRILLING BOOSTS PRODUCTION VOLUMES

Production from new wells drilled during the year significantly boosted fiscal 2001 natural gas and oil production. Total production volumes rose 18% to 1,064 MMcfge (million cubic feet of gas-equivalent) in fiscal 2001. This compares with 902 MMcfge last year. Natural gas production rose 20% to 800 MMcfg compared to 668 MMcfg last year while crude oil sales rose 13% to 44,000 barrels compared to 39,000 barrels last year. Production accelerated in the second half of the year, increasing 33% over last year.

NATURAL GAS PRICES INCREASE SHARPLY

Total natural gas price realizations for fiscal 2001 rose 76% to $5.00 per Mcf compared to $2.84 last year. Hedging transactions added $.83 per Mcf to 2001 gas price realizations and reduced prior year price realizations by $.21. Net wellhead natural gas prices rose 37% to $4.17 per Mcf compared to $3.05 last year. Wellhead oil prices fell 5% to $26.45 per barrel compared to $27.88 last year.

At October 31, 2001, the company's open hedge positions totaled 580,000 Mcf covering the months of November 2001 through July 2002 at an average price of $3.39 per Mcf. This hedge represents approximately 76% of the company's estimated gas production for those months.

OPERATIONS PROGRESS ON MULTIPLE FRONTS

Capital spending increased to a record $2,688,000 for fiscal 2001 as the company deployed increased cash flows into oil and gas assets. CREDO’s growth strategy focuses on two core projects—natural gas drilling along the Anadarko Shelf of Oklahoma and application of its patented Calliope Gas Recovery System.

As previously reported, CREDO owns the exclusive right to a patented technology known as the Calliope Gas Recovery System. Calliope can achieve substantially lower flowing bottom hole pressure than conventional production methods because it does not rely on reservoir pressure to lift liquids. In many gas wells, lower bottom hole pressure translates into recovery of substantial additional gas reserves. CREDO's field applications have proven Calliope to be low risk, cost effective and repeatable over a wide range of depths (down to 18,600 feet) and applications, including the most rigorous scenario of completely dead wells. Excluding prototype applications, Calliope is currently installed on five company-owned wells, four of which were dead and scheduled to be plugged and abandoned. Combined production for those wells has ranged between 1,300 and 1,000 Mcfgd and their remaining economic lives are estimated to range from seven to 20 years. For fiscal 2001, Calliope wells contributed 21% of the company's gas production. CREDO is presently developing a comprehensive strategy and materials for marketing the technology.

During fiscal 2001, the company successfully completed nine gas wells in connection with its core drilling program along the Anadarko Shelf of Oklahoma. CREDO's interest in the wells ranged up to 60%.

The most important well drilled in fiscal 2001 was the 7,600-foot Glendena #1-5 well which tested the Morrow formation on the company’s 1,600-acre Sand Creek Prospect. The well was placed on production just before fiscal year end and, thus, did not contribute to fiscal 2001 results. The exploratory well encountered two Morrow zones totaling 31 feet which calculate productive on logs. It was completed naturally (without acid or fracture treatments) from only one of the two zones, and was tested at an absolute open flow rate of 6.3 million cubic feet of gas per day (MMcfgd). Pipeline sales commenced in late October and the well has since produced at an average daily rate of about 3.0 MMcfg, six barrels of condensate, and no water. The second zone will be developed at a future date. Based on current production rates and pressures, the company believes the well will contribute significantly to its fiscal 2002 production. CREDO is operator of the well and owns a 40% working interest. A direct offset well will be drilled in the first quarter of 2002.

In the Powder River Basin of Wyoming, CREDO participated for a 10% interest in drilling 24 coal bed methane wells. These wells have recently commenced production and are in the start up phase. CREDO owns interests in 17,000 gross (3,900 net) acres on the east side of the Powder River Basin which are prospective for coal bed methane development.

STRONG FINANCIAL CONDITION PROVIDES
SOLID FOUNDATION FOR GROWTH

At October 31, 2001, working capital was $5,791,000, up 23% from October 31, 2000 fiscal year end. Total assets were $16,470,000 including cash and short-term investments of $6,102,000. Stockholders’ equity was a record $12,843,000. The company's only long-term debt is a $456,000 exclusive license obligation that is payable over eight years.

MANAGEMENT COMMENT

James T. Huffman, CREDO's President, stated, "Record earnings and cash flow afforded us the opportunity to ramp-up our drilling which resulted in substantial increases in both production and reserves. This was particularly apparent in the second half of the year when production increased 33% over last year." Huffman further stated, "Our most important discovery well, the Glendena #1-5, did not contribute to fiscal 2001 earnings because it was placed on production at the end of the fiscal year. This well and its upcoming offsets have the potential to provide significant production volumes in 2002."

"CREDO is off to a good start at maintaining the momentum established last year. We expect fiscal 2002 to be another very good year for CREDO despite lower product prices", Huffman said.

For a more detailed discussion of current operations, refer to the company’s Form 10-QSB for the fiscal quarter ended July 31, 2001 and its upcoming Form 10-KSB for fiscal year ended October 31, 2001.

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CREDO Petroleum Corporation is a publicly traded independent energy company headquartered in Denver, Colorado. The company is engaged in the exploration for and the acquisition, development and marketing of natural gas and crude oil in the Mid-Continent and Rocky Mountain regions. The company's stock is traded on the NASDAQ System under the symbol "CRED" and is quoted daily in the "NASDAQ Small-Cap Issues" section of The Wall Street Journal.

This press release includes certain statements that may be deemed to be "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements included in this press release, other than statements of historical facts, address matters that the company reasonably expects, believes or anticipates will or may occur in the future. Such statements are subject to various assumptions, risks and uncertainties, many of which are beyond the control of the company. Investors are cautioned that any such statements are not guarantees of future performance and that actual results or developments may differ materially from those described in the forward-looking statements.

           CREDO PETROLEUM CORPORATION
           FINANCIAL HIGHLIGHTS

Condensed Operating Information	Year        Ended       October 31,         2001	Year        Ended      October 31,         2000
Revenue:
Oil and Gas Sales	$  5,163,000	$  2,971,000
Operating	456,000	417,000
Investment Income and Other	188,000	471,000
Non-Recurring Litigation Settlement	-	345,000
	5,807,000	4,204,000
Expenses:
Oil and Gas Production	1,135,000	934,000
Depreciation, Depletion and
Amortization	842,000	533,000
General and Administrative	957,000	840,000
Interest	53,000	-
	2,987,000	2,307,000
Income Before Income Taxes	2,820,000	1,897,000
Income Taxes	(818,000)	(550,000)
Net Income	$  2,002,000	$   1,347,000
Basic Income Per Share	$      .64	$      .45
Diluted Income Per Share	$      .61	$       .43

   

	October 31, 2001	October 31, 2000
Condensed Balance Sheet Information
Cash and Short-Term Investments	$   6,102,000	$   5,110,000
Other Current Assets	925,000	807,000
Oil and Gas Properties, Net	8,669,000	6,735,000
Exclusive License Agreement, Net	618,000	688,000
Other Assets	156,000	166,000
	$ 16,470,000	$ 13,506,000
Current Liabilities	$   1,236,000	$   1,211,000
Deferred Income Taxes	1,935,000	1,408,000
Exclusive License Agreement Obligation	456,000	500,000
Stockholders' Equity	12,843,000	10,387,000
	$ 16,470,000	$ 13,506,000