DENVER, COLORADO, June 18, 2001—CREDO Petroleum Corporation (NASDAQ: CRED) today reported record financial results for the six months ended April 30, 2001. Net income from continuing operations (excluding a non-recurring litigation settlement gain last year) rose 135% to a record $1,132,000 compared to $481,000 last year. On a per diluted share basis, net income from continuing operations was a record $.35 compared to $.15 last year. Including the $235,000 (net of tax) non-recurring litigation settlement gain last year, net income increased 58% to $1,132,000, or $.35 per diluted share, compared to $716,000, or $.23 per diluted share, last year. Revenue increased 37% to a record $3,042,000 compared to $2,218,000 last year. Cash flow from operating activities (before working capital changes) rose 34% to a record $1,690,000.

For the second quarter ended April 30, 2001, net income increased 137% to a record $530,000, or $.16 per diluted share, on a 68% increase in revenue to $1,465,000, also a record. This compares to net income of $224,000, or $.07 per diluted share, on revenue of $874,000 for the same quarter last year.

Total natural gas and oil production rose 5% to 483 MMcfge (million cubic feet of gas-equivalent) for the first half of fiscal 2001. This compares with 460 MMcfge last year. Natural gas production rose slightly to 346 MMcfg while crude oil sales climbed 19% to 22,800 barrels. Gas production placed on stream during the first half of 2001 offset production lost due to property sales and the expected rapid depletion of a major well. Crude oil sales increased significantly due to new discoveries and continued positive results from an Oklahoma waterflood project.

Second quarter production volumes rose 8% to 247 MMcfge compared to 228 MMcfge last year. Natural gas production rose 6% to 181 MMcfg while crude oil sales volumes rose 14%.

Total natural gas price realizations for the first half of 2001 rose 151% to $5.99 per Mcf compared to $2.39 last year. Hedging transactions added $.19 per Mcf to 2001 gas price realizations. First half net wellhead natural gas prices rose 143% to $5.80 per Mcf compared to $2.39 last year. Wellhead oil prices rose 9% to $28.02 per barrel compared to $25.66 last year.

For the quarter ended April 30, 2001, total natural gas price realizations rose 136% to $5.80 per Mcf compared to $2.46 last year. Hedging transactions added $.37 per Mcf to 2001 gas price realizations. Net wellhead natural gas prices rose 121% to $5.43 per Mcf compared to $2.46 last year. Wellhead oil prices fell 4% to $26.06 per barrel compared to $27.04 last year.

Hedging activities at April 30, 2001 resulted in "other comprehensive income" totaling $61,000 which has been reflected in Stockholders’ Equity. The company currently has open hedge positions totaling 180,000 Mcf covering the months of July, August and September at an average price of $4.55 per Mcf. This hedge represents approximately 85% of the company's estimated gas production for those months.

Capital spending increased to a record $1,456,000 for the first half, as CREDO aggressively deployed capital into oil and gas assets in anticipation of continued strong product prices. CREDO’s growth strategy focuses on two core projects--application of its patented Calliope gas recovery technology and drilling along the Anadarko Shelf of Oklahoma. Both projects have been successfully implemented and are being ramped-up.

As previously reported, the company owns the exclusive right to patented technology known as Calliope Production System™ . The Calliope technology significantly enhances the recovery of gas reserves from existing low pressure reservoirs using a repeatable, cost effective and low risk process. The technology is proven to work in 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 is now approximately 1,100 Mcfgd and their remaining economic lives are estimated to range from seven to 20 years. For the first half of fiscal 2001, Calliope wells contributed 23% of the company's gas production.

During the first half of 2001, five successful wells were drilled in connection with the company's drilling program along the Anadarko Shelf of Oklahoma, of which four were gas wells and one was oil. CREDO's interest in the wells ranged from seven percent to 60%. The most important of these wells to the company is the recently completed 7,800-foot Bill-Judy Brown #1-6 well in Beaver County, Oklahoma. The well is currently producing on a 20/64-inch choke at a daily rate of approximately 1.5 MMcfg and eight barrels of oil. CREDO owns a 60% working interest in the well and is the operator.

In Ellis County, Oklahoma, CREDO recently completed its 8,800-foot Thurmond-State #1-36 well in two separate Morrow formation sands. The well was tested at an absolute open flow rate of approximately 3.8 MMcfgd and 10 barrels of oil. It is currently producing on a 16/64-inch choke at a daily rate of 1.5 MMcfg and eleven barrels of oil. CREDO owns a 17.5% working interest in the well and is the operator.

In Harper County, Oklahoma, the company participated for a 21% interest in the 7,600-foot Audrey Marie #1-29 well. The well encountered two Morrow sands which wireline logs calculate are productive. The well is currently waiting on pipeline connection prior to being completed for production.

The company is currently committed to participate in drilling five wells along the Anadarko Shelf with interests ranging from seven percent to 40%.

At April 30, 2001, working capital was $5,180,000, up 10% from October 31, 2000 fiscal year end. Total assets were $15,367,000 including cash and short-term investments of $5,279,000. Stockholders’ equity was a record $11,784,000.

James T. Huffman, President stated, "For the first half of fiscal 2001, CREDO's earnings from continuing operations exceeded earnings for all of last year. We had significant success with our Anadarko Shelf drilling program and made major advances in application of our Calliope technology."  Huffman further stated, "The momentum from our drilling program and successful Calliope applications give us an opportunity to maintain the current pace of earnings and cash flow for the balance of fiscal 2001, despite lower natural gas prices and investment returns."

For a more detailed discussion of current operations, refer to the company’s Form 10-QSB for the fiscal quarter ended April 30, 2001 and its Form 10-KSB for fiscal year ended October 31, 2000.

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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.

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