DENVER, COLORADO, September 11, 2001—CREDO Petroleum Corporation (NASDAQ: CRED) today reported that higher product prices and rising production volumes resulted in record financial results for the nine months ended July 31, 2001. Net income from continuing operations (excluding a non-recurring litigation settlement gain last year) rose 114% to a record $1,633,000 compared to $764,000 last year. On a per diluted share basis, net income from continuing operations was a record $.50 compared to $.24 last year. Including the $241,000 (net of tax) non-recurring litigation settlement gain last year, net income increased 62% to $1,633,000, or $.50 per diluted share, compared to $1,005,000, or $.32 per diluted share, last year. Revenue increased 42% to a record $4,483,000 compared to $3,160,000 last year. Cash flow from operating activities (before working capital changes) rose 64% to a record $2,617,000.

For the third quarter ended July 31, 2001, net income increased 73% to a record $501,000, or $.15 per diluted share, on a 53% increase in revenue to $1,441,000, also a record. This compares to net income of $289,000, or $.09 per diluted share, on revenue of $942,000 for the same quarter last year.

Total production volumes rose 13% to 773 MMcfge (million cubic feet of gas-equivalent) for the first nine months of fiscal 2001. This compares with 682 MMcfge last year. Natural gas production rose 11% to 566 MMcfg while crude oil sales climbed 21% to 34,500 barrels. The significant increase in production volumes resulted primarily from new wells placed on stream during the period.

Production from new wells drilled boosted third quarter production volumes by 30% to 290 MMcfge compared to 222 MMcfge last year. Natural gas production rose 32% to 220 MMcfg while crude oil sales volumes rose 26% to 11,700 barrels.

Total natural gas price realizations for the nine months ended July 31, 2001 rose 108% to $5.46 per Mcf compared to $2.62 last year. Hedging transactions added $.52 per Mcf to 2001 gas price realizations and reduced prior year price realizations by $.09. Net wellhead natural gas prices rose 82% to $4.94 per Mcf compared to $2.71 last year. Wellhead oil prices rose 2% to $27.25 per barrel compared to $26.72 last year.

For the quarter ended July 31, 2001, total natural gas price realizations rose 50% to $4.63 per Mcf compared to $3.09 last year. Hedging transactions added $1.02 per Mcf to 2001 gas price realizations and reduced prior year price realizations by $.29. Net wellhead natural gas prices rose 7% to $3.61 per Mcf compared to $3.38 last year. Wellhead oil prices fell 11% to $25.75 per barrel compared to $28.90 last year.

At July 31, 2001, the company's open hedge positions totaled 420,000 Mcf covering the months of September 2001 through March 2002 at an average price of $3.72 per Mcf. This hedge represents approximately 92% of the company's estimated gas production for those months.

Capital spending increased to a record $2,087,000 for the first nine months as the company deployed increased cash flows into oil and gas assets. 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.

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 low pressure gas reservoirs using a repeatable, cost effective and low risk process. CREDO has proven the effectiveness of the technology 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 the first nine months of fiscal 2001, Calliope wells contributed 23% of the company's gas production.

During fiscal 2001, ten successful wells were completed in connection with the company's drilling program along the Anadarko Shelf of Oklahoma, of which nine were gas wells and one was oil. CREDO's interest in the wells ranged up to 60%. The most important of those wells to the company is the 7,800-foot Bill-Judy Brown #1-6 well in Beaver County, Oklahoma. The well is currently producing on a 25/64-inch choke at a daily rate of approximately 850 Mcfg. CREDO owns a 60% working interest in the well and is the Operator.

In Ellis County, Oklahoma, the company participated for an 11% interest in drilling the 8,900-foot Jacoby "10" #1 well. The well was recently completed and is producing from the Oswego formation at the daily rate of approximately 3.9 MMcfg and 207 barrels of oil.

Also in Ellis County, the company is currently drilling the Glendena #1 well on its 1,280-acre Sand Creek Prospect. CREDO owns 40% of the 7,650-foot Morrow formation test and is Operator of the well.

At July 31, 2001, working capital was $5,408,000, up 15% from October 31, 2000 fiscal year end. Total assets were $16,004,000 including cash and short-term investments of $5,679,000. Stockholders’ equity was a record $12,280,000.

James T. Huffman, CREDO's President, stated, "Record earnings and cash flow afforded us the opportunity to ramp-up capital spending which resulted in significantly higher production volumes. Application of our Calliope technology and drilling along the Anadarko Shelf of Oklahoma continue to be our core projects and both are enjoying significant success. Our objective is to maintain the earnings momentum established this year by using higher production volumes and gas price hedging to offset 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 July 31, 2001 and its Form 10-KSB for fiscal year ended October 31, 2000.

*    *    *    *    *

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.

           CREDO PETROLEUM CORPORATION
           FINANCIAL HIGHLIGHTS