DENVER, COLORADO, September 25, 2001—CREDO Petroleum Corporation (NASDAQ: CRED) today reported that recent events have not caused a material adverse change in its financial condition or its ongoing business. James T. Huffman, CREDO's President, stated, "Working capital and the value of CREDO’s short-term investments have not changed significantly from the values reported at the company’s July 31, 2001 fiscal third quarter end. In addition, we have hedged CREDO’s expected natural gas production for the next six months at prices substantially above current prices."

At CREDO's July 31, 2001 fiscal third quarter end, total assets were $16,004,000 of which $5,679,000, or 35%, was represented by cash and short-term investments. Working capital was $5,408,000. The company’s only long-term financial obligation is an exclusive license obligation totaling $500,000 that is payable in equal installments over the next eight years. The company’s cash and working capital provide a significant source of liquidity, and the company does not believe that recent events have caused any material adverse change.

As previously reported, pending deployment into oil and gas assets, the company invests surplus cash with professional money managers. Most of such investments are with money managers who specialize in short-term timing of domestic mutual funds. Those managers generally enter and exit stock funds on a short-term basis. The cash is maintained in money market accounts when not invested in stock funds. Other short-term investments consist primarily of professionally managed limited partnerships that invest in financial instruments and provide readily determinable market values. The average return on the company’s investments was 3% through the July 31, 2001 fiscal third quarter end.

The money managers who specialize in market timing were invested in money market accounts at the time of the terrorist attack, and thus, those investments have not been exposed to the subsequent stock market volatility. Cash invested in professionally managed partnerships does not appear, to the best of management's knowledge, to have been materially affected by the recent market volatility.

The company has hedged 92% of its expected gas production through the winter of 2001-2002. The hedge position totals 360,000 Mcf and includes the months of October 2001 through March 2002. The average hedge price for the period is $3.61 per Mcf, which is substantially above current market prices for natural gas.

Mr. Huffman stated, "While we never look forward to trying times, dramatic cycles and market volatility are nothing new to the oil and gas business or to CREDO’s management. Our financial strength provides the staying power as well as the resources to continue to conduct our business in a prudent manner with the objective of building high quality assets that will generate excellent returns."

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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.