Osprey Purchases Working Interest in Offshore Exploration Permits for Natural Gas and Coalbed Methane

VANCOUVER, B.C., CANADA


BRIDGEWATER, Nova Scotia, July 31, 2001 (PRIMEZONE) -- The Company is pleased to announce that it has purchased a 10% working interest (W.I.) in seven onshore exploration permits for conventional natural gas and coalbed methane on 642,128 acres of Prince Edward Island (PEI) This represents nearly 50% of the land mass of the Island. Osprey also has an option to acquire an additional 15% interest within 120 days.

There is ample evidence of conventional gas reserves on the Island and in adjacent areas of the Maritime Basin. One well off East Point, PEI, which flowed at a rate of five million cubic feet of gas per day in 1974, has an estimated reserve of 77 billion cubic feet of gas. A well about three miles away, which was recently drilled and cased, will be tested over the next few weeks. Another Maritime company with reported reserves on PEI, has successfully tested a well near Sussex, N.B., which flowed at a rate of more than 2 million cubic feet of gas per day.

A mapping of the Island's onshore coal seams by the Atlantic Geoscience Centre of Dartmouth, N.S. estimated coal bed methane (CBM) potential of approximately 7.6 trillion cubic feet of methane gas. New technology for extracting methane gas has spurred the growth of CBM production in the U.S. over the last ten years so that 8% of U.S. gas production is now CBM. Nine of the thirteen coal basins in the U.S. have CMB production in the same depth range as the methane-producing coalbeds in the U.S.

In Nova Scotia, seismic fieldwork on a 220,000-acre tract between Debert and Parrsboro in which Osprey has a 15% W.I. (with an option to increase to 25%) has been completed. Computer processing should generate a first interpretation of the data by the middle of August. Seismic and geological work conducted in the area over the past several years indicates potential reserves of up to 345 billion cubic feet of gas and 75 million barrels of oil.

Osprey Energy also wishes to announce that two recent independent analyst reports have been published with favorable reviews of the Company. One issued a "buy" recommendation based on the Company's promising cash flow projections while the second noted that Osprey was undervalued relative to the market when viewed in relation to recent acquisition prices for junior and emerging oil and gas companies. These reports are available on Osprey's Webpage at www.ospreyenergy.com

The Company also wishes to announce that the private placement for 1,500,000 units at $.75 approved by the CDNX in June has been oversubscribed by 450,000 units, bringing the total placement to 1,950,000 units.


                   ON BEHALF OF THE BOARD OF DIRECTORS OF 
                             OSPREY ENERGY LTD.
                             "R. Gary Malone"
                                President

"This release was prepared by management who take full responsibility for its contents. The CDNX neither approves nor disapproves of this news release". WARNING: The Company relies on litigation protection for "forward-looking" statements.


        

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