TORONTO, ONTARIO--(Marketwire - Feb. 17, 2011) - Eurogas Corporation ("Eurogas" or the "Corporation") (TSX:EUG) today announced its financial results for the year ended December 31, 2010.

During 2010, the Corporation incurred a net loss of $3.8 million, or approximately $0.02 per share. This compares with a net loss of $3.2 million in 2009. In June 2010, the Corporation successfully completed the acquisition of oil and natural gas properties in and around Lake Erie, Ontario (the "Acquisition"). Following the Acquisition, the Corporation began generating revenues from, and incurring expenses related to the assets acquired. As such, the nature of the Corporation's operations have changed significantly, impacting the various components of net earnings when compared with those of the prior year, where the Corporation's activities were limited to exploration and development activities.

LAKE ERIE ASSETS
Revenues from Oil and Gas Sales
Since the Acquisition, Eurogas has earned gross revenues of $19.5 million from the sale of oil and natural gas.
		FOURTH QUARTER								FROM JUNE 29, 2010 TO DECEMBER 31, 2010
		($000's) Oil and Gas Sales			Average Production Volumes		Realized Prices per Unit			($000's) Oil and Gas Sales			Average Production Volumes		Realized Prices per Unit
Natural gas		$	4,309		10,417		$	4.50		$	9,190		10,435		$	4.79
					(Mcf/d	)							(Mcf/d	)
Oil			5,342		669		$	86.82			10,141		669		$	82.38
					(bbls/d	)							(bbls/d	)
Liquids			117		22		$	58.18			189		19		$	55.11
					(bbls/d	)							(bbls/d	)
Total Revenue		$	9,768							$	19,520

Revenues from natural gas sales were adversely affected by North American natural gas prices which, as a result of excess supply, have continued to decline throughout the second half of 2010. Global natural gas working inventories at the end of 2010 remain near the record highs set in December 2009. The Corporation realized an average price of $4.79/Mcf, representing a positive basis differential from the Nymex price of US$4.30/Mcf due to the Corporation's proximity to the Dawn hub, which is located in southwestern Ontario. The Dawn hub is a leading provider of natural gas supply to the greater Toronto market area.

During the six months since the Acquisition, the Corporation realized an average price of $82.38/bbl on sales of oil. While world oil consumption grew in 2010, significant uncertainties in world markets continue to cause substantial volatility in the price of oil.

Since the Acquisition, field level cash flows generated from the Lake Erie Assets were $10.8 million.

(in thousands except per unit amount)		FOURTH QUARTER										FROM JUNE 29, 2010 TO DECEMBER 31, 2010
		Field Level Cash Flows			($/bbl) Oil and Liquids			($/Mcf) Natural Gas				Field Level Cash Flows			($/bbl) Oil and Liquids			($/Mcf) Natural Gas
Total sales		$	9,768		$	85.91		$	4.50			$	19,520		$	81.64		$	4.79
Royalty expense			(1,467	)		(12.64	)		(0.69	)			(3,040	)		(12.73	)		(0.74	)
Cost of sales and transportation costs			(2,926	)		(23.29	)		(1.51	)			(5,719	)		(20.42	)		(1.63	)
Field Netbacks		$	5,375		$	49.98		$	2.30			$	10,761		$	48.49		$	2.42

Capital Expenditures

Since the Acquisition, the Corporation invested $3.8 million in the Lake Erie Assets, including a new compressor at one of its gas plants, as well as pipeline replacements and upgrades throughout the field. Planned capital expenditures in 2011 are estimated at $8.9 million on a net basis and include approximately $5.1 million for onshore projects and a further $3.8 million for offshore projects. Capital expenditures in 2011 include the drilling of four infill wells onshore and three wells offshore, at a cost of approximately $2.6 million and $1.5 million on a net basis, respectively.

Price Risk Management

The Corporation has entered into fixed price derivative contracts for the purpose of protecting its oil and natural gas revenue from the volatility of oil and natural gas prices and the volatility in Canadian to US foreign exchange rates. The Corporation's price risk management strategies assist the Corporation in securing a more stable amount of cash flows to protect a desired level of capital spending and for debt management. At February 17, 2011, the Corporation had locked in pricing for 350 bbl/d of oil production at a weighted average rate of Cdn$90.40/bbl through to December 2011. It also entered into a commodity swap on 6.5 million btu/day of natural gas from June 1, 2011 to February 28, 2012 at a fixed price of Cdn$4.66/MMbtu. With these risk management contracts, the Corporation has hedged approximately 50% of its oil production and 60% of its natural gas production during the periods covered by the hedges.

CASTOR UNDERGROUND GAS STORAGE PROJECT

Project financing for the Castor Project was completed in July 2010, providing the project with a 10-year, €1.3 billion project financing through a syndicate of 19 banks. To provide security for the financing, the Corporation's subsidiary, Castor UGS Limited Partnership ("CLP") pledged its 33.33% interest in Escal UGS S.L., the owner of the Castor Project, to the banking syndicate. Other than the pledging of its shares, CLP will not be required to provide any equity or debt funds or provide any warranties required by the project finance lenders as this obligation was assumed by ACS Servicios Communicacions y Energia S.L. ("ACS"), CLP's partner in this transaction and a 66.67% owner of Escal. Notwithstanding any form by which ACS may fund Escal during the construction phase, CLP's interest in Escal will at all times remain at 33.33%, and CLP will retain the right to 33.33% of all distributable cash flows.

During 2010, project construction and development, including the 12 well drilling program, continued to advance. The routing of the subsea pipeline from the shore to the site of the onshore facilities of the Castor Project was established and the necessary rights of way were granted as part of the Administrative Authorization Permit received in June 2010.

PREFERRED SHARE INTEREST IN EUROGAS INTERNATIONAL INC.

On January 18, 2011, Eurogas International announced that, together with its joint venture partner, it has declared a condition of a Force Majeure with respect to the Sfax Permit and Ras-El-Besh concession. Eurogas International and its joint venture partner believe that the current political uncertainty and civil unrest in Tunisia, which have resulted in the collapse of the government, a declaration of a state of emergency and serious civil disturbance, adversely affects their ability to continue their exploration and evaluation activities. Eurogas International believes that the declaration of a Force Majeure will temporarily suspend activities while the conditions resulting in the Force Majeure continue.

During 2010, an aggregate of $3.4 million was capitalized by Eurogas International to deferred exploration costs. In addition, Eurogas International settled previously announced arbitration proceedings with Seawolf Oilfield (Cyprus) Limited and Seawolf Oilfield Services Limited for US$12 million, to be received over an 18 month period. Eurogas International's share of the settlement proceeds were US$3.6 million and were primarily applied to reduce the carrying amount of deferred exploration costs.

As a condition of the Sfax Permit, Eurogas International is committed to drilling one new exploration well. Eurogas International has also committed to complete the abandonment and reclamation of the REB-3 well, which was drilled in 2008. The estimated budget for the Sfax Permit and the associated Ras-El-Besh concession during 2011, including these two commitments, is approximately US$25 million, of which Eurogas International is responsible for its net share of approximately US$8.1 million. In the event that Eurogas International does not complete its work commitments as outlined in the terms of the extension, a compensatory payment of up to US$12 million (net US$5.4 million to Eurogas International) will be payable to the Tunisian regulatory bodies, less any amounts incurred by the joint venture in respect of the completion of its obligations. Additional information regarding Eurogas International may be accessed at www.eurogasinternational.com.

ABOUT THE CORPORATION

Eurogas has filed its consolidated financial statements and related management's discussion and analysis for the year ended December 31, 2010 with the Canadian securities regulatory authorities on the System for Electronic Document Analysis and Retrieval ("SEDAR"). All documentation may be viewed under the Corporation's profile on SEDAR (www.sedar.com), the Corporation's website www.eurogascorp.com or by contacting Eurogas. Eurogas Corporation is listed on the Toronto Stock Exchange under the symbol "EUG" and is engaged in oil and natural gas operations in Ontario and indirectly in the development of a major underground storage facility off the east coast of Spain. For more information on Eurogas, visit the website www.eurogascorp.com.

FOOTNOTES

• "Field Level Cash Flows" is calculated as revenues from oil and gas sales, less royalties, cost of sales and transportation costs.
• "Field Netbacks" refers to field level cash flows expressed on a barrel of oil equivalent basis.

"Field Level Cash Flows" and "Field Netbacks" are common benchmarks in the oil and natural gas industry. However, these measures are not defined by generally accepted accounting principles, do not have standard meanings and as such, may not be comparable to similar measures used by other companies.

FORWARD-LOOKING STATEMENTS

Certain information set forth in these documents, including management's assessment of each of the Corporation's future plans and operations, contains forward-looking statements. Forward-looking statements are statements that are predictive in nature, depend upon or refer to future events or conditions or include words such as "expects", "anticipates", "intends", "plans", "believes", "estimates" or similar expressions. By their nature, forward-looking statements are subject to numerous risks and uncertainties, some of which are beyond the Corporation's control, including: exploration, development and production risks; uncertainty of reserve estimates; reliance on operators, management and key personnel; cyclical nature of the business; economic dependence on a small number of customers; additional funding that may be required to execute on exploration and development work; the ability to obtain, sustain or renew licenses and permits; risks inherent to operating and investing in foreign countries; availability of drilling equipment and access; industry competition; environmental concerns; climate change regulations; volatility of commodity prices; hedging activities; no history of earnings; potential defects in title to properties; potential conflicts of interest; changes in taxation legislation; insurance, health, safety and litigation risk; labour costs and labour relations; geo-political risks; risks relating to management of growth; aboriginal claims; volatility of the Corporation's share price; royalty rates and incentives; regulatory risks relating to oil and natural gas exploration; marketability and price of oil and natural gas; failure to realize anticipated benefits of acquisitions and dispositions; information system risk; and other risk factors discussed or referred to in the section entitled "Business Risks" in the Corporation's Management's Discussion and Analysis as at and for the year ended December 31, 2010. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements. The Corporation's actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits the Corporation will derive from them. The Corporation disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.