Oil and Energy

Lancaster production continues to improve on the original nine wells drilled on 80 acre spacing. The company is collecting detailed pressure and production data from isolated coal intervals in seven new 40 acre infill wells, and will start accelerating dewatering when data collection is complete. The company plans to monitor progress, evaluate completion techniques and the impact of 40 acre downspacing, and evaluate pipeline alternatives to see if economic viability can be achieved.

The wells at Lancaster continue to show signs of improvement, but are still just below our economic threshold. Although there is no guarantee the rate will continue to increase, the Company plans to continue to monitor the per well averages.

The Company had earlier implemented a revised completion program on two of its northern areas. The results of the completions did not result in any sustainable or large increase in production from the wells tested. Before implementing a revised completion or drill program on its Northern acreage, the Company has determined that it is best to focus its efforts on the Southern Acreage and if successful, implement some of the same lower cost and seemingly more effective completion procedures on its Northern acreage. Accordingly, the Company will be shutting in its original Engleke pilot, located near Holton, Kansas, which to date has failed to produce economic quantities of gas. The BTA pilot, acquired from Evergreen Resources during the last quarter of 2004, will also be shut in due to noncommercial production. Both pilots produce gas, but despite extensive dewatering efforts, have failed to show the improvements in gas rate needed to justify pipeline investment and hookup.

In proceeding with the development of its Kansas operations, management has spent less than $5 million of its cash since closing the Forest City basin transaction in October, 2004. Currently the company is debt free and has nearly $10 million cash and is monitoring its current projects as well as other opportunities in order to create shareholder value.

Notice Regarding Forward Looking Statements
This news release contains "forward-looking statements", as that term is defined in Section 27A of the United States Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Statements in this press release, which are not purely historical, are forward-looking statements and include any statements regarding beliefs, plans, expectations or intentions regarding the future. Such forward-looking statements include, among other things, the prospective nature of the Company's Coal Bed Methane assets as described above and specifically the Lancaster pilot project, Heartland's drilling and completion of its ongoing Coal Bed Methane drilling program, the costs associated therewith and any potential future production from the Company's Lancaster pilot project.

Actual results could differ from those projected in any forward-looking statements due to numerous factors. Such factors include, among others, the inherent uncertainties associated with oil and gas exploration and unforeseen difficulties which may arise during the Company's drilling and de-watering efforts noted herein. These forward-looking statements are made as of the date of this news release, and the Company assumes no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those projected in the forward-looking statements. Although we believe that the beliefs, plans, expectations and intentions contained in this press release are reasonable, there can be no assurance those beliefs, plans, expectations or intentions will prove to be accurate. Investors should consult all of the information set forth herein and should also refer to the risk factors disclosure outlined in our annual report on Form 10-KSB for the 2004 fiscal year, our quarterly reports on Form 10-QSB and other periodic reports filed from time-to-time with the Securities and Exchange Commission.

SOURCE Heartland Oil & Gas Corp.
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