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Energy Editors / Business Editors HOUSTON--(BUSINESS WIRE)--GULF-- GulfWest Energy Inc. (OTCBB:GULF) reported financial and operating results for the 3 months ended June 30, 2004, showing net income of $9.3 million ($0.50 per common share outstanding). This net income was primarily due to a one-time forgiveness of debt of $11.9 million, which was a result of a refinancing which closed at the end of April. This gain from forgiveness of debt was partially offset by $1.9 million of non-cash and financing related expenses for the second quarter. These expenses consisted of additional interest and financing costs associated with the refinancing, along with non-cash adjustments to assets taken in the quarter, as well as a non-cash expense associated with hedge agreements. Revenues from the sale of crude oil and natural gas for the quarter decreased from $2,770,156 in 2003 to $2,494,347 in 2004 due to a decrease in oil and gas volumes, partially offset by an increase in sales prices. Oil and gas volumes were 41,613 bbls and 230,247 Mcf in the second quarter of 2004 compared to 59,414 bbls and 307,238 Mcf in the second quarter of 2003. Volumes declined due to normal depletion and a reduction in the company's development program over the last year while refinancing. Currently the company is increasing its oil and gas production with its 2004 workover program, which kicked off in the middle of the second quarter. This program is funded as a part of the refinancing. Through early August, production has increased 20% as compared to the end of the first quarter and the company should complete the $3+ million workover program in the fourth quarter. Development activities are focused along the gulf coast region of Texas, Cameron Parish Louisiana, and the D-J basin in Colorado. -0- *T Summary Financial Data: ---------------------- Three Months Six Months Ended June 30, Ended June 30, 2004 2003 2004 2003 ----------- ------------ ----------- ------------ Operating revenues $2,535,266 $2,790,124 $5,073,995 $6,040,727 Less operating & overhead expenses 1,777,771 1,812,883 3,513,605 3,596,859 ----------- ------------ ----------- ------------ Income from operations 757,495 977,241 1,560,390 2,443,868 DD&A (437,043) (570,665) (876,245) (1,174,609) Interest expense (1,014,609) (811,770) (1,934,777) (1,572,650) Other financing costs (369,270) (1,000,000) (369,270) (1,000,000) Gain (loss) on property sales/ abandonment (553,321) 0 (553,321) 0 Unrealized gain (loss) on derivative instruments (846,782) 173,311 (558,935) 192,167 Forgiveness of debt 11,884,145 0 11,884,145 0 Income taxes 0 0 0 0 ----------- ------------ ----------- ------------ Net income (loss) 9,420,615 (1,231,883) 9,151,987 (1,111,224) Dividends paid on preferred stock 97,334 0 131,709 0 ----------- ------------ ----------- ------------ Net income (loss) available to common shareholders $9,323,281 $(1,231,883) $9,020,278 $(1,111,224) =========== ============ =========== ============ Income (Loss) per common share outstanding $.50 $(.07) $.49 $(.06) =========== ============ =========== ============ *T The matters discussed herein may contain "forward-looking" statements that involve risks and uncertainties including, without limitation, competitive factors in the marketplace. For further discussion regarding the information in the press release, please refer to the Company's 10-K for December 31, 2003 and 10-Q for June 30, 2004. KEYWORD: TEXAS LOUISIANA COLORADO INDUSTRY KEYWORD: ENERGY OIL/GAS EARNINGS SOURCE: GulfWest Energy Inc. CONTACT INFORMATION: GulfWest Energy Inc., Houston John E. Loehr or Thomas R. Kaetzer, 281-820-1919

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