NGAS Resources (NGAS)

[makesumgravy]

NGAS Reports First Quarter 2008 Results

NGAS Resources, Inc. (Nasdaq: NGAS) today reported first quarter 2008 total revenue of $17.6 million compared to $17.9 million in the comparable quarter in 2007. Gas gathering, compression and processing revenue rose 31 percent in the period on increased fees for moving third-party gas through the open-access section of the Company’s gathering system. Oil and gas production revenue increased 26 percent year-over-year, driven by a 13 percent increase in production volumes and substantially higher oil prices.

Net income in first quarter 2008 was $163,189 versus a net loss of $254,264 in first quarter 2007. Earnings per share were $0.01, compared to a net loss per share of $0.01 in first quarter 2007, while discretionary cash flow was $4.1 million ($0.15 per share), compared to $2.7 million ($0.13 per share). (A reconciliation of this non-GAAP measure is provided at the end of this release.) William S. Daugherty, President and CEO of NGAS Resources commented, “The evolution of our business model by taking a larger interest in core area wells contributed to our 13 percent organic growth in production.” Mr. Daugherty added, “Since February we have drilled four horizontal wells in the Devonian shale in our Leatherwood field and a fifth has been spudded. Production from the first well averaged 367 Mcf for the first 30 days. We are very pleased with the initial results and plan to drill a total of 20 horizontal wells in our core area this year.” He further commented, “With our large acreage position, the success of our horizontal drilling program has the potential to significantly increase production and reserves.” Operational and Financial Highlights for 1Q 2008 versus 1Q 2007: Average daily production was 9.7 Mmcfe versus 8.7 Mmcfe Total production volume increased 13 percent to 0.880 Bcfe 60 gross (27.7 net) wells drilled versus 57 gross (23.6 net) Average sales price for natural gas was $8.51/Mcf versus $8.62/Mcf Average realized prices for the Appalachian gas portion was $9.18 in 1Q 2008 Gas gathering, compression and processing revenue rose 31 percent to $2.6 million Oil and gas production revenue increased 26 percent to $8.5 million Capital expenditures of $13.3 million 26 miles added to gathering system First Quarter 2008 Expense Review Selling, general and administrative (SG&A) expenses were $3.3 million, 18 percent below the same quarter of 2007. This primarily reflects the timing of marketing expenditures for sponsored drilling programs. As a percentage of revenue, SG&A costs were 18.6 percent, compared to 22.4 percent in first quarter 2007, reflecting the contraction in drilling program initiatives.

Depreciation, depletion and amortization (DD&A) expenses were $2.9 million in first quarter 2008, compared to $2.3 million in first quarter 2007. The increase in DD&A reflects substantial additions to oil and gas properties and gas gathering systems over the past year.

Interest expense in the quarter was $1.3 million, compared to $1.2 million in the same period last year. This was attributable to increased credit facility fundings for drilling and infrastructure expansion.

Conference Call Information A conference call will be held today at 4:30 p.m. (Eastern) today to discuss 1Q 2008 results. The call in number is 888-254-3584 or 913-312-0711 (international). Conference ID number is 3439696. The conference call will be webcast and can be accessed by logging onto www.ngas.com or clicking on the following link: http://viavid.net/dce.aspx?sid=00004ECD. A PowerPoint presentation, which highlights management’s discussion points, will be available on the Company’s website. For those unable to listen to the live presentation, the webcast will be archived on the Company’s website. A telephone replay will also be available for one week beginning at 7:30 p.m. (Eastern), May 8, 2008, and can be accessed by dialing 888-203-1112 or 719-457-0820 (international) and entering pin number 3439696.

About NGAS Resources NGAS Resources is an independent exploration and production company focused on unconventional natural gas basins in the United States that provide repeatable drilling opportunities, principally in the southern portion of the Appalachian basin. Additional information, including the Company’s most recent periodic reports and proxy statement, can be accessed on its website at www.ngas.com.

Forward Looking Statement This release includes forward-looking statements within the meaning of the Private Litigation Reform Act of 1995 relating to matters such as anticipated operating and financial performance and prospects. Actual performance and prospects may differ materially from anticipated results due to economic conditions and other risks, uncertainties and circumstances partly or totally outside the control of the Company, including risks of production variances from expectations, volatility of product prices, the level of capital expenditures required to fund drilling and the ability of the Company to implement its business strategy. These and other risks are described in the Company’s periodic reports filed with the United States Securities and Exchange Commission.

NGAS RESOURCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended March 31, 2008 2007 REVENUE Contract drilling $ 6,602,118 $ 9,245,219 Oil and gas production 8,489,434 6,752,232 Gas transmission, compression and processing 2,558,092 1,947,941 Total revenue 17,649,644 17,945,392 DIRECT EXPENSES Contract drilling 5,119,849 7,180,717 Oil and gas production 2,764,955 1,683,014 Gas transmission, compression and processing 1,090,246 1,099,593 Total direct expenses 8,975,050 9,963,324 OTHER EXPENSES (INCOME) Selling, general and administrative 3,288,483 4,021,882 Options, warrants and deferred compensation 137,679 341,123 Depreciation, depletion and amortization 2,871,760 2,306,470 Bad debt expense 347,840 -- Interest expense 1,325,970 1,224,756 Interest income (69,710 ) (84,054 ) Other, net (6,277 ) 92,749 Total other expenses 7,895,745 7,902,926 INCOME BEFORE INCOME TAXES 778,849 79,142 INCOME TAX EXPENSE 615,660 333,406 NET INCOME (LOSS) $ 163,189 $ (254,264 ) NET INCOME (LOSS) PER SHARE Basic $ 0.01 $ (0.01 ) Diluted $ 0.01 $ (0.01 ) WEIGHTED AVERAGE COMMON SHARES OUTSTANDING Basic 26,235,811 21,791,107 Diluted 26,731,037 21,791,107 NGAS RESOURCES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS March 31, December 31, 2008 2007 ASSETS (Unaudited) Current assets: Cash $ 1,643,262 $ 2,816,678 Accounts receivable 8,718,209 7,909,943 Prepaid expenses and other current assets 962,512 505,778 Loans to related parties 7,750 7,654 Total current assets 11,331,733 11,240,053 Bonds and deposits 610,445 535,445 Oil and gas properties 194,398,168 183,823,702 Property and equipment 3,624,092 3,689,636 Loans to related parties 247,376 249,410 Deferred financing costs 1,681,852 1,706,852 Other non-current assets -- 3,242,790 Goodwill 313,177 313,177 Total assets $ 212,206,843 $ 204,801,065 LIABILITIES Current liabilities: Accounts payable $ 8,987,575 $ 6,649,809 Accrued liabilities 3,784,488 3,655,684 Customer drilling deposits 3,027,091 2,857,806 Long term debt, current portion 24,000 388,856 Total current liabilities 15,823,154 13,552,155 Deferred income taxes 9,834,430 9,218,770 Long term debt 84,333,809 80,160,915 Deferred compensation 2,062,858 1,960,020 Total liabilities 112,054,251 104,891,860 SHAREHOLDERS' EQUITY Capital stock Authorized: 5,000,000 Preferred shares 100,000,000 Common shares Issued: 26,243,064 Common shares (2007 - 26,136,064) 109,087,029 108,842,526 21,100 Common shares held in treasury, at cost (23,630 ) (23,630 ) Paid-in capital - options and warrants 3,408,056 3,484,148 Contributed surplus 955,009 1,043,222 To be issued: 9,185 Common shares 45,925 45,925 113,472,389 113,392,191 Deficit (13,319,797 ) (13,482,986 ) Total shareholders' equity 100,152,592 99,909,205 Total liabilities and shareholders' equity $ 212,206,843 $ 204,801,065 NGAS RESOURCES, INC.

CASH FLOW RECONCILIATION Discretionary cash flow represents net income, as determined under generally accepted accounting principles (“GAAP“), with certain non-cash items added back. Although a non-GAAP measure, discretionary cash flow is widely accepted as a financial indicator of an oil and gas company’s ability to generate cash that can be used to internally fund exploration and development activities and to service debt. This measure may also be used in the valuation, comparison, rating and investment recommendations for companies in the oil and gas exploration and production industry. Cash flow is not a measure of financial performance under GAAP and should not be considered as an alternative to cash flows from operating, investing, or financing activities or as an indicator of cash flows or measure of liquidity.

(Unaudited) Three Months Ended March 31, 2008 2007 Net income (loss) $ 163,189 $ (254,264 ) DD&A 2,871,760 2,306,470 Options, warrants and deferred compensation 137,679 341,123 Bad Debt Expense 347,840 -- Deferred taxes 615,660 333,406 DISCRETIONARY CASH FLOW $ 4,136,128 $ 2,726,735 DISCRETIONARY CASH FLOW PER SHARE $ 0.15 $ 0.13