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NGAS REPORTS 140% PRODUCTION GROWTH IN SECOND QUARTER 2005
Oil and Gas Production Revenues Increased 255%

LEXINGTON, KENTUCKY, August 15, 2005. NGAS Resources, Inc. (Nasdaq: NGAS) announced Monday that total revenues for the three months ended June 30, 2005 increased 37 percent to $11.4 million, compared to $8.3 million during the same quarter last year. The increase was driven by higher natural gas production and prices. Production volumes during the second quarter of 2005 increased 140 percent to 437.0 Mmcfe, compared to 182.3 Mmcfe during the year-earlier quarter. The Companyfs average natural gas sales price increased 45 percent to $7.97 per Mcf from $5.50 in the second quarter of 2004. Earnings (loss) per fully diluted share were ($0.03) for second quarter of 2005 compared to $0.01 in second quarter 2004.

Operational and Financial Highlights for 2Q 2005:

. Total production volumes were up 140% to 437.0 Mmcfe
. Average daily production was 4,800 Mcfe
. 27 gross (7.166125 net) wells were drilled
. 47.4 miles of pipeline added to gathering system
. Average natural gas prices in the quarter were $7.97/Mcf versus $5.50 in 2Q 2004.
. Oil and gas revenues increased 255% to $3.5 million, from $986 thousand in 2Q 2004
. Discretionary cash flow/share was $0.03 compared to $0.04 in 2Q 2004
. Capital expenditures totaled $7.3 million

Ongoing drilling success coupled with last year's acquisition of the Stone Mountain Energy assets enabled us to deliver another record quarter of production growth, with an increase of 140 percent,h commented William S. Daugherty, President and CEO of NGAS. Mr. Daugherty added, "I am also pleased with the significant progress we made on the extension of our gathering system, adding 47 miles of pipeline during the quarter. As a result, the construction of the main pipeline from our key Leatherwood Field is complete. We are now working on the installation of compression and dehydration units and connecting previously drilled wells to the system. Production from this field is targeted to commence late in the third quarter 2005, contributing to significant additional increases in production before year-end."

Twenty-seven wells were drilled in the quarter, with 7.166 wells net to the company. Contract drilling revenue of $7.6 million increased 8.5 percent over the prior year. Contract drilling margins in the quarter, however, were negatively impacted by cost overruns associated with downhole problems on three wells.

gAlthough contract drilling margins were significantly below our expectations, long term, we are still targeting margins around 25 percent,h said Michael P. Windisch, CFO.

Operational and Financial Highlights for the Six Months Ended June 30, 2005:

. Record production of 833.9 Mmcfe
. 76 miles of pipeline added to gathering system
. 84 wells drilled
. Record revenues of $31.4 million
. Capital expenditures of $14.6 million

Mr. Daugherty concluded, "This is an exciting period for us. We plan to drill up to 170 gross wells this year and expect average daily production to reach 7,000 Mcfe by year-end. We will also significantly extend our gathering system, increase our lease position and continue to seek strategic acquisitions. As a result, we expect production and reserve volumes to increase in future periods as we continue the execution of our business plan. To date, we have invested $14.6 million, or almost half of our $30 million capital expenditure budget for 2005. With these initiatives, as well as the groundwork we laid in 2004, we have further strengthened our position for playing a significant role in the development of the southern Appalachian Basin natural gas resources."

A conference call will be held at 10:00 a.m. (ET) on Tuesday, August 16, 2005 to discuss 2Q 2005 results. The conference call will have a live simulcast on the Internet and can be accessed by logging onto http://viavid.net/dce.aspx?sid=000027DC. A slide presentation, which highlights managementfs discussion points, will be available on the website. A replay of the conference call will be available on the Company's website for 30 days.

About NGAS Resources, Inc.

NGAS Resources is a natural resources company focused on natural gas development drilling and reserve growth. NGAS controls approximately 250,000 acres in the Appalachian Basin where it owns 154 miles of gas gathering lines and interest in over 575 wells. Based in Lexington, Kentucky, the Company specializes in developing its own geological prospects concentrated in the Appalachian Basin. Additional information about the company can be accessed on its website at: www.ngas.com.

This release includes forward-looking statements within the meaning of Section 21E of the Securities Exchange Act 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 ongoing drilling initiatives 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.