Teton Energy Corporation Announces Financial and Operating Results for Second Quarter and Six Months Ended June 30, 2008

   TETON REALIZES A 922 PERCENT INCREASE IN OPERATING REVENUES AND A 157

                   PERCENT INCREASE IN PRODUCTION VOLUMES



    DENVER, Aug. 7 /EMWNews/ -- Teton Energy Corporation

("Teton" or "the Company") (Amex: TEC) today reported operating revenues of

$10.1 million for the second quarter of 2008, a 922 percent increase over

the second quarter of 2007. The Company reported a net loss of $30.0

million for the second quarter of 2008, or $1.40 per fully diluted share of

common stock. The results included a $22.2 million unrealized commodity

derivative loss and other non-cash items totaling $8.0 million. These other

non-cash items included amortization of debt discount and issuance costs of

$4.6 million, stock-based compensation of $3.5 million and a net gain on

derivative warrant liabilities of $51,000. Excluding these items, the

adjusted net income for the second quarter would have been $229,000, or

$0.01 per fully diluted share.



    For the second quarter of 2007, the Company realized a loss of $7.2

million, or $0.45 per fully diluted share of common stock, on operating

revenues of $990,000. Excluding non-cash items, the adjusted net loss would

have been $1.4 million, or $(0.09) per fully diluted share.



    Operating cash flow from oil and gas activities (defined as oil and gas

sales less lease operating expense, transportation expense and production

taxes) for the second quarter of 2008 increased 1,066 percent to $7.9

million. Earnings before interest, taxes, depreciation, depletion and

accretion, exploration expense, and non-cash general and administrative

expense (EBITDAX, a non-GAAP measure -- refer to last table of press

release for a reconciliation to net income), increased to $4.9 million in

the second quarter of 2008 from $(0.4) million in the second quarter of

2007.



    For the six months ended June 30, 2008, the Company realized a net loss

of $38.3 million, or $1.95 per fully diluted share of common stock, on

operating revenues of $13.8 million. This compares to a net loss of $9.0

million, or $0.57 per fully diluted share of common stock for the same

period in 2007. Excluding a $23.5 million unrealized commodity derivative

loss and other non-cash items totaling $13.2 million, the adjusted net loss

for the six months of 2008 would have been $1.6 million, or $(0.08) per

fully diluted share.



    Operating cash flow from oil and gas activities increased 563 percent

for the six months ended June 30, 2008 to $10.9 million, compared to $1.6

million for the same period of 2007. EBITDAX was $5.6 million for the first

six months of 2008 compared to $(0.4) million in the same period of 2007.



    Operating Metrics. The Company's gross margin (oil and gas revenues,

net of the effect of commodity hedging positions, less oil and gas

operating expenses) in the second quarter of 2008 increased 137 percent to

$9.15 per thousand cubic feet equivalent ("Mcfe") compared to $3.86 per

Mcfe in the second quarter of 2007.



    Oil and gas operating expenses, including lease operating expense

("LOE"), transportation expense and production taxes, for the second

quarter of 2008 collectively increased 175 percent on a per Mcfe basis to

$3.22 per Mcfe. The increase per Mcfe was primarily due to the addition of

new operating areas with higher oil production which results in higher LOE

costs and higher transportation costs related to oil in the Central Kansas

Uplift ("CKU"). Increased production taxes on an Mcfe basis were the result

of higher commodity prices.



    Operational Highlights. Operational highlights during the second

quarter of 2008 include the following:




    -- Oil and gas sales volumes increased 157 percent to 684 million cubic

       feet equivalent ("MMcfe"), or 7.5 million cubic feet equivalent per day

       ("MMcfed"), of which 51 percent was oil and 49 percent was natural gas.

    -- The Company realized an average wellhead price of $12.37 per Mcfe after

       realized hedging results ($14.79 per Mcfe pre-hedging) in the second

       quarter of 2008 compared to an average realized wellhead price of $5.03

       per Mcfe after realized hedging results ($4.48 per Mcfe pre-hedging) in

       the second quarter of 2007.

    -- The Company participated in the drilling of 96 gross wells in the

       second quarter.

    -- Total gross producing wells increased to 247 (108 net) at June 30, 2008

       as compared to 38 gross producing wells (9 net) at June 30, 2007.

    -- The Company acquired reserves, production and certain oil and gas

       properties in the Central Kansas Uplift ("CKU") for $53.6 million.



    Operating Activity by Project. Overall, the Company has interests in

eight oil and gas projects, of which five are operated by Teton.



    Central Kansas Uplift. Since acquiring the Teton-operated CKU assets in

early April 2008, Teton has drilled nine gross wells. Five wells are

producing, two wells are awaiting completion and two wells were

unsuccessful, resulting in a 78 percent success rate to date. An additional

well is currently drilling, one well is recompleting and a new well

location is under construction. Current cumulative gross production from

the five wells is averaging 208 barrels of oil per day ("bopd") or 1.25

MMcfed. Additional potential producing zones, currently behind pipe, will

be opened up as the production in these wells stabilizes. After beginning

operations with one drilling rig, Teton added a second rig in June and is

adding a third drilling rig this week. Teton is also operating a

completion/workover rig in the area. Teton has performed seven workovers to

date which have added incremental gross production of 114 bopd (684 Mcfed).



    At mid-year, the Company increased its capital expenditure program in

the CKU from $7 million to up to $13.5 million and now plans to drill a

total of up to 40 new wells in 2008 and perform 12 workovers as compared to

29 wells and 12 workovers previously planned.



    Piceance Basin. Teton participated in the drilling of 27 gross wells in

the first six months of 2008. As of July 31, 2008, 72 gross wells were

producing with 17 wells waiting on completion, eight wells completing and

three wells drilling. The success rate for wells drilled and completed over

the life of the project is 100 percent.



    DJ Basin. In the Teton/Noble AMI, the Company participated in 59 gross

wells during the first six months of 2008. As of July 31, 2008, 164 gross

wells have been drilled in the play of which 109 wells are currently

producing, six wells are completing, 13 wells are waiting on completion,

two wells are drilling, two wells are service wells and 32 wells were

unsuccessful, resulting in an 81 percent success rate. In the Washco area,

where Teton has 27 wells, Teton has performed two workovers to return two

shut-in wells to production.



    Williston Basin. Teton has participated in the drilling of four gross

wells to date in 2008. Teton holds a non-operated interest in seven wells,

including six Bakken wells and one Red River well. Five wells are

producing, one well is drilling and one well is in a workover mode. Three

additional wells, including two Bakken wells and one Red River well are

approved waiting on equipment and/or permits to begin drilling.



    Big Horn Basin. Teton is in the process of permitting two Greybull and

two Mowry Shale wells and plans to spud a Greybull test during the fourth

quarter of 2008. The Company recently announced an agreement with Unit

Petroleum Company to fund a portion of the first two wells in return for a

50 percent working interest in approximately 26,000 gross acres.



    Other Financial Highlights. Other financial highlights for the second

quarter of 2008 include the following:




    -- On April 2, 2008, Teton amended and increased its revolving credit

       facility with JPMorgan Chase Bank from $50 million to $150 million and

       increased its available borrowing base from $10 million to $50 million.

       The current borrowing base following the June 18, 2008 private debt

       placement is $32.5 million.

    -- On May 16, 2008, the Company completed the repayment of its $9.0

       million of 8% Senior Subordinated Convertible Notes issued on May 16,

       2007:  $6.6 million was repaid in cash and $2.4 million was converted

       into 480,000 shares of common stock at a conversion price of $5.00 per

       share.

    -- On June 18, 2008, the Company closed the private placement of $40

       million of 10.75% Secured Convertible Debentures. The holders have a

       90-day put option to call up to 25 percent of the face amount, or $10

       million.  The funds were used to pay down the Company's outstanding

       indebtedness on its revolving credit facility, which will be available

       for future capital expenditures.

    -- On June 30, 2008, the Company completed the syndication of its

       revolving credit facility with a group of four banks, including

       JPMorgan Chase Bank as administrative agent.



    Capital Expenditures. The capital expenditure budget for the full year

2008 has been increased 14 percent to up to $49.2 million, largely to

accelerate development of the Kansas properties through the drilling of up

to 11 additional wells. Capital expenditures for the second quarter and six

months ended June 30 totaled $7.3 million and $16.0 million, respectively.



    Price Risk Management. Teton manages its overall exposure to commodity

price fluctuations through the use of various hedging contracts for some of

its production. The duration of various hedging contracts depends on the

Company's view of market conditions, available contract prices and

operating strategy. The use of such contracts is intended to limit the risk

of fluctuating cash flows. As of June 30, 2008, Teton had hedging contracts

in effect for approximately 80 percent of its then-current daily net

production.



    Balance Sheet. At June 30, 2008, Teton had total assets of $139.1

million, cash and cash equivalents in short-term investments of $14.0

million, total long-term debt outstanding of $51.9 million and a long term

debt to total capitalization ratio of 61 percent. The higher level debt to

capitalization is largely related to a decrease in stockholders' equity as

a result of the $23.5 million charge to income for unrealized losses on oil

and gas derivatives. In accordance with SFAS 133, "Accounting for

Derivative Instruments and Hedging Activities", these losses increased the

Company's accumulated deficit, which is a component of stockholders equity,

at June 30, 2008.



    CEO comments. Karl Arleth, President and Chief Executive Officer,

commented, "The Central Kansas acquisition contributed substantially to our

results in the second quarter, as we realized a 922 percent increase in our

operating revenue over the second quarter of 2007. We now have three

drilling rigs on location and will accelerate our drilling program in the

second half of 2008. We are very focused on executing our business plan to

optimize operating results and develop the group of assets we have

assembled as we enter the next phase of our company's evolution, whereby we

are generating growing discretionary cash flow from operations."



    Earnings conference call. Teton invites you to participate in its

second quarter 2008 financial and operating results conference call today

August 7, 2008 at 9:30 a.m. (Mountain Time) by dialing (877) 407-0782 (Toll

Free) or (201) 689-8567 (International). Please dial in five to ten minutes

before the start of the call. A replay of the conference call will be

available through midnight, August 21, 2008 by dialing (877) 660-6853 (Toll

Free) or (201) 612-7415 (International), conference ID#292669 and account

#286. Both numbers are needed for the replay. The live conference call may

also be accessed on the Internet by logging onto Teton's Web site at

http://www.teton-energy.com. Select Investor Relations, then the Webcasts

and Presentations option on the menu. Log on at least ten minutes prior to

the start of the call to register, download and install any necessary audio

software. An audio replay of the call will also be available on the web

site for approximately 60 days following the live webcast.










    Financial Results:



    (In thousands except per share) Three Months Ended    Six Months Ended

                                          June 30,             June 30,

                                      2008       2007      2008       2007

    Operating revenues:

    Oil and gas sales              $10,121       $990    $13,761      $2,188



    Operating expenses:

      Lease operating expense        1,302         64      1,651         107

      Transportation expense           477        158        600         287

      Production taxes                 425         89        627         153

      Exploration expense              762        309      1,088         615

      General and administrative     4,756      2,180      8,575       4,060

      Depreciation, depletion and

       accretion expense             3,099        594      5,298       1,149

        Total operating expenses    10,821      3,394     17,839       6,371



    Operating income (loss)           (700)    (2,404)    (4,078)     (4,183)



    Other income (expense):

      Realized gain (loss) on oil

       and gas derivative contracts (1,715)       201     (1,936)        256

      Unrealized loss on oil and

       gas derivative contracts    (22,246)      (105)   (23,479)       (198)

      Gain (loss) on derivative

       warrant liabilities              51     (4,629)       876      (4,629)

      Interest expense, net         (5,418)      (308)    (9,634)       (292)

        Total other expense        (29,328)    (4,841)   (34,173)     (4,863)



    Net loss                      $(30,028)   $(7,245)  $(38,251)    $(9,046)



    Basic loss per common share     $(1.40)    $(0.45)    $(1.95)     $(0.57)



    Fully diluted loss per common

     share                          $(1.40)    $(0.45)    $(1.95)     $(0.57)



    Basic weighted-average

     common shares outstanding  21,477,811 16,125,492 19,625,383  15,846,748

    Fully diluted weighted-

     average common shares

     outstanding                21,477,811 16,125,492 19,625,383  15,846,748







    Condensed Consolidated Balance Sheet:



    (Dollars in thousands)                           June 30,    December 31,

                                                       2008         2007

    Assets:

    Cash and cash equivalents                        $13,977      $24,616

    Other current assets                               9,353        4,385

    Total current assets                              23,330       29,001

    Net property and equipment                       113,859       49,139

    Other non-current assets                           1,941          159

    Total assets                                     139,130       78,299



    Liabilities and Stockholders' Equity:

    Current liabilities                              $39,038      $20,742

    Long-term debt                                    51,867        8,000

    Other long-term liabilities                       15,503          529

    Total liabilities                                106,408       29,271

    Total stockholders' equity                        32,722       49,028

    Total liabilities and stockholders' equity      $139,130      $78,299







    Operating Results:



                                           Quarter             Six Months

                                        Ended June 30,        Ended June 30,

                                        2008      2007        2008      2007

    Net production volumes (Mcfed)     7,520     2,942       6,080     2,591

    Realized price (pre hedging)

     ($/Mcfe)                         $14.79     $4.48      $12.44     $4.67

    Realized price (net of hedging)

     ($/Mcfe)                         $12.37     $5.03      $10.74     $5.09

    Lease operating expense ($/Mcfe)   $1.90     $0.24       $1.49     $0.23

    Transportation expense ($/Mcfe)    $0.70     $0.59       $0.54     $0.61

    Production taxes ($/Mcfe)          $0.62     $0.34       $0.57     $0.33

    Gross margin ($/Mcfe)(1)           $9.15     $3.86       $8.13     $3.92

    Exploration expense ($/Mcfe)(2)    $1.11     $1.16       $0.98     $1.31



    (1)  Gross margin is realized price (net of hedging) less lease operating

         expense, transportation expense and production taxes.

    (2)  Includes delay rentals, and geological and geophysical costs.







    Reconciliation of Net income (loss) to EBITDAX:



    (Dollars in thousands)           Three Months Ended     Six Months Ended

                                           June 30,              June 30,

                                        2008      2007        2008      2007

    Net income (loss)               $(30,028)  $(7,245)   $(38,251)  $(9,046)



    Add:



    Interest expense, net              5,418       308       9,634       292



    Depreciation, depletion and

     accretion expense                 3,099       594       5,298     1,149



    Exploration expense                  762       309       1,088       615



    Unrealized loss on oil and gas

     derivative contracts             22,246       105      23,479       198



    (Gain) loss on derivative

     warrant liabilities                 (51)    4,629        (876)    4,629



    Stock-based compensation expense   3,457       898       5,236     1,792



    EDITDAX                           $4,903     $(402)     $5,608     $(371)





    EBITDAX is not a measure determined pursuant to generally accepted

accounting principles, or GAAP, nor is it an alternative to GAAP income.

The Company is presenting this information, as it is an important measure

of financial performance used by equity analysts.



    Company Description. Teton Energy Corporation is an independent oil and

gas exploration and production company focused on the acquisition,

exploration and development of North American properties. The Company's

current operations are concentrated in the prolific Rocky Mountain and

Mid-continent regions of the U.S. Teton has leasehold interests in the

Central Kansas Uplift, the eastern Denver-Julesburg Basin in Colorado,

Kansas and Nebraska, the Piceance Basin in western Colorado, the Williston

Basin in North Dakota and the Big Horn Basin in Wyoming. Teton is

headquartered in Denver, Colorado and is publicly traded on the American

Stock Exchange under the ticker symbol "TEC". For more information about

Teton, please visit the Company's website at http://www.teton-energy.com.



    Forward-Looking Statements. This news release may contain certain

forward-looking statements, including declarations regarding Teton's and

its subsidiaries' expectations, intentions, strategies and beliefs

regarding the future within the meaning of Section 27A of the Securities

Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All

statements contained herein are based upon information available to Teton's

management as at the date hereof and actual results may vary based upon

future events, both within and without the control of Teton's management,

including risks and uncertainties that could cause actual results to differ

materially including, among other things, the impact that additional

acquisitions may have on Teton and its capital structure, exploration

results, market conditions, oil and gas price volatility, uncertainties

inherent in oil and gas production operations and estimating reserves,

unexpected future capital expenditures, competition, governmental

regulations, and other factors discussed in the Company's Annual Report on

Form 10-K for the year ended December 31, 2007, filed with the Securities

and Exchange Commission. Teton's disclosure reports are on file at the

Securities and Exchange Commission and can be viewed on Teton's website at

http://www.teton-energy.com. Copies are available without charge upon

request from the Company.






     Investor contact:

     Ron Wirth

     Director of Investor Relations & Administration

     303-565-4600 X124

     [email protected]