BPG Bpi Energy Holdings,

BPI Energy Holdings, Inc. (AMEX: BPG), an independent energy company engaged in the exploration, production and commercial sale of coalbed methane (CBM) in the Illinois Basin, today announced financial and operating results for the quarter and six-month periods ended Jan. 31, 2008. During the fiscal 2008 second quarter, net gas sales volume increased 73 percent to 64.5 million cubic feet from 37.4 million cubic feet in last year�s comparable quarter. On a sequential basis, net gas sales increased 13 percent versus the current fiscal year�s first quarter. For the first six months of fiscal 2008, BPI reported net gas sales of 121.3 million cubic feet�up 37 percent from the first half of fiscal 2007. Gas prices increased modestly compared with the second quarter of fiscal 2007 and the first quarter of fiscal 2008. The company received an average of $6.79 per thousand cubic feet (Mcf) during the quarter, versus averages of $6.61 and $5.60 per Mcf, respectively, during last year�s second quarter and this fiscal year�s first quarter. BPI has entered into a �costless collar� commodity derivative contract that set a �price floor� and �price ceiling� on the majority of the company�s gas production through July 2009. Under the terms of the contract, any shortfall below the floor of $7.00 per MMBtu will be covered and any price excess above the ceiling of $11.00 per MMBtu will be paid to the derivative contract�s counterparty. Fiscal second-quarter 2008 revenues from gas sales advanced 77 percent to $438,000 from the $247,000 generated in the comparable year-ago period, primarily reflecting the sales volume increase. The company�s net loss was $1.7 million, or $0.02 per share, compared with last year�s net loss of $1.8 million, or $0.03 per share. For the six-month period, revenues rose 40 percent to $756,000 from last year�s level of $541,000. Average selling price in this year�s first half was $6.23 per Mcf, compared with $6.09 per Mcf realized in the year-ago period. A net loss of $3.6 million, or $0.05 per share, was recorded during the fiscal year�s first half, compared with last year�s net loss of $4.5 million, or $0.07 per share. BPI has experienced significant losses in recent periods and must be able to finance both its current operations and future exploration and development costs, to remain a going concern. The company is not currently drilling new wells; however, based on its current working capital situation, the company will need to raise cash in order to be able to settle its accounts payable and fund its net cash used in operating activities through the fiscal quarter ended April 30, 2008. The company has historically financed its activities primarily from the proceeds of private placements of its common shares and most recently from advances under the Credit Agreement with GasRock. BPI Energy is currently evaluating options for financing current and future operations and engaging in discussions with potential funding sources and transaction partners. Tristone Capital has been engaged by the company to assist in evaluating all options, which include additional advances under its Credit Agreement, which are at the discretion of GasRock, issuance of new debt and/or equity securities, joint ventures, mergers/combinations, asset sales or a combination of these alternatives. Although the company is currently evaluating its options and engaging in discussions with potential funding sources and transaction partners to raise the necessary funds, it can provide no assurance that it will be successful in completing a financing or transaction. Project Update Commenting on the company�s operations, BPI Energy�s Chairman and Chief Executive Officer James G. Azlein said: �We drilled four new production wells at our Southern Illinois Basin Project and completed and tied in six new wells that were drilled in the prior quarter. We also drilled two additional test wells and during workover operations, we abandoned one older well, which resulted in a total of 126 producing wells at quarter end.� Operating data for the fiscal 2008 second-quarter and six-month periods ended Jan. 31, 2008, are summarized below: Selected Financial and Operating Data � Three Months Ended 1/31/2008 � 1/31/2007 � Net Gas Sales (Mcf) 64,481 37,352 � Average Selling Price ($/Mcf), net $6.79 $6.61 � Six Months Ended 1/31/2008 1/31/2007 � Net Gas Sales (Mcf) 121,314 88,842 � Average Selling Price ($/Mcf), net $6.23 $6.09 � At 1/31/2008 At 7/31/2007 � Cumulative Wells Drilled 206 170 � Wells Producing and Selling Gas1 126 91 � Cash Balance (in millions)2 $2.6 $11.3 � Acreage in Production < 2% < 2% � Total Acreage 531,000 512,000 1All producing wells are located at BPI Energy�s Southern Illinois Basin Project. 2Cash Balance at March 10, 2008, was $1.7 million. BPI is filing its Form 10-Q for the interim period with the Securities and Exchange Commission today, Monday, March 17, 2008. Please refer to the Form 10-Q, which can be found on the company�s website, for additional information on BPI Energy and its interim results. To be added to BPI Energy�s e-mail distribution list, please click on the link below: http://www.clearperspectivegroup.com/clearsite/bpi/emailoptin.html About BPI Energy BPI Energy (BPI) is an independent energy company engaged in the exploration, production and commercial sale of coalbed methane (CBM) in the Illinois Basin, which covers approximately 60,000 square miles in Illinois, southwestern Indiana and northwestern Kentucky. The company controls a large CBM acreage position in the Illinois Basin at approximately 531,000 acres. News releases and other information on the company are available on the Internet at: http://www.bpi-energy.com Some of the statements contained in this report that are not historical facts, including statements containing the words �believes,� �anticipates,� �expects,� �intends,� �plans,� �should,� �may,� �might,� �continue� and �estimate� and similar words, constitute forward-looking statements under the federal securities laws. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements, or the conditions in our industry, on our properties or in the Basin, to be materially different from any future results, performance, achievements or conditions expressed or implied by such forward-looking statements. Some of the factors that could cause actual results or conditions to differ materially from our expectations, include, but are not limited to: (a) our inability to generate sufficient income, obtain sufficient financing, close an offering of debt or equity securities, or complete a merger/combination or other transaction that would enable us to fund our operations through the quarter ending April 30, 2008; (b) our inability to retain our acreage rights at our projects, at the expiration of our lease agreements, due to insufficient CBM production or for other reasons; (c) our failure to accurately forecast CBM production; (d) displacement of our CBM operations by coal mining operations, which have superior rights in most of our acreage; (e) our failure to accurately forecast the number of wells that we can drill; (f) a decline in the prices that we receive for our CBM production; (g) our failure to accurately forecast operating and capital expenditures and capital needs due to rising costs or different drilling or production conditions in the field; (h) our inability to attract or retain qualified personnel with the requisite CBM or other experience; (i) unexpected economic and market conditions, in the general economy or the market for natural gas; (j) limitations imposed on us by our Credit Agreement with GasRock; (k) our ability to repay or refinance the amounts advanced to us by GasRock when such amounts become due; and (l) potential exposure to losses caused by our derivative contract. We caution readers not to place undue reliance on these forward-looking statements. �Financial Tables Follow� BPI Energy Holdings, Inc. Consolidated Statements of Operations (Dollars in thousands, except per share data) (Unaudited) � � Three Months EndedJan. 31, � Six Months EndedJan. 31, 2008 � 2007 2008 � 2007 Revenues: Gas sales $ 438 $ 247 $ 756 $ 541 � Expenses: Lease operating expense 377 528 635 864 General and administrative expenses 1,519 1,470 3,403 4,204 Lease rentals and other operating expense 79 - 79 - Depreciation, depletion and amortization 168 � 192 � 348 � 376 � Total operating expenses 2,143 2,190 4,465 5,444 � Operating loss (1,705 ) (1,943 ) (3,709 ) (4,903 ) � Other income (expenses): Interest income 34 166 131 385 Interest expense (30 ) (3 ) (32 ) (6 ) Other income (expense) 44 � - � 18 � - � 48 � 163 � 117 � 379 � � Net loss $ (1,657 ) $ (1,780 ) $ (3,592 ) $ (4,524 ) � Basic and diluted loss per share ($0.02 ) ($0.03 ) ($0.05 ) ($0.07 ) � Weighted average common shares outstanding 71,054,872 70,059,225 70,485,748 69,427,874 BPI Energy Holdings, Inc. Consolidated Balance Sheets (Dollars in thousands) � Jan. 31, 2008 � July 31, 2007 (Unaudited) ASSETS Current Assets: Cash and cash equivalents $ 2,578 $ 11,292 Accounts receivable 258 94 Other current assets 1,298 � 1,348 � Total current assets 4,134 12,734 � Property and equipment, at cost: Gas properties, full cost method of accounting: Proved, net of accumulated depreciation, depletion, amortization and impairment of $12,815 and $12,621 21,936 16,631 Unproved, excluded from amortization 10,372 8,533 Support equipment, net of accumulated depreciation and amortization of $828 and $741 434 � 552 � Net gas properties 32,742 25,716 Other property and equipment, net of accumulated depreciation and amortization of $214 and $152 457 � 473 � Net property and equipment 33,199 26,189 Restricted cash 100 100 Other non-current assets 168 � 220 � Total assets $ 37,601 � $ 39,243 � � LIABILITIES AND SHAREHOLDERS� EQUITY Current Liabilities: Accounts payable $ 1,126 $ 1,371 Current maturities of long-term debt and notes payable 10,959 8,488 Accrued liabilities and other 537 � 1,503 � Total current liabilities 12,622 11,362 � Long-term debt and notes payable, less current maturities 38 48 Asset retirement obligation 156 114 Other long-term liabilities 16 � - � Total liabilities 12,823 11,524 � Shareholders� Equity: Common shares, no par value, authorized 200,000,000 shares, 73,611,896 and 72,524,493 issued and outstanding 67,946 67,946 Additional paid-in capital 8,250 7,608 Accumulated deficit (51,427 ) (47,835 ) Total shareholders� equity 24,769 � 27,719 � Total liabilities and shareholders� equity $ 37,601 � $ 39,243 �