Tidelands Oil & Gas Update on Sonterra Energy

Tidelands Oil & Gas Update on Sonterra Energy

Tidelands Oil & Gas Corporation , a midstream natural gas project development, natural gas pipeline, and NGL distribution company, today said it is updating shareholders and potential investors about the progress and achievements of its Sonterra Energy subsidiary.

“Sonterra Energy continues to see solid improvement year over year across all segments of its operations. During 2006, it continued to focus on improving bottom line figures by improving operational efficiencies and increasing revenue. Revenue increased approximately 17% from 2005 to 2006, while expenses increased by approximately 8%,” said Tidelands President & CEO James B. Smith.

“The growth in revenue was due to an increase in gas sales and the growth of our construction service business. The overall growth of our customer base and a colder winter led to the increase of gas sales revenue. In 2006, we made a commitment to increase revenues through our construction business. Through this focus, and the dedication and hard work of our employees, Sonterra Energy was able to generate a meaningful increase in revenue from our construction activities. The modest increase in expenses for 2006 was due to the higher volume of gas purchased, and increased material and equipment costs generated by the higher volume of construction work performed,” Mr. Smith said.

“Sonterra Energy continues to steadily add to its customer base. We are forecasting a 15% increase in its customer base for 2007. Sonterra Energy currently provides gas service to approximately 1155 customers serving 17 developments in the Central Texas Area. At total build-out of these developments, Sonterra Energy will provide gas service to approximately 2250 customers,” Tidelands CEO said.

“Management continues to seek out new developments where Sonterra Energy can provide propane gas service via its ‘Community Gas Systems.’ Rapidly growing communities include Cordillera Ranch, one of the Texas Hill Country’s most exclusive Golf Communities, Avonlea, a new community near Canyon Lake, one of the new developments Sonterra Energy will begin serving in 2007, and the rapidly growing community of Senna Hills, located near Lake Travis, are adding key additional customers,” Mr. Smith said. “With increased marketing efforts and education to developers throughout Texas, Sonterra will continue to succeed in growing its customer base.”

“Management continues to seek new avenues to increase revenue through the use of our existing assets including expanding the scope of Sonterra’s construction division. In January 2007, Sonterra Energy was awarded a construction and installation contract with the largest telephone cooperative in Texas, GVTC Communications. GVTC provides cable TV, high speed internet, security, and telephone service to more than 31,000 customers in 11 counties across 2000 square miles of Central Texas. Since many of our employees were already experienced in various types of utility construction, this was a great opportunity to expand into another business segment. Management is actively seeking similar utility construction contracts with other service providers to increase the revenue stream,” Tidelands CEO said.

Tidelands Oil & Gas Corporation

Tidelands Oil & Gas Corporation, San Antonio, Texas, focuses on development of mid-stream oil and gas projects including natural gas pipeline infrastructure, retail NGL sales, and natural gas receiving and storage facilities. Through its subsidiaries, Tidelands offers a full suite of services and has the capability to satisfy a wide variety of customer needs, both domestically and internationally. For more information about the Company, please contact Jim Smith at jsmith@tidelandsoilandgas.com.

Cautionary Statement to Investors: Statements made in this release with respect to Tidelands’ current plans, estimates, strategies and beliefs and other statements that are not historical facts are forward-looking statements about the future performance of Tidelands. Forward-looking statements include, but are not limited to, those statements using words such as “believe,” “expect,” “plans,” “strategy,” “prospects,” “forecast,” “estimate,” “project,” “anticipate,” “aim,” “may” or “might” and words of similar meaning in connection with a discussion of future operations, financial performance, events or conditions. From time to time, oral or written forward-looking statements may also be included in other materials released to the public. These statements are based on management’s assumptions and beliefs in light of the information currently available to it. Tidelands cautions you that a number of important risks and uncertainties could cause actual results to differ materially from those discussed in the forward-looking statements, and therefore you should not place undue reliance on them. Those cautionary risks are outlined in the Company’s filings with the U.S. Securities and Exchange Commission. You also should not rely on any obligation of Tidelands to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Tidelands disclaims any such obligation. Furthermore, this news release is not an offer or a solicitation of an offer to buy or sell securities. Please be aware that decisions regarding investing are the responsibility of users themselves.

Source: Tidelands Oil & Gas Corporation

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