Galaxy Energy and PetroHunter Energy Corporation Extend Closing Date on Sale of Galaxy's Powder River Basin Oil and Gas Assets

    DENVER, CO, Aug. 1 /CNW Telbec/ - Galaxy Energy Corporation (Amex:   GAX)
and its wholly owned subsidiary, Dolphin Energy Corporation, have agreed to an
amendment to the Purchase and Sale Agreement (PSA) with PetroHunter Energy
Corporation. The amendment extends the closing date to on or before August 31,
2007, in connection with PetroHunter's efforts to obtain financing. Marc A.
Bruner, a 14.1% beneficial shareholder of Galaxy, is the 75% owner of MAB
Resources LLC (MAB Resources) which is PetroHunter's largest shareholder. In
addition, Marc A. Bruner is the father of Marc E. Bruner, Galaxy's President
and Chief Executive Officer and a director.
    Under the terms of the PSA, which was originally signed on December 29,
2006, PetroHunter agreed to pay a total consideration of $45 million to
acquire all of Galaxy/Dolphin's oil and gas working interests in Sheridan,
Johnson, Converse and Campbell Counties in Wyoming, and Big Horn, Custer,
Powder River and Rosebud Counties in Montana. The PSA calls for $20 million to
be paid in cash and the remainder to be paid in PetroHunter common stock. On
March 21, 2007, in consideration of the agreement of MAB Resources to acquire
an undivided working interest in the properties by assuming the obligation
under the PSA to pay Galaxy/Dolphin the PetroHunter common stock, PetroHunter
assigned to MAB Resources its right to purchase an undivided 45% interest in
all of the oil and gas assets being sold by Galaxy. Closing of the transaction
will be subject to PetroHunter obtaining financing on terms acceptable to
PetroHunter and approval of the PSA by Galaxy's senior lenders.
    As required under the PSA, PetroHunter made an initial earnest money
deposit to Galaxy in the amount of $2 million. On closing of the transaction,
PetroHunter will receive a credit against the purchase price for the deposit
and expenses incurred by it as contract operator of Galaxy/Dolphin's
properties. If the transaction does not close by August 31, 2007, the total
amount of the deposit and operating expenses incurred by PetroHunter will
convert to a subordinated, unsecured promissory note.
    Either party may terminate the agreement if the closing has not occurred
by August 31, 2007. Galaxy has filed a Form 8-K concerning the amendment to
the PSA with the Securities and Exchange Commission.
    Dolphin owns an average 86% working interest in 197 oil and gas wells in
the Powder River Basin. Twenty-two wells are currently selling gas at an
average rate of about 530,000 cubic feet per day. The remaining wells are in
various stages of dewatering, shut-in waiting on pipeline, or waiting to be

    Amex Update

    In June 2007, Galaxy submitted a plan to the American Stock Exchange
(Amex), to advise Amex of action the company has taken, or will take, that
would bring Galaxy into compliance with all of Amex's continued listing
standards by November 24, 2008. These actions include the proposed sale of
Galaxy's oil and gas assets in the Powder River Basin. Amex is currently
reviewing the company's plan submission and no assurances can be given that
the plan will be accepted by Amex. When completed, the proposed sale of the
Powder River Basin assets will positively impact the company's stockholders'
equity, significantly reduce Galaxy's outstanding debt and provide the initial
funding required for Galaxy to continue its operations in the Piceance Basin
of Colorado.

    About Galaxy Energy

    Galaxy Energy Corporation, a development stage oil and gas exploration
and production company, focuses its operations in the Powder River Basin of
Wyoming and the Piceance Basin of Colorado, in addition to exploration
activities in Germany and Romania. Galaxy conducts its exploration activities
through two wholly owned subsidiaries, Dolphin Energy Corporation and
Pannonian International, Ltd.

    Forward Looking Statement

    This press release consists of forward looking statements regarding the
intent, belief or current expectations of Galaxy and its management.
Prospective investors are cautioned that any such forward looking statements
are not guarantees of future performance and involve a number of risks and
uncertainties, and actual results could differ materially from those indicated
by such forward looking statements. Galaxy assumes no obligation to update the
information contained in this press release, whether as a result of new
information, future events or otherwise. Please refer to Galaxy's filings with
the United States Securities and Exchange Commission for discussions of risks
and uncertainties found in Forms 10-K (annual report), 10-Q (quarterly report)
and other filings.

    Additional information may be found at the Galaxy Energy Corporation Web
site, or by calling Brad Long, Investor Relations/Galaxy
Energy at (800) 574-4294, Bevo Beaven or Warren Laird of CTA Integrated
Communications at (303) 665-4200.

For further information:

For further information: Renmark Financial Communications Inc.: Neil
Murray-Lyon:; Dan Symons:, (514) 939-3989, Fax: (514) 939-3717,

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