GAX Galaxy Energy Corp.

* Amex grants extension to meet continued listing standards DENVER, June 19 /PRNewswire-FirstCall/ -- Galaxy Energy Corporation (AMEX:GAX) announced today an update of its status with the American Stock Exchange and its drilling activities in both the Piceance Basin and the Powder River Basin. American Stock Exchange The Company has received notice from the American Stock Exchange that, although it is not now in compliance, the business plan submitted by the Company on May 12, 2006 "makes a reasonable demonstration of the Company's ability to regain compliance with the continued listing standards" of the Exchange. The Exchange has given the Company an extension until July 24, 2006 to implement portions of the business plan sufficient to convince the Exchange that, in fact, it has regained compliance with the Exchange's continued listing requirements. As an important facet of its business plan, the Company has determined to sell certain of its properties in the Powder River Basin and other areas which it considers non-core, that is, properties on which it does not plan to commence development activities within the next two fiscal years. The Company will make further releases as it identifies with the help of its advisers specific properties for sale. As additional parts of its plan, the Company will aggressively pursue operations in the Piceance Basin and selected areas of the Powder River Basin. The Company's progress with these operations is updated below. The Piceance Basin The Company controls approximately 6,000 (1,500 net) undeveloped acres in the Piceance Basin through its wholly owned subsidiary, Dolphin Energy Corporation and in partnership with Exxel Energy Corp. The Company has received permits to drill on 10-acre spacing in its areas of current operation and will apply for approval to drill on 10-acre spacing throughout most of its acreage position. Although the Company experienced delays in the drilling of its first well, in the Piceance Basin, it has met its drilling timeline on the second well and is currently ahead of its drilling schedule on the third well. The first well, the Biscuit Ranch 10-31D well, in which the Company has a 25% working interest, was spudded on January 25, 2006. Drilling of the well took longer than originally anticipated due to a variety of reasons and it took 55 days for the well to be drilled to a target depth of 9,250 feet. Completion operations and testing are now underway with three fracture treatment stages having already been completed. Fracture treatment fluids are currently being recovered from these stages and gas flow tests will be conducted within the next few days. Test results will be announced when the tests are complete. A possible fourth stage treatment may also be done on this well once the flow rate from the first three stages is known. The second well, the Mulvihill 15-32D well, in which the Company will have an 18.75 to 25% working interest, depending upon a participation election by an unrelated operator, was drilled to a depth of 10,010 feet within the planned drilling time of 27 days. Completion intervals are being selected, and fracture treatment stimulations are being designed based on the results of the work completed to date in the first well. Drilling for the third well, the Purkey Ranch 13-31B well, in which the Company has a 25% working interest, is moving ahead at an accelerated pace. The well was spudded on May 29, 2006 and has been drilled to a depth of 8,134 feet in only 20 days from the commencement of drilling operations. Target depth of 9,300 feet is anticipated to be reached within four days. In addition to the interests owned in these three operated wells, the Company through Dolphin has varying working interests in additional non- operated wells. These non-operated wells include one producing well operated by Williams Production RMT Company, two wells operated by Bill Barrett Corporation with one in the completion phase and the other well drilling, as well as one well in the completion and evaluation phase, which is operated by Antero Resources Company. The Company has identified five additional operated well locations which are fully permitted with drilling pads completely constructed and ready for a drilling rig. Three additional individual well locations are in various stages of permitting, and seven more locations are identified and planned for immediate permitting to continue development of an inventory of drilling locations for the ongoing drilling program. To assist in the accelerated drilling program outlined above, the Company has contracted for the use of a second drilling rig, which is now being transported to the site of the BR 03-03B Biscuit Ranch well, in which the Company has a 25% working interest. It is believed that drilling of this well can start by the end of June. The rig will be shared with another operator and it is uncertain at this point what its availability to the Company will be after the BR 03-03B well is drilled. The Powder River Basin In Sheridan County, Wyoming, dewatering operations continue from the Company's Pipeline Ridge completed producing wells. Increased water handling capacity is planned for this area with the implementation of a managed irrigation project on adjacent private property, which will include installation of at least three center pivot sprinkler units. Based on the results of the Pipeline Ridge project, the same approach for handling of increased produced water volumes will be considered for the Leiter and Ucross areas of Sheridan County, where the Company currently has 49 wells in various stages of completion with inadequate water handling capacity for the projected dewatering rates. The Company's producing wells located on the eastern side of the Wyoming portion of Campbell County continue to generate production and gas sales, currently at the rate of 825 mcf per day. About Galaxy Energy Galaxy Energy Corporation, a development stage oil and gas exploration and production Company, is focusing on acquiring and developing coal bed methane in the Powder River Basin of Wyoming and Montana and other unconventional natural gas properties in the Piceance Basin of Colorado, in addition to exploration activities in Germany, Romania and Texas. The Company 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 the Company 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. The Company 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 the Company's filings with the United States Securities and Exchange Commission for discussions of risks and uncertainties found in Forms 10-KSB (annual report), 10-QSB (quarterly report) and other filings. Additional information may be found at the Galaxy Energy Corporation Web site, http://www.galaxyenergy.com/ or by calling Brad Long, Investor Relations/Galaxy Energy at (800) 574-4294, Bevo Beaven or Warren Laird of CTA Public Relations at (303) 665-4200, or Tina Cameron, Renmark Financial Communications at (514) 939-3989 or Kathleen Heaney (203) 803-3585 of Integrated Corporate Relations. DATASOURCE: Galaxy Energy Corporation CONTACT: Brad Long, Investor Relations of Galaxy Energy, +1-360-945-0395, +1-800-574-4294; or Bevo Beaven, Vice President/GM, or Warren Laird, Senior Account Executive both of CTA Public Relations, Inc., +1-303-665-4200, for Galaxy Energy Corporation Web site: http://www.galaxyenergy.com/

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