LEXINGTON, Ky., July 8 /PRNewswire/ -- Daugherty Resources (Nasdaq: NGAS)
announced today that Daugherty Petroleum has signed a Letter of Intent to sell
its 80% stake in Red River Hardwoods to H & S Lumber, Inc.
    The Letter of Intent, which calls for a definitive agreement to be
executed and a closing of the sale of Daugherty's hardwood dimension plant to
occur before August 1, 1999, has an effective date of June 30, 1999.  While
the Letter of Intent does not permit the disclosure of the sale price or other
financial data prior to the closing, Daugherty's Chief Executive Officer,
William S. Daugherty, stated, "This sale will result in a significant
reduction in the Company's operating losses and will increase equity.  When
concluded, the transaction will permit Daugherty's management to concentrate
on it's energy related business and address previous concerns related to Red
River's lack of synergy with the Company's core business of drilling and
producing natural gas."
    H & S Lumber is a saw mill and lumber concern locally owned and operated
in Clay City, Kentucky, the site of Red River's manufacturing facility.
Daugherty Petroleum is a wholly owned subsidiary of Daugherty Resources, a
natural resources development company with interests in oil and gas
development, wood products manufacturing and gold mining prospects.
    The information in this release includes certain forward-looking
statements that are based on assumptions that in the future may prove not to
have been accurate.  Those statements, and Daugherty Resources and its
subsidiaries are subject to a number of risks, including production variances
from expectations, volatility of product prices, the capital expenditures
required to fund its operations, environmental risks, competition, government
regulation, and the ability of the company to implement its business strategy.
These and other risks are described in the company's documents and reports
that are available from the company and the United States Securities and
Exchange Commission.

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