DENVER, Colorado — Tipperary Corporation (AMEX-TPY), an independent oil and gas company, today announced that Slough Estates USA Inc., the Company’s largest shareholder, has agreed to provide Tipperary financing of $11.7 million. The Company plans to use the funds to finance ongoing development of its Australia coalbed methane project and to reduce bank debt. The financing is pursuant to an agreement which is subject to execution of definitive documents by December 31, 1998.

According to the letter agreement, Slough will extend Tipperary a loan of $1.7 million, which will be in addition to the $3.8 million Slough has previously loaned the Company. The combined loan will have a three-year term and bear interest at the London Interbank Offered Rate (LIBOR) plus 3.5%. The Company will also receive $4.0 million from the purchase by Slough of two million shares of restricted Tipperary common stock at a price of $2.00 per share. Tipperary will use $4.7 million to reduce bank debt and retain $1.0 million for working capital. Slough will receive warrants to purchase up to 500,000 shares of Tipperary common stock at $3.00 per share. The warrants will be exercisable during a period beginning two years from the date of closing and ending seven years from the date of closing.

Additionally, Slough will loan to Tipperary Oil & Gas (Australia) Pty Ltd., a wholly-owned subsidiary of Tipperary, $6.0 million and will receive a 10% common stock interest in the subsidiary. The note will bear interest at the rate of 10% per annum plus an additional payment based upon the performance of the Comet Ridge coalbed methane project in Queensland, Australia. Tipperary intends to use the loan proceeds to fund its share, and potentially extend loans to cover part or all of its co-venturers’ shares, of the cost of drilling eight wells and extending the associated gathering system on the Comet Ridge Project. Tipperary holds a majority interest in the project.

David L. Bradshaw, Tipperary’s president and chief executive officer, said, "We are extremely pleased to have secured funding to finance our continuing development efforts in Australia. We are seeing an increase in demand for gas in Queensland and will need to drill additional wells to meet opportunities for new sales contracts. This project finance loan is made possible by the Company’s recently announced 5-year gas contract with Allgas Energy, Ltd. and the magnitude of the coalseam methane reserves already proven and likely to be proven through further drilling.

"It is particularly gratifying that Slough Estates USA is increasing its investment in the Company and its projects. Slough is paying a premium for Tipperary stock during a very difficult time for the oil and gas industry. Slough’s parent company, Slough Estates plc, is one of the largest listed property companies in the United Kingdom, and has been a Tipperary shareholder since 1986."

In addition to its interest in the Comet Ridge Project, Tipperary has producing properties primarily in the Rocky Mountain region and in the Permian Basin of west Texas and southeast New Mexico.

Information herein contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which can be identified by words such as "may," "will," "expect," "anticipate," "estimate" or "continue," or comparable words. In addition, all statements other than statements of historical facts that address activities that Tipperary expects or anticipates will or may occur in the future are forward-looking statements. Readers are encouraged to read the SEC reports of Tipperary, particularly its Form 10-K for the Fiscal Year Ended September 30, 1997, for meaningful cautionary language disclosing why actual results may vary materially from those anticipated by management.