HOUSTON, Oct. 6 /PRNewswire-FirstCall/ -- Construction of the Blast Energy Services' (OTC:BESV) (BULLETIN BOARD: BESV) initial abrasive fluid jetting rig continues to progress. Currently, Alberta Energy Holding (AEH), the Company's rig construction contractor and technology provider, is finalizing the fabrication of the formation access tool and the coiled tubing module. Additional resources have recently been added by AEH to expedite the final construction and integration processes. Blast now expects to commence testing at the end of the month, which should allow the rig to be deployed and begin generating revenue in the latter part of November 2005. "We have experienced some slippage in the construction timetable," said David Adams, President and Co-CEO. "However, with additional Alberta contractors on hand, I believe we can mitigate any further delays and stay on track to begin revenue generation in November." The Company has invested approximately 85% toward the $1.2 million estimated cost of construction and parts for Blast Rig #1, using proven coiled tubing technology as the base platform. The capabilities of this next generation rig should allow Blast to expand their market opportunities to a wider range of well services, including specialty casing cutting, long reach perforating, lateral jetting, and specialty completions. After the Blast Rig #1 establishes market acceptance and based upon a normal weekday, daylight operations schedule and current rates for specialized well perforation and completion services, the rig is estimated to have the capacity to generate more than $6 million in annual revenues. Also, following a successful deployment of Rig #1, the Company intends to begin construction of additional rigs with similar abrasive cutting capabilities as the market demands. At the end of September, the Company received the final installment in the previously announced $1.0 million arrangement to fund the completion of the Blast Rig #1. Under the terms of the loan agreement with Berg McAfee Companies, LLC, a major shareholder, cash revenues from the initial rig will be shared on the basis of allocating 90 percent to the Company and 10 percent to Berg McAfee for a ten-year period following repayment. After ten years, the Company will receive all of the revenue from the rig. The loan, which has a senior and subordinated structure, carries a combined interest rate of 7.4 percent and is due September 15, 2006. Berg McAfee also has the option to fund an additional three rigs under these commercial terms. Additionally, related to the Technology Assignment Agreement announced in March 2005, Maxim Energy has missed two scheduled $400,000 principal payments and has been avoiding default provisions by paying a series of late charges. To date, Maxim has paid $535,000 toward principal reduction and $350,000 in late fees on an original cash commitment of $1.3 million. However, as a result of their missing the June and September deadlines, Blast has failed to pay the judgment rendered in the Gryphon lawsuit but intends to enter into discussions with them to reschedule the payment. Following mediation talks held early in 2005, Blast entered into an Agreed Judgment with Gryphon Master Fund as to all breach of contract claims related to the Company's delay in registering common stock acquired by Gryphon in October 2003. Under the terms of the Agreed Judgment, Blast was obligated to pay liquidated damages of $500,000 to Gryphon on or before September 30, 2005. Meanwhile, Blast's satellite business has more than doubled its revenues during the first half of 2005 versus the same period last year and activity levels in the third quarter indicate that this turnaround should continue. We are currently supporting our customers in the Gulf of Mexico and along the Gulf Coast affected by the hurricanes and where we have over 100 installations. Blast has installed satellite units in the U.S., the Gulf of Mexico and Africa for customers such as BP, Exxon/Mobil, GE, Dynegy, Halliburton, Apache and Noble Energy. The Satellite Division is generating a positive gross margin from an annual revenue rate of more than $1 million. Revenues are expected to increase from both new and existing customers interested in our ability to provide broadband satellite services for data, voice and internet service from remote operations throughout the world. About Blast Energy Services, Inc. Blast Energy Services, Inc. is a publicly traded company based in Houston. Our mission is to substantially improve the economics of existing oil and gas operations through the application of our worldwide licensed and proprietary technologies. Using specially fabricated mobile drilling rigs we intend to operate a commercially viable energy service business, including: specialty casing cutting, perforation, fracturing services and lateral drilling with the potential to penetrate through well casing and into reservoir formations to stimulate oil and gas production. This service should provide oil and gas producers with an attractive, lower cost alternative to existing well stimulation or horizontal drilling services. Additionally, we are providing satellite services to oil and gas producers. This service allows them to monitor and control well head, pipeline or drilling operations through low- cost broadband data and voice services from remote operations where conventional land based communication networks do not exist or are too costly to install. Please visit our website: http://www.blastenergyservices.com/ . Safe Harbor Statement Any statements made in this news release other than those of historical fact, about an action, event or development, are forward looking statements. Forward looking statements involve known and unknown risks and uncertainties, which may cause the Company's actual results in future periods to be materially different from any future performance that may be suggested in this release. Such factors may include risk factors including but not limited to: the ability to raise necessary capital to fund growth, adequate liquidity to manage operations and debt obligations, the introduction of new services, commercial acceptance and viability of new services, fluctuations in customer demand and commitments, pricing and competition, reliance upon lenders, contractors and vendors, the ability of Blast Energy Services' customers to pay for our services, together with such other risk factors as may be included in the Company's filings on Form SB-2 and its periodic filings on Form 10-KSB, 10-QSB, and other current reports. DATASOURCE: Blast Energy Services, Inc. CONTACT: John MacDonald of Blast Energy Services, Inc., +1-281-453-2888, or +1-713-725-9244, or Web site: http://www.blastenergyservices.com/

Copyright