On Tuesday, Dune Energy, Inc. provided an update on the drilling at Garden Island Bay, Plaquemines Parish, Louisiana.

The ORX SL 214 #1 well at Garden Island Bay has undergone drilling and logging to a total depth of 19,670 feet (measured depth) and 19,550 feet (true vertical depth). The well is being temporarily abandoned and left capable for deepening or sidetracking operations later.

The cost of the well was approximately $32 million of which Dune Energy, Inc. had a 15 percent working interest. Dune received approximately $3.9 million in cash recoupments from their partners before drilling the well. This resulted in a net cost to date of approximately $900,000.

Mr. James A. Watt, President and Chief Executive Officer of Dune Energy, Inc., stated, “Although disappointed in the results of this well to date, we are encouraged by the fact that we encountered reservoir quality rocks with hydrocarbon shows in the prospective section. We will now evaluate the data from the well and integrate it with the seismic to determine if a deepening or a side tracking operation would be warranted at a later time. We anticipate continuing our conventional lower risk drilling programs within our existing fields, including Garden Island Bay”.

Garden Island Bay was discovered in 1934 by Texaco. It is one of the largest remaining Louisiana State Leases (16,600 acres). Dune Energy, Inc.’s ownership interest is a 100 percent Working Interest (WI). The Company is the operator of the 16,600 net acres. The Garden Island Bay Project has 41 Pay sands (Pliocene to Miocene) from 1,400 feet to 13,000 feet. The field is largely untested below 12,000 feet.

Headquartered in Houston, Texas, Dune Energy, Inc. is an independent exploration and development company with operations focused along the Louisiana and Texas Gulf Coasts. The Company’s strategy is to grow organically via low-risk exploitation, development, and higher risk exploration of their existing properties and acreage.

Dune’s intention is to focus on exploitation of their underdeveloped properties for the next several years. They will do this through extensional drilling and low-risk step outs. The Company has a 2-plus year current drilling inventory on Gulf Coast properties.

They will continue exploiting low-risk opportunities on their existing acreage positions and gradually increase their focus on exploratory opportunities in 2011 and beyond. They will accomplish this by applying technology and capital to untested zones with significant upside in deeper pool and subsalt potential.

Dune Energy, Inc.’s total proved reserves at December 31, 2010 were 82.7 Bcfe, consisting of 48.6 Bcf of natural gas and 5.7 MMbbls of oil.

For more information visit: www.duneenergy.com