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National Energy Group, Inc. Announces Approval of Delaware Litigation Settlement

As previously announced by NEGI, the parties to the Lawsuit agreed to a settlement (the "Delaware Settlement"), subject to approval by the Court of Chancery of the State of Delaware (the "Court"). At a hearing held on July 19, 2010 (the "Settlement Hearing"), the Court issued an order approving the Delaware Settlement and awarding attorney's fees and expenses to plaintiff's counsel in connection therewith. This press release summarizes the Delaware Settlement and the order of the Court approving such settlement. Persons desiring additional information concerning the Delaware Settlement should review the order of the Court approving the same dated July 19, 2010 and the related Notice of Pendency and Settlement of Action dated May 17, 2010, which are accessible through the following Company website link: http://www.negx.com.

As approved by the Court, the Delaware Settlement provides that within five business days of the date on which the order of the Court approving such settlement becomes final and no longer subject to further appeal or review, whether by exhaustion of any possible appeal, lapse of time or otherwise, Lawsuit defendant Icahn Enterprises, L.P. ("IELP") (or its successor in interest or one of its affiliates) shall cause the sum of $9,150,000.00 (the "Settlement Fund") to be deposited into an interest-bearing account designated by plaintiff's counsel. Plaintiff's counsel shall serve as the escrow agent for the Settlement Fund. Interest on the Settlement Fund shall accrue and become part of the Settlement Fund. Plaintiff's counsel shall cause (i) the amount of $2,500,000.00 in legal fees and $292,391.38 in expenses awarded by the Court to be paid to plaintiff's counsel out of the Settlement Fund, and (ii) the balance of the Settlement Fund (estimated at $6,357,608.62 after payment of attorneys' fees and expenses awarded by the Court and before the accrual of any interest earned thereon) to be delivered to NEGI, which then shall cause such sum to be distributed promptly (through its transfer agent), pro rata, to the stockholders of record of NEGI as of 5:00 p.m., Eastern Time, on March 25, 2008 (the "Final Record Date") (which was the previously announced time and date set by the Company's Board of Directors (the "Board") for determination of those Company stockholders entitled to receive liquidation distributions, if and when authorized by the Board, under the Company's plan of complete dissolution and liquidation (the "NEGI Liquidation Plan")), including Cede & Co., but excluding Lawsuit defendants IELP, Robert G. Alexander, Jon F. Weber, Robert J. Mitchell, Jack G. Wasserman and Robert H. Kite (collectively, the "Lawsuit Defendants").

As a result of the Court's approval of the Delaware Settlement, and since such approval has not been appealed by any interested party that has the requisite legal standing, based on presently available information (which is subject to change as circumstances warrant), the Company believes that the following sequence of events will apply with respect to the distribution of the net remaining balance of the Settlement Fund resulting from the Delaware Settlement:

    --  On July 19, 2010, the Court approved the Delaware Settlement (the
        "Initial Court Approval").
    --  Since the Initial Court Approval was not appealed by a party with the
        requisite legal standing, on August 18, 2010, the Court's approval of
        the Delaware Settlement became final and non-appealable (the "Final
        Court Approval Date").
    --  On or before August 25, 2010, IELP will deposit the Settlement Fund with
        plaintiff's counsel who, after payment of legal fees and expenses
        awarded by the Court, will then promptly remit the then remaining
        balance of the Settlement Fund (including any interest earned thereon)
        to NEGI.
    --  On September 3, 2010 (assuming that NEGI receives the then remaining
        balance of the Settlement Fund from plaintiff's counsel not later than
        August 27, 2010 in the amount of $6,357,608.62 (before the accrual of
        any interest earned thereon)), NEGI (through its transfer agent) will
        then distribute such balance via U.S. Mail, pro rata, to the
        stockholders of record of NEGI as of the Final Record Date, including
        Cede &Co., but excluding the Lawsuit Defendants or members or their
        respective immediate family.
    --  As of the Final Record Date, 11,190,650 shares of NEGI Common Stock were
        then outstanding, of which 5,678,352 shares were held by the Lawsuit
        Defendants or members of their respective immediate family, which shares
        are not entitled to participate in the distribution of the Settlement
        Fund, and of which 5,512,298 shares were held by all other NEGI
        stockholders of record (the "Non-Lawsuit Defendant Shares"), which
        shares are entitled to participate in the distribution of the Settlement
        Fund.
    --  Based on the foregoing, on September 3, 2010, NEGI will distribute the
        then remaining balance of the Settlement Fund via U.S. Mail, pro rata,
        to NEGI stockholders of record as of the Final Record Date who then held
        Non-Lawsuit Defendant Shares in the estimated amount of $1.15 per share
        (rounded to the nearest whole number).
    --  To the extent that the aforementioned distribution of the then remaining
        balance of the Settlement Fund is made by NEGI's transfer agent to any
        bank, brokerage firm, intermediary, street name holder or other nominee
        who was holding shares of NEGI common stock for the account of others as
        of the Final Record Date, it will be the responsibility of such bank,
        brokerage firm, intermediary, street name holder or other nominee to
        further distribute such funds to the underlying beneficial owners
        entitled to receive such funds.  NEGI will not be responsible for the
        proper distribution of such funds to parties other than the holders of
        record of Non-Lawsuit Defendant Shares as of the Final Record Date and
        to the addresses of such parties appearing on the stock transfer records
        maintained by NEGI's transfer agent.

With respect to the previously announced NEGI Liquidation Plan, based on presently available information (which is subject to change as circumstances warrant) and subject to final Board approval, the Company believes that it will commence an initial distribution of cash pursuant to such plan approximately 45 calendar days following NEGI's distribution of the above-noted Settlement Fund.

The Company will provide periodic updates to the above-noted information from time to time as circumstances warrant via one or more additional press releases.

SOURCE National Energy Group, Inc.