PEASE OIL & GAS COMPANY



Pease and Carpatsky Agree to Amend Merger Agreement

Grand Junction,  Colorado - January 11, 2000 - Pease Oil and Gas Company (OTCBB:
WPOG) announced today that it has revised the terms of its Merger Agreement as a
result of Carpatsky Petroleum, Inc.'s (CDNX:KPY) $4,000,000 sale of its Series A
Convertible Preferred Shares to Bellwether Exploration Co. (NASDAQ:BELW).

As previously  reported by both Carpatsky and Bellwether,  on December 30, 1999,
Carpatsky  sold 95.45  million of its  preferred  shares and warrants to acquire
12.5 million  Common Shares to Bellwether  Exploration  Co. for $4 million.  The
preferred  shares  are  convertible  (at US $0.08  per  share)  into 50  million
Carpatsky Common Shares  (approximately 40% of Carpatsky's equity), do not carry
a  preferential  dividend and carry  majority  voting  rights in  Carpatsky.  In
connection  with this  investment,  J. P. Bryan,  Chairman and CEO of Bellwether
became the Chairman and CEO of Carpatsky and three Carpatsky  directors  retired
and were replaced by four Bellwether  appointees,  giving Bellwether five of the
now eight directorships of Carpatsky.

In connection with the financing,  the terms of the merger between Carpatsky and
Pease were amended to (1) approve the Bellwether  investment and commit Pease to
issue a similar class of preferred stock to Bellwether upon  consummation of the
merger, (2) revise the sharing ratio so that the Pease shareholders will retain,
in the  aggregate,  a 12.5% interest in the merged entity after giving affect to
the Bellwether  financing,  and (3) modify such other terms as necessary to take
recent events into account.


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Patrick J. Duncan, President of Pease Oil & Gas, stated that, "Completion of the
Bellwether financing allows Carpatsky to significantly  strengthen its financial
position by funding its current obligations, amending the terms of its licensing
agreement in Ukraine,  securing its full contractual rights in the RC field, and
providing sufficient capital for near-term operations.  The combination of Pease
with  Carpatsky  and the  Bellwether  investment,  will be fully  reflected in a
Registration  Statement  expected  to be  filed  with the U. S.  Securities  and
Exchange  Commission  early next week. Once the registration  statement  becomes
effective,  it will be followed by  stockholders  meetings of both Carpatsky and
Pease to vote upon the proposed merger."

Further information contact:        Pease Oil and Gas Company
                                    Patrick J. Duncan, President
                                    970-245-5917

Forward-Looking  Statements:  The statements in this report regarding the filing
of  a  Registration   Statement,   issuance  of  shares,  terms  of  the  merger
transaction,  sufficient capital for near-term operations,  and the other quoted
statements by Company  officials  are  "forward-looking  statements"  within the
meaning of the federal security laws. Such statements are inherently  uncertain,
and actual results and activities may differ  materially from those estimated or
projected.  Certain  factors  that can affect the  Company's  ability to achieve
projected results are described in the Company's Annual Report and other reports
filed with the Securities and Exchange Commission.  Such factors include,  among
others:  the uncertainty that the contemplated  merger will ultimately close for
any reason,  material unknown factors  discovered  during further due diligence;
potential  adverse  changes in either  company's  business;  the  uncertainty of
shareholder  and  regulatory  approvals;   uncertainties   inherent  in  reserve
estimations  and  production  rates,  especially  for  estimates of  undeveloped
reserves;   operational  risks  inherent  in  the  oil  and  gas  industry  with
corresponding  exposure  to  delays;   significant  cost  overruns;   mechanical
problems;  the  highly  competitive  nature  of the oil and  gas  industry  with
corresponding  shortages of equipment  and  personnel;  the  uncertain  cost and
pricing environment in the oil and gas industry;  and the commercial and country
risks associated with doing business in the Republic of Ukraine. The Company has
no  obligation  to update the  statements  contained  in this  report or to take
action that is described herein or otherwise presently planned.