Summary of TETON ENERGY CORP

Entry into a Material Definitive Agreement, Bankruptcy or Receivership, Trigger

Item 1.01. Entry into a Material Definitive Agreement

Plan Sponsorship Agreement

On November 8, 2009, Teton Energy Corporation, a Delaware corporation ("TEC") and affiliated entities, Teton North America LLC, a Colorado limited liability company ("TNA"), Teton Piceance LLC, a Colorado limited liability company ("TP"), Teton DJ LLC, a Colorado limited liability company ("TDJ"), Teton Williston LLC, a Colorado limited liability company ("TW"), Teton Big Horn LLC, a Colorado limited liability company ("TBH"), Teton ORRI, LLC, a Colorado limited liability company ("TORRI"), and Teton DJCO LLC, a Colorado limited liability company ("Teton DJ" and collectively with TEC, TNA, TP, TDJ, TW, and TORRI, the "Teton Entities" or "Teton" ), entered into a Plan Sponsorship Agreement (the "Sponsorship Agreement") with Rise Energy Partners II, LLC, a Delaware limited liability company ("Rise" or the "Proposed Purchaser"), whereby Rise has agreed to fund the Teton Entities' emergence from reorganization proceedings under Chapter 11 of Title 11 of the United States Code, 11 U.S.C. 壯 101 et. seq., as amended (the "Bankruptcy Code").

The Sponsorship Agreement contains certain covenants by the Teton Entities, including, among other things, the agreement by each of the Teton Entities to commence its bankruptcy case by filing a voluntary Chapter 11 petition and the proposed plan of reorganization (the "Plan") in the United States Bankruptcy Court for the District of Delaware (the "Bankruptcy Court") on or before November 9, 2009 (the "Chapter 11 Cases").

Pursuant to the Sponsorship Agreement, on or before December 31, 2009 (the "Effective Date"), or alternatively should circumstances beyond the control of the Teton Entities make it impractical or impossible to consummate the Plan on or before the Effective Date, before January 31, 2010 (the "Alternative Effective Date"), all existing equity interests in TEC shall be cancelled, and TEC will convert its organizational form from a Delaware corporation to a Delaware limited liability company. Under the Sponsorship Agreement, Rise will acquire one hundred percent (100%) of the membership interests of the reorganized TEC (the "Membership Interests") and will be its sole managing member. TEC, as reorganized, will own 100% of the equity securities of TNA, TP, TDJ, TW, TBH, TORRI, and Teton DJ.

In exchange for Rise acquiring all of the Membership Interests and acting as the sole managing member of the reorganized TEC, Rise, on the Effective Date or the Alternative Effective Date, will contribute to TEC the sum of $11,700,000 in cash and will lend to or cause to be loaned to TEC the additional sum of $7,000,000 (the "Rise Offer"). The proceeds from the Rise Offer will be used to fund the Plan, which will eliminate Teton's indebtedness under Teton's Third Amendment to the Second Amended and Restated Credit Agreement and Forbearance Agreement (as amended, the "Credit Agreement") among Teton, the financial institutions party thereto as lenders ("Lenders"), and JPMorgan Chase Bank, N.A., as Administrative Agent ("Administrative Agent"), and provide a distribution to the holders of Teton's 10.75% Secured Convertible Debentures (the "Debentures") and certain unsecured creditors. The Lenders will then release their liens and claims against the Teton Entities, the Teton Entities as reorganized, and their respective property.

The Sponsorship Agreement also provides (i) for a break-up fee (the "Break-Up Fee") in an amount not to exceed $750,000 to Rise and the reimbursement of Rise's actual out-of pocket and reasonable third party expenses in an amount not to exceed $200,000 if the transaction is not ultimately consummated with the Proposed Purchaser ("Expense Reimbursement Fee"); (ii) that the Rise Offer to sponsor the Teton Entities from reorganization proceedings shall be subject to higher and better offers, which shall be submitted no later than December 14, 2009, and subject to an auction on December 15, 2009 if one or more Qualified Bids (as defined in the Sponsorship Agreement ) are received.

Plan Support Agreements

The Teton Entities entered into two Plan Support Agreements, one of which is with the Administrative Agent and the Lenders dated November 8, 2009 (the "Lender Support Agreement"), and one of which is with the holders of more than 50% in number and more than 2/3 in amount of the Debentures (the "Holders") dated November 5, 2009 (the "Holder Support Agreement," and collectively with . . .

Item 1.03 Bankruptcy or Receivership

On November 8, 2009 (the "Petition Date"), the Teton Entities filed the Chapter 11 Cases in the Bankruptcy Court. Teton will seek to have the Chapter 11 Cases jointly administered under the caption Teton Energy Corporation, Case No. 09-13946.

The Teton Entities remain in possession of their assets, and will continue to manage and operate their businesses and properties as debtors-in-possession under the jurisdiction of the Bankruptcy Court and in accordance with Bankruptcy Code sections 1107 and 1108 and other applicable provisions of the Bankruptcy Code, which require, among other things, Bankruptcy Court approval of certain matters outside the ordinary course of business. During the bankruptcy process, Teton intends to use cash flow from operations and the DIP Loan to allow business operations to continue as normal.

On the Petition Date, Teton filed the Plan. The Plan provides for (i) the emergence of Teton from bankruptcy as the reorganized Teton and the re-vesting of Teton's assets in the reorganized Teton free and clear of any liens, encumbrances or other interests; (ii) the funding of Teton's obligations under the Plan through a transfer of its assets pursuant to a Court approved auction process; and (iii) the resolution of all outstanding Claims against and Interests in Teton.

Teton would like to inform investors that it believes it is likely that there will be no value for its common stockholders in the bankruptcy process. Teton does not contemplate its stockholders receiving any recovery absent it receiving a substantially higher and better offer for the membership interests in the reorganized company. Stockholders of a company in chapter 11 generally receive value only if all claims of the company's secured and unsecured creditors are fully satisfied. In this case, the expected proceeds from the sale are substantially less than the amount Teton's secured and unsecured creditors are owed. Therefore, Teton's management strongly believes all such claims will not be fully satisfied, leading to its belief that its common stock will have no value.

Item 2.04. Triggering Events That Accelerate or Increase a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement.

The filing of the Chapter 11 Cases described in Item 1.03 above constitutes an event of default under the Credit Agreement and the Debentures. The aggregate amount of principal, fees and interest outstanding under the Credit Agreement and Debentures was approximately $43 million as of the Petition Date. On the Petition Date, all obligations under the Credit Agreement and Debentures became automatically and immediately due and payable. However, the ability of the secured creditors to seek remedies to enforce their rights under the Credit Agreement and Debentures is automatically stayed as a result of the filing of the Chapter 11 Cases. The automatic stay invoked by the filing of the Chapter 11 Cases effectively precludes any actions by Teton's secured creditors to collect, assert, or recover a claim against Teton, subject to the applicable provisions of the Bankruptcy Code and orders granted by the Bankruptcy Court.