Non-Compliance and Cessation Order (the "Order") Issued by Department of Natural Resources ("DNR")


TORONTO, ONTARIO--(Marketwire - May 16, 2011) -

NOT FOR DISSEMINATION IN THE UNITED STATES OF AMERICA OR THROUGH U.S. NEWSWIRE SERVICES

Lipari Energy, Inc. ("Lipari") (TSX:LIP) announces that it has received a non-compliance and cessation order (the "Order") issued by Department of Natural Resources ("DNR") for the Commonwealth of Kentucky on May 12, 2011. The Order asserts that Lipari's mining activities caused a slide to occur on property outside of Lipari's currently permitted and leased property. Pursuant to the Order Lipari is required to retrieve all material from the slide, stabilize and seed the slide area, re- establish drainage through the property and provide alternate sediment control for the affected area.

Lipari does not believe that its mining activities caused the slide referenced in the Order and is in the process of seeking administrative relief. In the event Lipari is unsuccessful in its defense of the allegations asserted by the DNR, Lipari will take the appropriate actions to satisfy the remediation measures requested by the DNR. Although Lipari is not able to give a precise estimate of the cost of the required remediation, it anticipates being able to fund any costs relating thereto from operating cash flow. During the period in which the Order is outstanding, Lipari will be prohibited from requesting additional mining permits; however, the Order does not restrict nor impact on current mining activities.

About Lipari:

Lipari was organized under the laws of the State of Delaware in 2008 and is a thermal coal producer with current operations and additional development properties in the Central Appalachian region of the United States. Lipari has been in production since 2008 and has diversified surface and highwall mining operations. Lipari sells predominantly to utilities through a mix of forward contracts and short-term sales. Lipari's growth strategy includes continued growth its organic reserves over the next five years through its enhanced drilling program, as well as from its focused and disciplined approach to strategic acquisitions. Lipari's corporate office is located in London, Kentucky.

This news release and the information contained herein does not constitute an offer of securities for sale in the United States and securities may not be offered or sold in the United States absent registration or exemption from registration.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION: This news release includes certain "forward-looking statements" under applicable Canadian securities legislation. Forward-looking statements include, but are not limited to, statements with respect to: future exploration and the business and operations of Lipari. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking statements. Such factors include, but are not limited to: general business, economic, competitive, political and social uncertainties; delay or failure to receive board, shareholder or regulatory approvals; the price of crude oil and natural gas; and the results of current exploration. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. Lipari disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Contact Information:

Lipari Energy Inc.
David Stetson
General Counsel
606-877-1800