EXHIBIT 20.1
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NGAS RESOURCES, INC.                                                 NEWS
120 Prosperous Place, Suite 201, Lexington, KY 40509                 RELEASE


FOR IMMEDIATE RELEASE

Investor Relations Contact:
Michael P. Windisch
Phone:  (859) 263-3948
Fax:    (859) 263-4228
E-mail: ngas@ngas.com


            NGAS AGREES TO ACQUIRE $27 MILLION IN APPALACHIAN ASSETS
      Represents Major Expansion for Appalachian Based Natural Gas Company


LEXINGTON, KENTUCKY, August 19, 2004. NGAS Resources, Inc. (Nasdaq: NGAS)
announced today an agreement to acquire approximately 23.2 Bcfe of proved gas
reserves and 75,000 gross acres (61,875 net acres) of leases for $27 million, or
$1.16 per Mcfe. The privately negotiated transaction includes substantially all
the assets of Stone Mountain Energy Company, L.C. ("SME") located in Bell,
Harlan, and Leslie Counties, Kentucky, and Lee County, Virginia.

The assets to be purchased include 113 oil and gas wells currently producing
approximately 2,700 Mcfe per day. Gas production is delivered through a
gathering system owned by Duke Energy Gas Services Corporation. NGAS currently
delivers natural gas production from its Straight Creek Field to Duke's
gathering system. Following the acquisition, NGAS plans to integrate operations
with its existing field activities in the region.

"This major acquisition paves the way for future growth in line with our
long-term strategic plan," said William S. Daugherty, President and CEO of NGAS.
"Our acreage position in the Appalachian Basin will be expanded to over 250,000
gross acres (170,000 net acres). The acquisition will also boost our current net
daily production to approximately 5,000 Mcfe per day and will increase our
proved oil and gas reserves to approximately 55 Bcfe, not including 2004 reserve
adjustments. This transaction offers us opportunities to expand our throughput
to major natural gas markets serviced through Duke's system and strengthen our
competitive position in the region."

The purchase agreement for the transaction provides for the assumption of
certain SME obligations, including future obligations under its oil and gas
leases, farm-out agreements and gas gathering and operating contracts. No SME
debt will be assumed. The closing under the purchase agreement is subject to
customary conditions. NGAS intends to fund the acquisition with cash and through
its reserve-based line of credit. The reserves were estimated by Wright and
Company, a petroleum engineering firm located in Houston and Nashville that has
compiled NGAS' reserves for the past six years.

NGAS Resources is a natural resources company focused on natural gas development
drilling and reserve growth. The Company changed its name from Daugherty
Resources in June 2004. Based in Lexington, Kentucky, the Company specializes in
developing geological prospects concentrated in the Appalachian Basin.
Information about the Company can be accessed on its website at www.ngas.com.

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This release includes forward-looking statements within the meaning of Section
21E of the Securities Exchange Act relating to matters such as anticipated
operating and financial performance and prospects. Actual performance and
prospects may differ materially from anticipated results due to economic
conditions and other risks, uncertainties and circumstances partly or totally
outside the control of the company, including risks of production variances from
expectations, volatility of product prices, the level of capital expenditures
required to fund ongoing drilling initiatives and the ability of the company to
implement its business strategy. These and other risks are described in the
company's periodic reports filed with the United States Securities and Exchange
Commission.