ENERGYSOUTH, INC.

                       CODE OF BUSINESS CONDUCT AND ETHICS



INTRODUCTION



         This Code of Business Conduct and Ethics covers a wide range of

business practices and procedures. It does not cover every issue that may arise,

but it sets out basic principles to guide all directors, officers and employees

of EnergySouth, Inc. and its subsidiaries (collectively referred to as the

"Company"). All of our directors, officers and employees must conduct themselves

accordingly and seek to avoid even the appearance of improper behavior. The Code

should also be provided to and followed by the Company's agents and

representatives, including consultants.



         If a law conflicts with a policy in this Code, you must comply with the

law; however, if a local custom or policy conflicts with this Code, you must

comply with the Code. If you have any questions about these conflicts, you

should ask your supervisor how to handle the situation.



         Those who violate the standards in this Code will be subject to

disciplinary action, up to dismissal for cause. If you are in a situation which

you believe may violate or lead to a violation of this Code, follow the

guidelines described in Section 14 of this Code Violation of this Code will be

enforced by the same mechanisms as other violations of applicable duties or

Company standards.



1.       COMPLIANCE WITH LAWS, RULES AND REGULATIONS



         Obeying the law, both in letter and in spirit, is the foundation on

which this Company's ethical standards are built. All employees must respect and

obey the laws of the cities in which we operate, the State of Alabama and the

United States of America. Although not all employees are expected to know the

details of these laws, it is important to know enough to determine when to seek

advice from supervisors, managers or other appropriate personnel.



         The Company holds information and training sessions to promote

compliance with laws, rules and regulations, including insider-trading laws.



2.       CONFLICTS OF INTEREST



         A "conflict of interest" exists when a person's private interest

interferes in any way with the interests of the Company. A conflict situation

can arise when an employee, officer or director takes actions or has interests

that may make it difficult to perform his or her Company work objectively and

effectively. Conflicts of interest may also arise



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when an employee, officer or director, or members of his or her family or

friends, receive improper personal benefits as a result of his or her position

in the Company. Loans to officers are subject to prohibitions under federal law,

and loans by the Company to, or guarantees by the Company of obligations of,

directors, officers, employees or their family members may create conflicts of

interest.



         It is almost always a conflict of interest for a Company officer,

director or employee to be simultaneously employed by the Company and a

competitor, customer or supplier. As an officer, you are not allowed to work for

a competitor as a consultant or board member. The best policy is to avoid any

direct or indirect business connection with our customers, suppliers or

competitors, except on our behalf.



         Conflicts of interest are prohibited as a matter of Company policy,

except as approved by the Board of Directors. Conflicts of interest may not

always be clear-cut, so if you have a question, you should consult with higher

levels of management or the Company's General Counsel. Any employee, officer or

director who becomes aware of a conflict or potential conflict must bring it to

the attention of a supervisor, manager or other appropriate personnel or consult

the procedures described in Section 14 of this Code.



3.       INSIDER TRADING



         The Company's Board of Directors has formalized the Company's insider

trading policy. The policy is described in the EnergySouth, Inc. Policy

Statement on Insider Trading dated July 26, 2002, a copy of which is attached as

Appendix A.



4.       CORPORATE OPPORTUNITIES



         Employees, officer and directors are prohibited from taking for

themselves personally opportunities that are discovered through the use of

corporate property, information or position without the consent of the Board of

Directors. No officer, director or employee may use corporate property,

information, or position for improper personal gain, and no officer, director or

employee may compete with the Company directly or indirectly. Employees,

officers and directors owe a duty to the Company to advance its legitimate

interests when the opportunity to do so arises.



5.       COMPETITION AND FAIR DEALING



         We seek to outperform our competition fairly and honestly. We seek

competitive advantages through superior performance, never through unethical or

illegal business practices. Stealing or appropriating proprietary information,

possessing trade secret information that was obtained without the owner's

consent, or inducing such disclosures by past or present employees of other

companies is prohibited. Each officer, director or employee should endeavor to

respect the rights of and deal fairly with the Company's



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customers, suppliers, competitors and employees. No employee should take unfair

advantage of anyone through manipulation, concealment, abuse of privileged

information, misrepresentation of material facts, or any other intentional

unfair-dealing practice.



         To maintain the Company's valuable reputation, compliance with our

quality processes and safety requirements is essential. In the context of

ethics, quality requires that our products and services be designed and

manufactured to meet our obligations to customers. All inspection and testing

documents must be handled in accordance with all applicable laws, rules and

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