Tuesday July 13, 5:18 pm Eastern Time
Company Press Release
Pan Ocean to Participate in EKHO Project
VANCOUVER, British Columbia--(BUSINESS WIRE)--July 12, 1999--Mr. Brent Jardine, Director of Pan Ocean Explorations Inc., (VSE:POE - news) is pleased to announce that it has entered into a letter of intent with Tri-Valley Oil and Gas ('TVOG') and a consortium of junior companies to earn an interest in and to carry out exploration on TVOG's EKHO Project. The EKHO Project is a deep oil and gas exploration project located in the San Joaquin Valley, Kern County, Calif., a very prolific oil and gas province. The area of mutual interest ('AMI') which forms the basis of negotiations covers approximately 261 square miles (167,000 acres) and is located east of the now famous Bellevue No. 1 blowout well.
The Bellevue No. 1 well hit an uncontrollable high-pressure gas zone in November 1998 at 17,657 feet and blew out and ignited. The well flowed uncontrolled for two weeks at an estimated rate of 100 million cubic feet per day (MMCFD). Under restricted flow the well averaged approximately 10 MMCFD and more than 400 barrels condensate per day (BCPD) for several months until it was plugged on May 28, 1999 (Source: Bakersfield Californian Online). Prior to this blowout, the deepest onshore producing oil well in California was at 14,570 feet and the deepest producing gas well at 12,576 feet. The Bellevue No. 1 blowout demonstrated that California's Great Central Valley has the potential to exploit even deeper reserves of oil and gas and the flow rates indicate that giant reserves of oil and gas are possible.
The consortium of junior companies (the 'Participants') participating in the EKHO Project and their respective interests are as follow:
Company Stock Exchange Trading Percentage
Symbol
Aster Ventures
Corp. VSE ASV 20%
Curion Venture
Corp. VSE CUV 20%
Berkshire
International
Mining Ltd. VSE BKR 10%
Lucre Ventures Ltd. VSE LVD 10%
Consolidated
Bradbury Intl.
Equities Ltd. VSE CBN 5%
Curlew Lake
Resources Inc. VSE CWQ 5%
Pan Ocean
Explorations Inc. VSE POE 5%
Prairie Pacific
Energy Corp. ASE PRP 5%
Royal International
Venture Corp. VSE RIL 5%
Reserved for other
Parties - - 15%
TVOG has a 12.5 percent carried interest to pay-out which then converts to a 25 percent working interest. To earn its workings interest, each Participant will be required to fund its proportionate share of the reimbursement of certain of TVOG's property acquisition costs and the proportionate cost of the initial work program. All subsequent work programs will be carried out as a joint venture and will require a pro-data financial contribution from each Participant or the Participant will be subject to dilution.
Bakersfield, Calif.-based TVOG, has been active in Kern County for more than 36 years. TVOG began leasing acreage in the AMI in 1997 after identifying the potential for deep hydrocarbon reserves in the project area through the interpretation of extensive data. To date TVOG has leased all or part of 26 sections and negotiations are continuing to acquire additional acreage in the AMI.
The EKHO Project's primary targets will be the Vedder and Upper Phacoides sandstones, which are part of the Lower Miocene Temblor Formation. It has been reported that the Bellevue No. 1 well is producing from the upper part of the Temblor Formation. The high flow rates in the Bellevue No. 1 well are attributed to fracturing. Proprietary data held by TVOG indicate that similar geologic structures, including significant fracturing, may be present within the EKHO project area.
The similarities that exist between the stratigraphy and structure of the Bellevue No. 1 and the EKHO Project Area, coupled with presence of oil and gas in surrounding wells, indicate that the EKHO Project has the potential for a discovery similar to Bellevue No. 1.
A work program to test the various targets in the Temblor Formation to an estimated depth of 18,000 feet is currently being prepared. The cost of this work program and property acquisition is estimated to be $9,000,000 US. The estimated cost to be incurred by the Company to earn its interest will be US$450,000, which is to be paid within 21 days from the date of entering into a Participation Agreement with TVOG. Halliburton Energy Services, a Fortune 100 Company and the world's largest oilfield service firm, will provide TVOG and the Participants technical services and support on a preferred basis during drilling, completion and production of the EKHO Project well. Subject to the parties completing a Participation Agreement and a Joint Operating Agreement, it is anticipated that activity in the field will begin in August 1999.
Pan Ocean has arranged the exercising of 1,636,362 warrants at a price of $0.38 for a net proceeds to the Company of $622,000 Cdn. Use of proceeds will meet all of the Company's financial commitments for the EKHO Project.
This press release was prepared by management who take full responsibility for its contents.
The Vancouver Stock Exchange neither approves nor disapproves of this press release.
On behalf of the Board of Directors
"Brent Jardine "
Brent Jardine,
Director
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Contact:
Pan Ocean Explorations Inc.
Brent Jardine, 604/685-2286
Toll Free: 800/361-8333
E-mail: corp@protal.ca
Web site: www.pocean.com
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