DRILLING! June 16, 2000 SYMBOL: CDNX-DRS
(Vancouver, B.C., June 16, 2000) - The company reports that on June 14,
2000 company officials appeared before the Wyoming Oil and Gas Commission
and approval to commence the LAK Ranch Oil Project was granted. The
company also reports that it has now entered into a contract with CAZA
Drilling Inc. of Denver, Colorado for the drilling of the first
injector/producer well pair on the property, located near the town of
Newcastle, Wyoming. An escrowed deposit of US $315,000 has been
established by the company on CAZA's behalf. Earlier, in May of this year,
the company sent a technical team to inspect one of CAZA's rigs located in
central Wyoming. That rig was accepted by the technical team and will now
be mobilized to the LAK Ranch on or about June 19th. Surface casing will
be set within a few days thereafter and drilling will then commence. The
company will provide updates on the LAK Ranch drilling program as events
unfold.
Previous exploration activities at the LAK Ranch have been conducted by
Texaco, Conoco, Parent Oil, Mapco and Surtek, Inc. (previously Exoil
Services). Surtek conducted field mapping studies, the drilling and coring
of numerous wells, and a resource estimate based upon their work and all
previous drill hole data. In 1984 Surtek estimated that the LAK Ranch
contained a resource of 100+ million barrels of oil in place. Recovery of
this oil has not yet been proven to be economic.
In 1998 Paul Trost, B.Sc., Ph.D., of MTARRI. Inc., under contract to Derek
Resources, conducted a four well drilling and coring program at the LAK
Ranch. Based upon the resulting logs/cores and a review of the Surtek data
and conclusions, Dr. Trost is in agreement with the Surtek estimate of a
100+ million barrel oil resource.
It is anticipated by the company's experts, John Donnelly, P.Eng., Ph.D.,
Paul Trost, B.Sc., Ph.D. and Ken Kisman, P.Eng., Ph.D., that 50% to 70% of
the oil in place will now be recoverable using newly developed Steam
Assisted Gravity Drainage ("SAGD") and related techniques. John Donnelly
became a Director of the Company in 1998 and Paul Trost is now a permanent
consultant to the company. Both hold stock options in the company at this
time.
The company's financing announced May 26th is proceeding well.
Approximately half of the CDN$7.6 million being subscribed from the company
has now been received. The financing consists of units being sold at CDN
$0.42 comprised of one share and one two year share purchase warrant. The
Company has now been advised by the CDNX that the pricing of the units at
CDN $0.42 per unit is acceptable, however, the pricing of the two year
warrants must be revised. The company had earlier stated that the exercise
price of the warrants would be CDN $0.42 in year one and CDN $0.48 in year
two. Under new policies adopted by the CDNX as of March 1, 2000,
discounted warrant pricing is no longer allowed. As a result the warrants
will now be revised to be exercisable at a price of CDN $0.53 for two
years. This is equivalent to the closing price of the company's shares on
the CDNX on May 26, 2000.
The company reports that it has agreed to issue a 1% field royalty to a
major financier who has subscribed for a significant portion of the
financing, acted as a finder on an additional portion of the financing and
who has been instrumental in arranging the financing. This financier is
also working to ensure the final closing of the financing. Finders fees on
the CDN $7.6 million financing consist of CDN $372,539 in cash or units,
which is 4.91% of the financing, 705,00 two year broker's warrants at a
price of CDN $0.53 plus the 1% field royalty described above.
The company expects initial production from the first SAGD well pair at the
LAK Ranch by the fall of this year. The company is earning a 75% interest
in the property by the expenditure of US $3.5 million on the project.
Qualifying expenditures to date on the project approximate US $600,000.
The company expects to vest its interest and then be required to cash call
its 25% partner before production commences. Additional expenditures on
the project by the company for the year 2000 are expected to exceed US $4.0
million.
DEREK RESOURCES CORPORATION
"Barry Ehrl" "Frank Hallam"
Barry Ehrl, Director Frank Hallam, Director
For further information please contact investor relations at
(604) 331-1757 or toll free at 1-888-756-0066
WWW.DEREKRESOURCES.COM info@derekresources.com
The Canadian Venture Exchange has neither approved nor disapproved
the information contained herein
Cautionary Note to U.S. Investors: The United States Securities and
Exchange Commission permits resource companies, in their filings with the
SEC, to disclose only those oil and gas deposits that a company can
economically and legally extract or produce. We may use certain terms and
calculations of oil and gas reserves on this news release, such as
calculations of "resources" and "reserves" that the SEC guidelines prohibit
us from including in filings with the SEC. Investors are urged to consider
closely the disclosure in our Form 20-F, File No. 0-30072, available from
us at Suite 1730, 355 Burrard Street, Vancouver, British Columbia, Canada,
V6C 2G8. You can also obtain this form from the SEC by calling
1-800-732-0330. |
