PROPERTY ACQUISITIONS / Gentry Resources & Gulf Canada
GENTRY ANNOUNCES AGREEMENT WITH GULF CANADA RESOURCES, TRIPLES PRODUCTION AND EXPANDS INTERNATIONAL OPERATIONS
CALGARY, May 25 /CNW/ - Gentry Resources Ltd. and Gulf Canada Resources
Limited are pleased to announce that they have signed a letter of intent that,
when concluded, will have an immediate significant impact on the size and
future growth of Gentry.
Gentry will be acquiring four long life producing properties in
southeastern Saskatchewan and two properties in Argentina that are currently
producing 650 and 420 barrels of oil equivalent per day (BOE/D) net to Gulf,
respectively. This will increase Gentry's production from 615 of oil to 1,685
BOE/D, resulting in an increase in production of 174 percent.
In addition, Gentry will acquire significant exploration and production
sharing agreements on three large concessions in Romania and in three
exploration licences in Albania. A portion of Gulf's interest has also been
acquired in two off shore exploration blocks in C“te d'Ivoire, West Africa.
The purchase price is $10,583,000 consisting of a cash payment of
$2,583,000 and the issuance to Gulf of 7,547,170 common shares of Gentry.
Gentry is pleased to announce and welcome the nomination of Mr. Craig S.
Glick, Executive Vice President, and Chief Financial Officer of Gulf Canada
Resources to its Board. Mr. Glick's strong background in the international
field and varied financial experience will greatly enhance the capability of
Gentry's board.
In Romania, Gentry will acquire a 15 percent interest in Blocks 3 and 8
and a 70 percent interest in Block 6. The blocks are located in an area of
great historical significance where existing fields have had cumulative
production in excess of 750 million barrels. A number of significant targets
on these lands exist due to deeper plays below existing shallow production and
extensions to the present hydrocarbon fairway. The target prospect size is
expected to be in the 50 - 200 million barrel range. The Block 6 Concession,
which comprises 440,000 gross acres, will be operated by MMS UK Limited.
Blocks 3 and 8 comprise a total of 534,000 gross acres, and these permits will
be operated by Tullow Oil PLC. Other partners in these two blocks are Ranger
Oil and Oranje-Nassau.
In Albania, Gentry will acquire a 15% interest in three on-shore licenses
covering some 1.7 million gross acres. The blocks are operated by OMV who own
a 40% interest. Other joint venture partners are Enterprise Oil Ltd. and MOL
Hungarian Oil & Gas Company. This strong exploration group is particularly
experienced in southern Europe exploration, OMV is active in Austria and
Albania; Enterprise in Italy, Greece and Bulgaria; and MOL in Hungary and
onshore Albania.
These Albanian concessions offer a broad range of high potential
exploration opportunities along extensions of proven productive trends. Play
types are similar to Romania, which are sub-salt structures beneath proven oil
bearing shallow horizons. Prospect sizes are expected to be in the 70 - 100
million barrel range.
Gentry will also be acquiring from Gulf a 5% interest in two large
concessions located offshore C“te d'Ivoire, West Africa. These concessions
encompass 790,000 and 620,000 acres, respectively, and are operated by Ranger
Oil. Gentry has significant knowledge of these concessions as it attracted
original partners to these exploration licences.
In Argentina, Gentry will hold a 5% interest in a field in the Neuquen
Basin that is currently producing 5,795 BOPD (290 BOPD net) from eight wells
operated by P.A. San Jorge, a large independent Argentinian oil company. The
field is situated on a 388,000 acre block with potential for additional
exploration drilling. On the second group of blocks, consisting of 247,000
acres in the San Jorge Basin, Gentry acquired a 40% interest in 19 oil wells
producing 340 BOPD (130 BOPD net) operated by the Argentinian Alpa group. The
western area contains several untested structural traps with potential for 2
to 10 MMBO accumulations.
All of the southeast Saskatchewan properties will be operated by Gentry
that include approximately 22,000 acres (18,500 net acres to Gentry) with
undeveloped land accounting for 55% of the total gross acres. Gentry's
average working interest in these lands is 84%.
The purchase will close on July 30, 1998 or such other date or dates as
may be agreed upon between Gentry and Gulf. The closing is subject to
execution of a formal purchase and sale agreement, obtaining all required
governmental, regulatory or third party approvals and the completion of
satisfactory due diligence by Gentry.
Gentry is also pleased to announce and welcomes Walter B. O'Donoghue QC
to the Board of Directors. Mr. O'Donoghue is a senior partner at the law firm
Bennett Jones Verchere in Calgary. He sits on a number of boards including
Gibson Petroleum Company Limited, Gulf Canada Resources, Rayrock Yellowknife
Incorporated, Telus Communications and is Chairman of the Board of Athabasca
Oil Sands Trust.
Hugh G. Ross, President and CEO of Gentry is quoted as saying ''the
acquisition of this diversified package of revenue generating producing
properties and international exploration licenses, offers Gentry exploration
targets with much larger reserve potential than currently available in the
mature Western Canadian basin. The acquisition will greatly accelerate
Gentry's growth and provide significant upside potential. With cash flow in
1998 projected to increase substantially, the Company will be able to take
advantage of additional production acquisition opportunities. I also wish to
welcome Mr. O'Donoghue and Mr. Glick, who will provide valued experience and
insight to the Board.''
''We have strong confidence in the people at Gentry. We are pleased to
have an ownership position in the Company and to retain interest in the upside
potential of these assets,'' adds Dick Auchinleck, President and CEO of Gulf
Canada. ''This is another step in Gulf's program to reduce debt and bring
focus to our asset base.''
Hugh G. Ross,
President & CEO
-30-
For further information: Hugh G. Ross, President & CEO, (403) 264-6161;
Bob Vukovich, Corporate Relations, 1-888-876-7197, Website:
gentryresources.com, Email: gentry@gentryresources.com; Gulf
Canada Resources Limited, Investor Relations, (303) 813-3800
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