PROPERTY ACQUISITION / Pendaries Petroleum Ltd. to Acquire for Cash
And Stock Additional Interest in Bohai Bay, China from Murphy Oil
TSE SYMBOL: PDQ
JUNE 1, 1998
TORONTO, ONTARIO--Pendaries Petroleum Ltd. announced today that
its board of directors has approved a purchase and sale agreement
with Murphy Pacific Rim, Ltd., a subsidiary of Murphy Oil
Corporation (NYSE - MUR), to acquire Murphy's 45 percent interest
in Block 04/36 in the Bohai Bay, People's Republic of China. This
acquisition increases Pendaries' working interest in what to date
has been its key property, Block 04/36, from 10 percent to 55
percent. Kerr-McGee China Petroleum, Ltd., a wholly owned
subsidiary of Kerr-McGee Corp. (NYSE: KMG), owns the remaining 45
percent interest and is operator of the Block. The acquisition is
subject to the approval of the China National Offshore Oil
Corporation.
The purchase price is US$38 million consisting of US$35 million
cash and US$3 million in Pendaries' common stock to be valued at
the market price of such stock on or near the date of closing. The
transaction is scheduled to close on or before October 21, 1998.
Pendaries is currently assessing its capital requirements for this
transaction as well as associated future exploration and
development costs.
"This is an extremely important step in Pendaries' plan to
increase its presence in China," said Chairman and CEO, Robert
Rigney. "Block 04/36 has a substantial base of proved and risked
probable reserves, and increasing our position in this block will
immediately improve Pendaries' asset base. Murphy and Kerr-McGee
are world-class oil and gas operators, and we are very fortunate
to work with such distinguished companies."
Claiborne Deming, President and CEO of Murphy Oil Corporation
stated, "We will continue our participation in Block 04/36, on a
smaller and indirect basis, through the acquisition of Pendaries'
common stock. Pendaries has developed excellent, long-standing
relationships with the Chinese government and oil industry. We
look forward to continuing our association with Pendaries in the
Bohai Bay, and anticipate other joint exploration ventures with
Pendaries in China."
Block 04/36 contains the CFD 2-1 field, site of a discovery well
drilled in 1996, which flowed more than 7,000 barrels of oil per
day, and three successful delineation wells drilled in 1997. A 3D
seismic survey has been conducted over this discovery region and
is now being processed and interpreted. Evaluation of alternative
plans to bring the field into production is underway.
Block 04/36 also contains the CFD 11-1 prospect area on the
Haizong High. 3D seismic surveys will be conducted on the region
prior to the drilling of an appraisal well in order to determine
an offset drilling location to a well drilled by the Chinese in
the area that penetrated over 230 feet of oil pay. In addition,
seven other areas on this block have been identified through
geological and geophysical analyses to have a high degree of
prospectivity.
Pendaries Petroleum is an independent oil and gas exploration
company with its primary focus in China. It holds working
interests in a total of five concessions: four in the Bohai Bay
totaling 1.1 million acres, and one in the Pearl River Mouth Basin
in the South China Sea, encompassing over 750,000 acres.
Kerr-McGee is the operator on all five concessions.
NOTE: Further information on Pendaries' holdings in China is
available on the Company's website at www.pendaries-petroleum.com.
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