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Gold/Mining/Energy : KERM'S KORNER

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To: Kerm Yerman who wrote (11195)	6/11/1998 9:25:00 PM
From: Herb Duncan	Read Replies (1) of 15196

ACQUISITIONS-MERGERS / Unsolicited Offer to Kensington Energy Ltd. Shareholders ASE SYMBOL: KNN.A KNN.B JUNE 11, 1998 CALGARY, ALBERTA--Kensington Energy Ltd. ("Kensington") wishes to advise its shareholders that it has supplied its registered shareholder list to Draig Energy Ltd. ("Draig") and anticipates that Draig will be mailing its previously announced unsolicited offer to acquire all of Kensington's Class A shares and Class B shares to Kensington's shareholders shortly. A special committee of the board of directors of Kensington has been formed and has retained Griffiths McBurney & Partners to advise them on the offer. Based upon the preliminary valuation work done by Griffiths McBurney & Partners on Kensington and Draig, the special committee and board of directors of Kensington have concerns about the proposed business combination with Draig based on, among other things: i) Net oil production from Draig's Chigwell property has declined from a stated fiscal year end rate of 305 bbl/d to approximately 20 bbl/d in April with a watercut of 95 percent. ii) Draig's total net production went from a fiscal year end exit rate of 705 boe/d to a current stated rate of 790 boe/d despite capital expenditures of approximately $4.0 million between November 30, 1997 and March 31, 1998. Draig's average production during this 4 month period was only 440 boe/d despite production acquisitions and the drilling of 9 gas wells and 1 oil well during the period. iii) Concerns that Draig will not reach its stated production exit rate from drilling activities for 1998 of 1,400 boe/d given its production and drilling history to date in 1998. iv) Concerns that Draig will not reach its stated cash flow forecast for 1998 of $3.9 million or $0.44 per share given that its cash flow during the first quarter (a four month period) was only $361,180 or $0.04 per share. v) The previously announced share exchange proposed by Draig does not represent fair value to Kensington Class A shareholders or Class B shareholders. Kensington would also like to correct certain information stated by Draig's management at Draig's recent annual meeting and SEPAC presentation regarding the Giroux Lake Viking F Pool. To clarify, Kensington and its partner did not farm-in on Draig to drill the discovery well for this pool. The Alberta Energy and Utilities Board recognizes the Kensington et al 4-22-66-21 W5 well as the discovery well for this pool. Kensington drilled this well in June 1996 with Lionheart Energy Corp. The special committee and board of directors of Kensington will continue to appraise any offer from Draig and will advise shareholders further once more information becomes available. Kensington's Class A Shares and Class B Shares trade on The Alberta Stock Exchange under the symbols KNN.A and KNN.B, respectively.

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