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Gold/Mining/Energy : KERM'S KORNER

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To: Kerm Yerman who wrote (11575)	7/2/1998 9:32:00 PM
From: Herb Duncan	Read Replies (1) of 15196

MERGERS-ACQUISITIONS / Reminder to Kensington Shareholders Regarding Hostile Bid by Draig ASE SYMBOL: KNN.A KNN.B JULY 2, 1998 CALGARY, ALBERTA--The board of directors and management of Kensington Energy Ltd. ("Kensington") wish to update shareholders concerning the hostile bid initiated by Draig Energy Ltd. ("Draig") to purchase all of the outstanding Class A and Class B shares of Kensington. To date more than 50 percent of Kensington shareholders have indicated that they plan to reject the unfair offer made by Draig. The board of directors and management of Kensington, collectively holding 15.7 percent of the Class A shares and 0.6 percent of the Class B shares do not intend to tender to the Draig offer. Reasons for rejection of this offer include: - in the opinion of the Kensington board of directors and Griffiths McBurney & Partners, the offer is inadequate and unfair to Kensington shareholders. - concerns that Draig's reserves at two of Draig's more significant properties at Chigwell and Brent/Hanna are overstated based on recent production data. - concerns about the stability of Draig's production given rapid production declines that have recently been observed on certain of its production. - a strong belief that Draig will not achieve its 1998 forecast of production and cash flow through drilling based on year to date results. - concerns about the level of debt and working capital deficiency of $6.3 million at March 31 which is high relative to Draig's cash flow and, in the opinion of Griffiths McBurney & Partners, high relative to industry peers that are favourably viewed by the investment community. Additionally there are concerns that Draig's debt level will increase further in order to meet its 1998 forecast. - Griffiths McBurney & Partners believe that holding Draig shares will not provide any significant inhancement in marketability or liquidity for Kensington shareholders. During the last five trading days Draig traded only 13,500 shares and its shares dropped from a brief high of $1.95 to $1.50. No action is required by Kensington shareholders wishing to reject the offer. 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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