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To: carromill who wrote (48287)	5/25/2000 12:31:00 AM
From: chapin	Respond to of 150070

(BSNS WIRE) Fortune Oil & Gas, Inc. Announces Acquisition of Oil Producing Fortune Oil & Gas, Inc. Announces Acquisition of Oil Producing Property Business Editors VANCOUVER, British Columbia--(BUSINESS WIRE)--May 24, 2000-- Fortune Oil & Gas, Inc. (OTC:FOGC) announces today that its subsidiary, Indo Pacific Oil and Gas, Inc., has signed an agreement to acquire 100% of the shares of GFB Resources (Java) Ltd. from Carmanah Resources Ltd. of Calgary, Alberta. GFB Resources (Java) Ltd. owns 100% of the Bawean Production Sharing Contract ("Bawean Contract") in the Java Sea approximately 430 miles east of Jakarta, Indonesia and 50 miles north of the Island of Java. The 3,025 square km contract area consists of two blocks; the Northern Camar Block (1,805 square km) containing the "producing" Camar Field and the Southern "exploratory" Tuban Block (1,220 square km). The initial term of the Bawaen Contract was 30 years and it is renewable for an additional 30 years after February 2011. The Bawaen Contract allows for recovery of eligible costs and expenditures on the Northern Camar Block and the Tuban Block. After considering unrecovered costs and a substantial "Cost Recovery Pool" of $160 Million USD as of December 31,1999, the Company's subsidiary will receive an approximate 89.09% of revenues from oil sales. Prior to the shut-in of the field in March 1999, the Camar Field was producing approximately 2500 Barrels of Oil per Day ("BOPD"). Camar Field commenced production in 1991 and was shut-in in March 1999 primarily due to poor world market oil prices. To date, Camar has produced eight million barrels of oil with recoverable reserves in excess of Fifty (50) Million Barrels. In addition, further exploration and development prospects have been identified in the Camar Field that the Company expects to evaluate late this year. To date, gas reserves have not been sold due the unavailability of a gas pipeline to a production site. Plans were in progress to construct a pipeline joining with an existing major gas producer's pipeline, but these plans were abandoned in 1999 due to then existing cash flow difficulties experienced by its previous owners. The Company anticipates that it will reopen discussions later this year in an effort to sell some of it's current gas reserves to a major producer. The all inclusive start up budget to bring the Camar Field back on line is estimated at $1.785 Million USD. The Company fully expects production to be consistent with the previous production of 2500 BOPD. Production is sold to Pertamina (Indonesia's National Oil Company) at the Indonesian Crude Price (USD) that approximates West Texas Intermediate prices. Based on current oil prices, the Company expects revenues to exceed $1.5 Million USD per month. "This acquisition represents an achievement of enormous proportions. For Fortune and our shareholders we are thrilled. With full production expected to occur during the 3rd Quarter, 2000. We expect to achieve to the level of our very high expectations for the long term outlook of the company," states David Nunn, President, Fortune Oil & Gas Inc. In addition to the prospects identified on the Camar Block, the Company has identified exploration prospects and leads in the Tuban Block. Substantial oil reserves have been identified with recoverable reserves calculated in excess of Ninety (90) Million Barrels in this Block. Exploratory prospects on the Camar and Tuban blocks have been identified from geological and geophysical studies. As Camar's production potential is realized, these prospects will be evaluated through drilling. Production facilities are capable of handling up to 25,000 barrels of oil per day therefore new discoveries require only a modest capital expenditure to be brought on stream. "We are well aware of the immense oil prospects located in this concession. The fact that producing wells already exist results in minimum expenditures by Fortune and maximum revenue streams," states David Nunn. In addition to the infrastructure already established and in place, the Company has furthermore acquired inventory valued at $3.4 million USD consisting of piping and drilling equipment that will be required as the Company initiates the drilling program at Camar expanding productivity and revenues. This significant expansion of the drilling program is expected to commence within the next five months. Complete compensation for the acquisition of GFB Resources (Java) Ltd. is as follows: An initial payment of $373,000.00 USD was paid on closing. Furthermore, a financing of $1,785,000. USD will complete the acquisition and bring the Camar Field back into production. A further $1.5 Million USD is to be paid and retired in full by March 2001 as well as a compensation arrangement related to outstanding trade payables and a 5% Gross Overriding Royalty ("GOR") payable on present production sites with a 2.5% GOR on all other sites to GFB Resources Ltd., a subsidiary of Carmanah Resources Ltd. In connection with and concurrent with the closing of the acquisition, the Company completed a private placement of 583,333 units at a price of $0.60 USD per unit for aggregate proceeds of $350,000 USD. Each unit consists of one share and two warrants. Each warrant is exerciseable into one common share of the Company for two years and at a price of $1.05 per share. This press release may contain "Forward-Looking Statements" within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. All statements other than statements of historical fact included in this release may constitute "forward-looking statements". Although the Company believes that the expectations reflected in such "forward-looking statements" are reasonable, it can give no assurance that such expectations will prove to have been correct. Actual results may differ materially from the Company's expectations due to changes in operating performance, project schedules, oil and gas demands and prices, and other technical, political and economic factors. This press release is not intended to be and is not an advertisement for any securities of the company. Please visit our web site at: www.fortuneoilandgas.com --30--AMP/se* CONTACT: Fortune Oil & Gas David Nunn/James Wensveen, 604/607-3737 Fax, 604/728-6281 KEYWORD: INTERNATIONAL CANADA ASIA PACIFIC INDUSTRY KEYWORD: ENERGY OIL/GAS MERGERS/ACQ Today's News On The Net - Business Wire's full file on the Internet with Hyperlinks to your home page. URL: businesswire.com * end of story *