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Gold/Mining/Energy : KERM'S KORNER -- Ignore unavailable to you. Want to Upgrade?

To: Kerm Yerman who wrote (14993)	1/27/1999 3:31:00 AM
From: Kerm Yerman	Respond to of 15196

PROPERTY ACQUISITION / Equatorial Energy Inc. and Gulf Canada Resources Limited Sign $72,000,000 Purchase and Sale Agreement CALGARY, Jan. 26 /CNW/ - President Marshall Abbott announced today Equatorial Energy Inc. (''Equatorial'' or ''the Company''; VSE-''OZ'') has signed a ''Purchase and Sale Agreement'' with Gulf Canada Resources Limited (''Gulf Canada''; Toronto- TSE, ME, NYSE: ''GOU'') for the $72,000,000 purchase of certain oil and gas properties in Western Canada. Closing is scheduled for February 18, 1999. The oil and gas properties, the majority of which are located in the Province of Alberta, Canada, consist of: a) Proven and probable oil and gas reserves with existing daily production of approximately 2,500 barrels of oil and approximately 27 million cubic feet of gas for a total of 5,200 BOE; b) Gas production facilities and other associated production equipment, and c) Approximately 567,000 gross acres ( approximately 340,000 net) of undeveloped leasehold interests. The purchase and sale transaction will be financed by cash and a conventional bank loan in the amount of $50,000,000, and the issuance to Gulf Canada of 6.5% convertible, redeemable preferred shares (''the Shares'') in the Company together with a subordinated note payable in the combined amount of $22,000,000. The Shares will be convertible into a maximum of 20,000,000 common shares and the principal amount of the subordinated note payable, if any, will equal the difference between the value attributable to the Shares and $22,000,000. Gulf Canada will also be entitled to appoint one (1) member to the Company's Board of Directors for so long as Gulf Canada owns the Shares or at least 20% or the common shares of the Company. Further, Gulf is also granted the right to participate for up to its proportionate equity interest in all future equity offerings undertaken by the Company. The transaction has been approved by a majority of the Company's shareholders and the Vancouver Stock Exchange. Mr. Abbott states: ''We view this strategic move into Western Canada at a time of lower commodity prices as substantive for the Company's future growth. The petroleum and natural gas properties in Canada will provide a balance for our rapidly developing oil production in South Sumatra and Kalimantan in Indonesia. Equatorial expects 1999 to be an exciting and pivotal year for our shareholders