Fourth Quarter 1998
For the period ended December 31, 1998

Message to Shareholders

During 1998, MMRL made significant progress in advancing its major development projects at Saltfleetby and Kyle. As expected, with the low crude oil price environment through the past year and the major dispositions of Canadian assets, the Company incurred substantially lower revenue, cash flow and net income in 1998 than in 1997.

Financial Results

Cash flow for the fourth quarter of 1998 was $1.7 million bringing full year cash flow to $13.6 million or $0.75 per share fully diluted. The Company recorded a net loss of $31.5 million for the 12 months ended December 31, 1998 which includes a ceiling test writedown of $24.0 million net of income taxes. The ceiling test calculation is based on proven reserves only and uses the constant commodity prices prevailing at the end of the year which included US$10.50 per barrel for Brent oil. Capital spending for the year was $52.9 million before taking into account $60.9 million of dispositions which took place in the first half of 1998. MMRL substantially trimmed its operating and administration costs in 1998 and has entered 1999 a leaner and more efficient company. Financial statements for the three and twelve month periods ending December 31, 1998 are attached.

Development Projects

The Saltfleetby natural gas project has been successfully tested and two high deliverability production wells are now behind pipe. These wells flowed at combined rates of 25 mmcf/d and 1,000 barrels of liquid per day. The project is expected to come on stream in the fourth quarter of 1999 and generate $35 million in cash flow in its first full year of production. Financing is under negotiation for the completion of this project which includes two additional wells and an 8 km pipeline to the Theddlethorpe gas plant.

The second major advancement in 1998 was in the Kyle project. It completed its first production well that tested at rates better than expected. Kyle is planned to start production by October 1999 at rates net to MMRL of approximately 1,300 bopd.

Completion of these two projects represents most of the Company's capital spending plans for 1999. They are expected to contribute a substantial increase in production and cash flow by the end of the year.

Reserves

Reserve reports have been prepared using constant dollar prices based on a 1998 year end price of US$10.50 per barrel of Brent oil and US$2.00 for natural gas. The reports were also prepared using escalating reference prices as shown in the table below.

The difference in reserve values is dramatic not only because of the price differential but also because the volume of economic reserves is much smaller when using a low constant commodity price. MMRL has adopted the international practice of reporting barrels of oil equivalent for its activities outside Canada using a 6 mcf:1 barrel conversion ratio for gas to oil. For Canadian activities, a 10:1 conversion ratio continues to be used which is consistent with the Canadian reporting practice.

Net Asset Value

The Company has calculated its before tax net asset value at year end using both constant and escalating oil prices. These values are significantly higher than the current trading price of the Company's shares.

Drilling

For the three month period ended December 31, 1998 MMRL participated in 3 wells, one of which was our success at Saltfleetby and the other was a successful gas well in Canada.

Outlook

Notwithstanding depressed oil prices and reduced current cash flow, MMRL is in the enviable position of having two major development projects coming on stream in 1999. As a result, cash flows by the fourth quarter of 1999 could exceed previous highs for the Company.

This news release contains forward-looking information. Actual future results may differ materially. The risks, uncertainties and other factors that could influence actual results are described in MMRL's annual report to shareholders and other documents filed with regulatory authorities.