First Quarter 1998
For the period ended March 31, 1998

Press Release

MMRL Announces Agreement with Northstar

Message to Shareholders

We are pleased to announce MMRL has reached agreement with Northstar to exchange certain Canadian assets for Northstar's holdings of common shares and options of MMRL and to report on the operations and financial performance for the three months ended March 31, 1998.

EXCHANGE AGREEMENT FOR NORTHSTAR ENERGY SHARE BLOCK

MMRL has entered into an agreement with Northstar to exchange its holdings of Mountain Energy Inc. ("Mountain") for the 4,216,740 common shares of MMRL and Northstar's option to purchase an additional 1,189,732 common shares of MMRL. Upon completion, the common shares and options representing approximately 25% of the Company will be cancelled. The exchange is subject to regulatory approvals, including an exemption from the Alberta Securities Commission and will have an effective date of June 30, 1998. Closing is anticipated to take place on July 31, 1998, at which time Northstar will resign as manager of MMRL. After the exchange is completed MMRL will have 15,394,822 shares outstanding (15,583,316 on a fully diluted basis).

MMRL and Northstar each own 50% of Mountain which holds oil and gas assets located primarily in the Halkirk and Panny areas of Alberta. MMRL's share of the Mountain assets contributed production of approximately 1,500 barrels of oil and liquids per day and six million cubic feet of natural gas per day in the first quarter of 1998 representing about 27% of the Company's total production. Mountain represented 20% of the proven and half probable reserves of the Company reported at December 31, 1997.

On a fully diluted per share basis this exchange is expected to be accretive for MMRL shareholders. Using the same basis of calculation as was done in our 1997 annual report, adjusting for the removal of Mountain reserves and estimated land and seismic values, the Company's net asset value per share increases 5.7% using proven plus half probable reserves and the fully diluted number of shares following the cancellation of the Northstar common shares and options.

Cash flow per share is also expected to increase after the exchange which will be felt most noticeably in 1999 when significant growth in cash flow is expected to occur from our development activities in the UK. The Company's spending plans for the balance of 1998 are being reduced to ensure that MMRL maintains a reasonable debt to cash flow ratio. Capital spending for the year as a whole is expected to be $50 million.

FIRST QUARTER RESULTS

Financial

Continued weakening of world oil prices has become the dominant factor affecting the petroleum industry in 1998. The average oil prices received by MMRL during the first three months of this year declined 32% from the average prices realized over the same period a year earlier. Being predominantly an oil producer, this decline in oil prices has had a significant impact on the financial results of the Company. Oil and gas revenues dropped to $13.5 million in the first quarter of 1998 from $18.3 million a year earlier. While lower oil prices were the major cause of this decline, weaker gas prices in the most recent quarter also contributed to the reduction in revenues. Production expenses increased from $3.1 million in 1997 to $5.1 million in 1998. This increase was due in part to the sale in the first quarter of oil inventory in the UK produced late in 1997, an increase in the exchange rate of the British pound relative to the Canadian dollar on a year over year basis and a number of one time adjustments which are not expected to be repeated. Cash flow from operations in the first quarter of 1998 reached $5.2 million or $0.26 per share fully diluted versus $11.0 million or $0.60 per share fully diluted in 1997. A net loss of $2.0 million was recorded in the first quarter or $0.10 per share fully diluted compared to net earnings of $3.9 million last year.

The oil futures market presently reflects future oil prices at a premium to the spot price. The Company took advantage of this favourable price situation and has sold forward 2,000 barrels of oil per day for 1999 at a Brent price of US$16.50 per barrel (which equates to about US$18.00 per barrel on a WTI basis).

MMRL's dividend policy was implemented at a time when the Company was engaged primarily in the acquisition and exploitation of oil and gas properties that had limited requirements for the reinvestment of cash flow. Given the Company's current exploration and development focus the Company believes it is prudent to preserve its capital for carrying out these activities. Therefore, the Company has decided to eliminate the payment of its regular quarterly dividend.

Production

Oil and natural gas liquids averaged 6,260 bbls/d in the first quarter of 1998 as compared to 6,205 bbls/d a year earlier. The first quarter is traditionally a weaker quarter for the Company with respect to its oil production as cold weather in the UK increases wax build-up and reduces well performance. Natural gas production averaged 13.6 mmcf/d throughout the first three months of this year versus 14.0 mmcf/d in the same period of 1997. Overall production averaged 7,683 boe/d to March 31, 1998.

Drilling

Through the first quarter, the Company participated in the drilling of 16 wells which resulted in six oil wells, four gas wells and six wells which were dry and abandoned.

The most active area of the Company's drilling was in the Panny region of Northern Alberta where a total of 13 wells were drilled experiencing a 69% success ratio.

In the UK, three wells were drilled which resulted in one oil well and two dry holes. Two development wells were drilled in the Welton field, one of which was successful while the exploration test at Glanford failed to encounter commercial amounts of oil.

During the first quarter, the discovery well at Keddington which was drilled in December, 1997 was worked over. Originally producing 200 bopd, following the workover, production of the well tested up to 700 bopd and is currently producing 250 bopd. The well is currently producing without a pump. Based upon these results and the geological interpretation of the area, this discovery represents the potential for a substantial reservoir. Two appraisal wells are planned this year to test the reservoir extension. Drilling of these wells awaits development approval which is expected in early June.

Drilling of the Kyle offshore appraisal well is scheduled to commence in June, 1998. Arrangements are being finalized to tie in production to the Banff field facilities with first production scheduled for the start of 1999. MMRL has a 12.50% working interest in this development.

Arrangements to secure a floating, production, storage and offtake vessel for the development of the Chestnut field are still under negotiation by the operator. MMRL has decided to increase its working interest in the field by a further 4% to 17.75%. The operator is planning for first production from this field by the end of the first quarter of 1999. If arrangements to secure a vessel are not finalized in the near future, startup will be pushed back to a later date.

Management

New management arrangements will be put in place to follow the termination of the Northstar management agreement which will result in lower general and administrative costs.

Outlook

When the exchange agreement is completed, the Company's Canadian production will be reduced by more than 50%. Additional sales of Canadian production can be expected in the future. UK production in the second half of 1998 should increase as a result of development programs on our Keddington and Cold Hanworth discoveries. In 1999 additional growth in production is projected to come from the Saltfleetby gas reserves being brought on stream and from our major development projects in the North Sea.

Peter A. Braaten
President and C.E.O.

May 12, 1998