May 22, 1997

MORRISON MIDDLEFIELD ANNOUNCES FIRST QUARTER RESULTS

MESSAGE TO SHAREHOLDERS

We are pleased to report on the operations and financial performance of Morrison Middlefield Resources Limited through the interim period ended March 31, 1997.

During the first quarter, the Company recorded substantial increases in cash flow and net earnings in comparison to the first quarter of 1996. In addition, the Company continued to focus on activities which are designed to build MMRL's longer term growth prospects. Highlighting these efforts was the Company's acquisition of 50% of Croft Oil and Gas plc, an independent UK oil and gas company involved in exploration and development in the UK sector of the North Sea ("UKNS").

FINANCIAL

Oil and gas revenues in the first quarter were $18.3 million up from $10.1 million a year earlier. This increase resulted from both higher production volumes and commodity prices realized in the current quarter. Also reflecting higher production volumes, production costs increased to $3.1 million from $1.9 million a year earlier. On a per barrel of oil equivalent basis, production costs were $4.50 per barrel.

Cash flow from operations in the first quarter of 1997 reached $11.0 million or $1.20 per share fully diluted. This represents a 78% increase over a year earlier. Net income continued to be strong through the period reaching $3.9 million or $0.43 per share fully diluted. This compares to $2.3 million or $0.28 per share fully diluted earned in the previous year.

PRODUCTION

MMRL's total production averaged 7,569 boe/d in the first quarter representing a 38% increase over the same period in 1996. Oil and natural gas liquids averaged 6,205 bbls/d as compared to 4,667 bbls/d a year earlier while natural gas production averaged 13.6 mmcf/d versus 8.1 mmcf/d in 1996. The increase in year over year volumes is due primarily to the Resman assets that were acquired in the fall of last year. Production volumes are expected to increase significantly over the balance of the year.

DRILLING

MMRL participated in the drilling of 26 wells in the first three months of 1997 which resulted in 5 oil wells, 14 gas wells, 1 service well and 6 wells that were abandoned for an overall success ratio of 77%.

Most of the drilling activity took place in the Company's Panny program in Northern Alberta where a total of 16 wells were drilled. Four additional wells were drilled during the quarter which are not included in the above results as they are still under evaluation. Construction of a 12 mmcf/d gas plant (one third interest net to MMRL) to service the Panny production was started and the plant was put on stream in May, 1997. MMRL is expected to produce an average of 3 mmcf/d from this area through the balance of this year.

The company participated in 2 successful gas wells in the Shiningbank area of Alberta which should add 1.5 mmcf/d of production to the Company.

In the UK, MMRL drilled four 100% working interest development wells, all of which were successful oil wells. One of the wells was drilled on a prospect in the Nettleham field that was identified by the 3D seismic shot last year. This discovery was significant because it opens up new locations in a field which was previously considered fully exploited.

EXPLORATION

In keeping with MMRL's strategy to increase its future growth prospects through greater exposure to internally generated prospects, exploratory preparatory work and drilling increased in the first quarter of 1997. Corporately, the Company participated in 11 exploration wells over the period, most of which were in the Panny area. These efforts have resulted in important new discoveries for the Company and a new focus area of production which was brought on stream in the second quarter.

In the UK, exploration activities made progress on a number of fronts. Access sites were secured during the first quarter for five exploration wells planned to be drilled later this year. Work is continuing to obtain planning approvals and access for the balance of the exploration wells planned. A total of ten exploration wells are expected to be drilled in the UK in 1997. MMRL has purchased existing available trade seismic covering its exploration licences and prospective open acreage both onshore and offshore. Detailed geological mapping of prospects in several of these areas has now been completed. Additional 3D seismic has now been acquired in East Lincolnshire and a further survey is planned to generate new drilling opportunities. The Company is planning to apply for additional onshore and offshore exploration acreage in licencing rounds commencing later this year.

CROFT ACQUISITION

During the first quarter, MMRL made an offer to acquire 50% of the outstanding shares and loan stock of Croft Oil & Gas plc. This purchase was closed in May, 1997.

As a result of this purchase, MMRL has a small working interest in three producing fields in the UKNS, a 12.5% working interest in Block 29/2c on which the Kyle North Sea oil field is being developed by Ranger Oil (UK) Limited as operator and an interest in a number of other offshore exploration licences. In addition, Croft has a 50% interest in a company which is currently negotiating the purchase of four oil and gas/condensate fields in the UKNS from a major international petroleum company.

OUTLOOK

1997 will be a record year for MMRL in terms of internally generated exploration and development work. The Company projects that it will spend $69 million in capital expenditures this year, $50 million of which will be on internally generated activities. Work is continuing to further evaluate MMRL's important gas discovery at Saltfleetby on its East Linc's licence in the UK. A 65 sq. km 3D seismic program has been shot during the second quarter of 1997 and the next exploration well in the area, Scupholme-1, was spudded on May 11, 1997. An appraisal well is being drilled in the Kyle field later this year with testing and development to follow in 1998. In addition, applications are being prepared for new exploration licences in the UK to add to the already extensive undeveloped land positions held by the Company. Some of these applications may be for offshore licences which compliment MMRL's existing onshore expansion activities.

DIVIDEND

At the Annual General Meeting held on May 22, 1997 the shareholders approved a 2 for 1 stock split for registered shareholders as at June 4, 1997. The shares will begin trading on a split basis on June 2, 1997. MMRL has declared a quarterly dividend of $0.10 per share ($0.05 on a post-split basis) payable on June 30, 1997 to the common shareholders of record at the close of business on June 23, 1997.

The common shares of the company are listed on the Toronto Stock Exchange under the symbol MM.

HIGHLIGHTS

CONSOLIDATED SUMMARIZED BALANCE SHEETS
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CONSOLIDATED STATEMENTS OF EARNINGS AND RETAINED EARNINGS
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CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION
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For further information please contact:
Raymond R. Pether
Chief Operating Officer
(416) 362-0714