September 12, 1996
MORRISON MIDDLEFIELD RESOURCES LIMITED ("MMRL") is pleased to announce that it has agreed in principle with Resman Oil and Gas Group ("Resman") to acquire 50 percent of the oil and gas assets of Resman. The acquisition is subject to satisfactory due diligence and completion of a purchase and sale agreement. The remaining 50 percent of the Resman assets will be acquired by Morrison Petroleums Ltd. ("Morrison"). The Resman assets, which are located in Alberta, include interests in oil and gas producing properties, undeveloped acreage (61,000 net acres), production facilities and seismic data.
The Resman properties are currently producing approximately 3,000 barrels of crude oil and 10 million cubic feet of natural gas per day. Resman's crude oil production generates netbacks well in excess of industry averages due to its premium quality and below average operating costs. The majority of Resman's crude oil production is from the Halkirk area. Other significant Resman fields are in Spirit River, Liege, Chard, Sylvan Lake and the Marten Hills South Gas Unit. The acquired fields have significant development potential and current production levels are expected to increase in 1997.
Assuming a WTI price of U.S. $19.00 per barrel and a natural gas price of $1.65 per thousand cubic feet, this acquisition is expected to contribute in excess of $10 million to MMRL's 1997 cash flow.
The combined purchase with Morrison is expected to close by the end of September for an aggregate consideration of approximately $87 million.
On a proven plus probable basis, the reserves of the Resman properties amount to approximately 10.5 million barrels of crude oil and natural gas liquids and 32 billion cubic feet of natural gas. This equates to an acquisition cost of $5.86 per barrel of oil equivalent ("BOE"), using a conversion factor of 10 thousand cubic feet of gas to one barrel of oil. Proven reserve additions amount to 7.9 million barrels of crude oil and natural gas liquids and 27 billion cubic feet of natural gas ($7.59 per BOE).
The common shares of the company are listed on the Toronto Stock Exchange under the symbol MM.
For further information contact:
Mr. Ray Pether
Chief Operating Officer
(416) 362-0714