Berkley Petroleum Announces First Half Results and Predicts a Strong Second Half 1998.

CALGARY, Alberta--(BUSINESS WIRE)--Aug. 20, 1998--Berkley Petroleum (TSE:BKP) (Alberta Stock Exchange:BKP) is pleased to announce first half results and update 1998 activities.

HIGHLIGHTS

1) Significant revenue and cash flow growth in the first half of

1998 with a 62 percent increase in fully diluted per share cash

flow over 1997 levels.

2) Large production increases already achieved in the third quarter

of 1998 will produce even stronger earnings and cash flow in

second half 1998 and in 1999. Current production is 3.5 times the

production level of one year ago.

3) Significant new gas discoveries in the Foothills of Alberta, all

of which will contribute to 1999 production.

FINANCIAL RESULTS

Berkley Petroleum increased production, revenue and cash flow in the first half of 1998. First half 1998 revenue was $50.5 million compared to $21.5 million in the first half of 1997. Cash flow in the first six months of 1998 was $27.7 million, an 84 percent increase over $15.1 million in the 1997 comparison period.

First half 1998 cash flow almost exceeded full year 1997 cash flow ($28.1 million). On a fully diluted per share basis, first half cash flow is 62 percent higher than the corresponding period in 1997. Earnings in the first half of 1998 were $3.7 million, compared to $5.2 million in 1997.

Second quarter 1998 cash flow was $11.0 million a 92 percent increase over second quarter 1997 cash flow of $5.7 million. Second quarter earnings were $0.7 million. Weaker second quarter commodity prices and lower than anticipated production volumes as noted below resulted in diminished second quarter cash flow compared to first quarter of 1998. -0-

Year    Earnings    Earn/Share  Cash   CF/Share   Net Revenue
           (x)                   (x)                   (x)
------- --------    ----------  ----   --------   -----------

1H 1998    3.7         0.06     27.7     0.42        50.5
1H 1997    5.2         0.10     15.1     0.30        21.5
2Q 1998    0.7         0.01     11.0     0.15        24.1
2Q 1997    1.5         0.03      5.7     0.11         9.6

(x) Millions of dollars

OIL AND GAS PRODUCTION AND PRICING

First half 1998 production averaged 18086 boepd, a 158 percent increase over first half 1997 production of 7013 boepd. Oil and liquid production was 7509 bpd, natural gas production was 106 MMCFPD. Second quarter 1998 production was 17049 boepd, consisting of 8358 bpd oil and liquids and 87 MMCFPD of natural gas. Second quarter production was diminished from first quarter of 1998 due to;

1) reduced production at Carstairs in June due to gas limitations

under the interim good production practice order.

2) Lower production volumes at Midale during the A pool waterflood

reconfiguration in May and June.

3) Plant turn-arounds in Alberta and Northeast British Columbia

which reduced gas production volumes.

The company received the final good production order from the AEUB for the Carstairs Elkton G pool on July 1 and production has been increased to approximately 10,000 boepd. Berkley has a 68 percent working interest and operates the Carstairs Elkton G pool production.

Net production in Southeast Saskatchewan has been more than doubled during the third quarter of 1998, compared to second quarter 1998, due to improved waterflood performance following the reconfiguration, artificial lift optimization and new pool discoveries in the Winnipeg Sand horizon.

The resolution of outstanding production issues at Carstairs and, to a lesser extent, in Southeast Saskatchewan greatly solidify the company's second half 1998 and 1999 production forecasts. Third quarter 1998 production is expected to be 35 percent higher than second quarter 1998. The company achieved its mid-year production target and is now on schedule for the 18 month development volume growth forecast. Current production is 3.5 times higher than production at this point in 1997.

The company now expects to average 23,000 boepd during 1998, and remains on schedule for a 1998 exit volume in excess of 30,000 boepd. The current production mix of approximately 60 percent gas and 40 percent oil and liquid is expected to grow to 70 percent gas and 30 percent oil in 1999. Current natural gas production has returned to Q1 98 levels (125 - 130 MMCFPD) and will continue to grow through the remainder of 1998. The company expects to reach the 200 MMCFPD gas production milestone in the first quarter of 1999.

First half 1998 gas price was $1.57/MCF and first half liquid price was $21.72/bbl. Second quarter natural gas price was $1.55/MCF and liquid price was $19.38/bbl.

FINANCIAL OUTLOOK

Significant growth in cash flow and earnings will occur both in the second half of 1998 and in 1999. Second half 1998 cash flow and earnings are expected to be close to double first half 1998 levels contingent upon commodity prices. A large proportion of the recent production additions are from higher net-back pools which will further enhance earnings. The company is striving to be one of the most profitable producers in the Basin, and is on target to do so.

RESERVE GROWTH

The company continues to add reserves in 1998 at the same pace as in 1997 and at costs similar to the five year rolling average of $4.75 - $5.00/boe for established reserves. The company estimates that the overall corporate reserve base is now well in excess of 1.2 TCFE. Significant new gas reserves have been added in the Foothills and Musreau areas of Alberta and in several locales in Northeast British Columbia. Berkley's gas reserves are either sweet or sour gas less than 3 percent H2S and the oil reserves are all premium quality light oil.

CAPITAL BUDGET AND DEBT

The company plans to spend $50 million on E and P activities in the second half of 1998. First half 1998 exit bank debt was $225 million, the company is targeting a year-end debt in the $200 - $225 million range. Long term debt is approximately 1.9 - 2.0 times annualized second half 1998 cash flow and approximately 1.3 times estimated 1999 cash flow levels. The company has a line of credit facility of $275 million and a loan value well in excess of $300 million. Second half 1998 cash flow will actually exceed second half EP expenditures, even with the continued aggressive drilling activity level.

1998 ACQUISITION ACTIVITY

The company has had an aggressive program in place to consolidate and increase working interests in specific deep gas properties in Alberta, Northeast British Columbia and the Northwest Territories as well as the Southeast Saskatchewan light oil complex. Thus far in 1998 the following transactions have been completed;

1) Acquisition of Canadian Hunter assets at July Lake, B.C.

2) Corporate acquisition of Burner Exploration Ltd.

3) Birch-Fireweed acquisition and joint venture in B.C.

4) Acquisition of the Shell Canada assets in the

Bovie-Arrowhead-Maxhamish areas, NWT.

5) Acquisition of the Westminster Resources Ltd. assets in S.E.

Saskatchewan.

6) Acquisition of the Gulf Canada assets at Adsett in B.C.

These assets have expanded the development project inventory and provide further production growth potential in the second half of 1998 and 1999. The company has a small divestment package currently in the marketing stage. The package contains a large number of smaller/lower working interest properties accumulated during the first five years of operation. Divesting of these smaller properties will allow the company to focus on higher interest/higher impact properties in the current inventory.

EP DRILLING UPDATE

The company drilled or participated in 50 wells in the first half of 1998 resulting in 20 gas wells (9.5 net), 21 oil wells (12.2 net) and 9 suspended or dry holes (5.0 net).

The company has maintained its record of finding two to three significant new pools each year, with important gas discoveries in the Foothills of Alberta, the Northwest Territories and the Winnipeg Sand in Southeast Saskatchewan thus far in 1998.

In the Alberta Foothills, four of the seven initial exploration wells have been production tested and are commercial, testing on the other three will be completed during the third quarter. Two additional exploration prospects will be tested in the fourth quarter of 1998.

Drilling and completion results thus far in the Central Alberta Foothills have been very encouraging, as the company now has interests in three commercial wells. The company has interests in two Mississippian gas discoveries, one of which has tested at rates in excess of 10 MMCFPD, the other testing at rates between 3.5 - 5.0 MMCFPD. Both discoveries have considerable follow-up potential. The Berkley Voyager 7-22-45-18W5 well is a new pool Cretaceous gas-condensate discovery made during August. The well is expected to produce in excess of 5.0 MMCFPD of liquid rich sweet gas, and will be extensively production tested during the next several weeks. Several step-out locations have been delineated on the structure, an early 1999 production start-up is anticipated.

At Turner Valley, stimulation of the 2-21-21-3W5 Mississippian gas discovery is currently ongoing. The well encountered 103 feet of net gas pay in the Mississippian Turner Valley Formation and tested at approximately 3 MMCFPD after perforation and clean-up. The stimulation is designed to significantly increase gas rates. Follow-up drilling on this large structural closure is planned in 1998. All of the Foothills discoveries are realistically scheduled to be on-stream in calendar 1999.

In NEBC, new pool discoveries have been made in the second and third quarter at Fireweed, Wilder and Blueberry West. These more modest discoveries will add approximately 15.0 MMCFPDE of net incremental production prior to the end of the third quarter.

At Wild River-Wildhay in Alberta, the company has recently completed gas wells in Cretaceous and Leduc horizons and has brought total net production to 20 MMCFPDE. The company plans further aggressive development activity in this high net-back gas complex.

In Southeast Saskatchewan the company has recently cased two additional Winnipeg sand oil discoveries at 8-16-6-11W2 and 4-2-7-11W2. These wells will be production tested during the next several weeks. A large number of follow-up drilling locations on this regionally extensive new play will be pursued during the next five months.

Berkley Petroleum's News Release for the past 14 months can be accessed electronically through the Canadian Corporate News website at http://cdn-news.com

CONTACT: Berkley Petroleum Corp.

Michael L. Rose, 403/571-3600

http://www.berkleypete.com