Crestar Energy Acquires Ecuadorian Assets.

Business Editors

CALGARY, Alberta--(BUSINESS WIRE)--July 4, 2000

CRESTAR(TSE:CRS.) Crestar Energy Inc. (TSE:CRS) announces that it has purchased all of the outstanding shares of CMS Oil and Gas Ecuador LDC ("CMS") for C$141.9 million (US$95.8 million), net of adjustments. The transaction closed on June 30, 2000.

For the past three years, Crestar has been examining international oil and gas investment opportunities with a focus on Latin America, where many of the onshore basins are similar to the Western Canadian Sedimentary Basin in its early stage of development. Crestar's strategy was to buy an existing production stream with exploration and development growth potential. This acquisition represents Crestar's first international investment and provides a springboard for expansion within the highly prospective and under-explored Oriente Basin. With the maturing of the Western Canadian Sedimentary Basin, international investments are an integral component of Crestar's continued growth.

In this purchase, Crestar has acquired a 14 percent working interest in the Block 16 Area of the Oriente Basin in eastern Ecuador, encompassing 519,000 acres (2,068 square kilometres), including substantial production and pipeline infrastructure. The acreage is held under Production Sharing Contracts, the majority of which continue until 2012. Term extensions are available. In addition to the operator, Repsol YPF, other participants in the consortium are Overseas Petroleum and Investment Corporation (a subsidiary of the Taiwanese state oil company) and Murphy Ecuador Oil Company.

The Block 16 Area contains an estimated two billion barrels of original oil in place, with gross proven reserves of 305 million barrels (43 million barrels, net to Crestar). On a barrel of oil equivalent (BOE @ 10:1) basis, this transaction replaces 145% of Crestar's estimated 2000 production, at a cost of C$3.30 per barrel of proven reserves and extends Crestar's total proven reserve life by one year.

Production from the Block 16 Area is from seven separate pools. Total productive capacity is more than 50,000 barrels per day, with oil gravity ranging from 15 to 23 degrees API. Current oil production is approximately 40,000 barrels per day (5,600 barrels per day net to Crestar) with an average API gravity of 16 degrees.

In the first quarter of 2000, wellhead realizations, net of royalties, transportation and quality adjustments, averaged C$24.24 per barrel. After deducting operating costs of C$3.83 per barrel and production taxes of C$0.30 per barrel, the Block 16 Area produced a netback of C$20.10 per barrel. Based on the purchase price ($3.30 per barrel for proven reserves), the current recycle ratio for the property is 6.1.

Production is presently constrained by limitations on the SOTE oil pipeline, the main export line servicing the Oriente Basin. Negotiations are underway tto alleviate the transportation bottleneck. The OCP Pipeline is scheduled to be operational in 2002 and would add 290,000 barrels per day of additional capacity from the Oriente Basin. Repsol/YPF, as operator of the Block 16 Area, has committed to 100,000 barrels per day of this capacity; Crestar's portion will be 14,000 barrels per day.

Exploration of Block 16 began in 1987 with the acquisition of 2,500 kilometres of seismic. Seven successful exploration wells were drilled during 1988 and 1989. Development began in 1992 with the construction of roads, pipelines and production facilities capable of processing 75,000 barrels of oil per day. Additional 2-D seismic and 135 square kilometres of 3-D seismic have been acquired.

To date, more than 60 wells have been pad drilled, including vertical, deviated and horizontal wells, without a dry hole. Currently, 17 wells remain shut-in due to lack of transportation capacity. Numerous structural and stratigraphic targets have been identified from seismic and approximately 120 wells are planned to explore, appraise and develop the potential of the Block 16 Area over the next several years. This activity is expected to more than satisfy the OCP Pipeline commitment.

Crestar and CMS have approached the Government of Ecuador regarding the purchase of the stock of CMS Oil and Gas Ecuador LDC by Crestar Energy Holdings Ltd. (a subsidiary of Crestar Energy Inc.) We expect Government acknowledgement of the transaction shortly.

NOTICE OF CONFERENCE CALL AND INTERNET WEBCAST

Crestar Energy will be conducting a conference call to discuss the transaction at 2:00 p.m. Mountain Daylight Time (4:00 p.m. Eastern) on Tuesday, July 4, 2000. Callers may participate by dialing 416-695-9757 (Toronto area and overseas) or 1-877-461-2816 (North America) and requesting the Crestar Energy conference call. Callers may also listen to a taped recording of the conference call until June 14, 2000, by dialing 416-695-9767 (Toronto area and overseas) or 1-888-509-0081 (North America). In addition, the conference call will be broadcast on the Internet via audio webcast on www.ir-live.com, www.vcall.com and www.crestar-energy.com. The webcast will be archived for a period of 90 days following the conference call.

CAUTION TO THE READER

The corporate information contained herein contains forward looking (forecast) information. The reader is cautioned that assumptions used in the preparation of such information, although considered reasonable by Crestar at the time of preparation, may be proved to be incorrect. Actual results achieved during the forecast period will vary from the information provided herein and the variations may be material. There is no representation by Crestar that actual results achieved during the forecast period will be the same in whole or in part as those forecast.

This news release is also available on Crestar's website at www.crestar-energy.com.