FOUNTAIN OIL SIGNS DEFINITIVE AGREEMENT TO ACQUIRE INTEREST IN MAJOR GAS FIELD.HOUSTON--(BUSINESS WIRE)--Aug. 15, 1995-- Fountain Oil Incorporated (Nasdaq NMS See NetWare Management System. : GUSH) announced today that it had entered into a definitive agreement to acquire an effective 31 percent interest in the development of the Maykop Field, located in the Republic of Adygea in southern Russia, through the acquisition of the outstanding stock of Gastron International Limited, a company presently holding the 31 percent interest. Under the definitive, agreement Fountain's obligations remain subject to the satisfaction of various conditions. Preliminary agreement regarding this transaction had been announced by Fountain Oil in June. The consideration that would be paid by Fountain Oil in connection with the acquisition is dependent upon the project reaching certain milestones. The maximum consideration payable consists of $1 million cash and one million shares of Fountain common stock. In addition, Fountain through Gastron would be responsible for contributing to the financing necessary to develop the Maykop Field. The Maykop Field has some 12,500 productive acres and currently produces the equivalent of approximately 2 MMCF MMCF Million Cubic Feet MMCF Multimedia Communications Forum MMCF Mint Mocha Chip Frappuccino MMCF Multi Media Communication Forum per day of gas. An independent engineering report on the Maykop Field indicated proven recoverable reserves of a minimum of 495 billion cubic feet of gas and 4.3 million barrels of condensate condensate, matter in the form of a gas of atoms, molecules, or elementary particles that have been so chilled that their motion is virtually halted and as a consequence they lose their separate identities and merge into a single entity. . Based upon the current international gas price of $2.00 per MCF MCF malignant catarrhal fever. and anticipated operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. , the engineering report would attribute a minimum undiscounted net future value of $141 million to the 31 percent interest in the Maykop Field, which is expected to be on production for approximately 20 years. Two drilling rigs with workover capabilities are being assembled and commissioned in the U.S.A. under the auspices aus·pi·ces 1 n. Plural of auspex. auspices Noun, pl under the auspices of with the support and approval of [Latin auspicium augury from birds] Noun of Gastron prior to shipment to the Maykop Field where two initial drilling sites have been prepared for in-fill drilling operations. The drilling program is expected to commence during the fourth quarter of calendar 1995 and will target early production. It is expected that gas production will be sold in the international market through Mostransgas, a member of the Gasprom group which is the largest gas distributor in Russia, under a contract which is currently being negotiated. Mostransgas and the local government are among the joint venture partners in the development of the Maykop Field. As an initial step in the transaction, Fountain has loaned approximately $2.45 million to Gastron to facilitate completion of the rigs. The loan is secured by the rigs and related equipment. Commenting on the agreement, Oistein Nyberg, Fountain's president and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. , said, "This is a very exciting project for Fountain Oil because in addition to the potential to generate early cash flow it presents substantial upside Upside The potential dollar amount by which the market or a stock could rise. Notes: This is basically an educated guess on how high a stock could go in the near future. See also: Bull, Downside . Not only is there significant potential to increase the proven gas reserves in the Maykop Field above the 495 billion cubic feet, but there is also the possibility of extending reserves into a neighboring neigh·bor n. 1. One who lives near or next to another. 2. A person, place, or thing adjacent to or located near another. 3. A fellow human. 4. Used as a form of familiar address. v. area of approximately 5,000 acres that is "on trend" with the Maykop Field." Fountain Oil is actively acquiring and developing a portfolio of oil and gas properties. The company has also developed and is marketing a patented, electrically enhanced oil recovery Enhanced Oil Recovery (EOR) is a generic term for techniques for increasing the amount of oil that can be extracted from an oil field. Using EOR, 30-60 %, or more, of the reservoir's original oil can be extracted [1] compared with 20-40% [2] technology used to increase the production of paraffinic oil and heavy oil. CONTACT: In the U.S.: John M. Liviakis, President Liviakis Financial Communications, Inc. 916/448-6084 or Gary J. Plisga, Executive Vice President, Americas Fountain Oil Incorporated 713/492-6992 or In Europe: Nils N. Trulsvik, Director Executive Vice President International Fountain Oil Incorporated (47) 66 90 3144 or Morten Rynning, Account Director Burson-Marsteller (47) 22 50 45 50 |
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