Fountain Oil closes major acquisition of gas reserves in Russia, gas production to start in 1996.HOUSTON--(BUSINESS WIRE)--Oct. 19, 1995--Fountain Oil Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on NMS See NetWare Management System. :GUSH) announced today that all conditions precedent to its acquisition of an effective 31% interest in the Maykop gas 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. field, Adygea, Russia, have been satisfied and the acquisition has now closed. Fountain's fellow shareholders in the joint venture include Mostransgas, a member of the Gasprom group which is the largest gas distributor in Russia, and the local government. Fountain has been appointed Operator for the development of the Field and as such will be responsible for all technical and financial operations. Two rigs with drilling and well completion capabilities have been assembled in the USA for transportation to Adygea. The field development program will initially involve the drilling of two new wells to assess the flow of primary gas production. Also, in order to increase production, five existing but non producing wells will be recompleted and stimulated using modern technology. Two sites have been selected and prepared for the drilling of the new wells which are expected to be in production by March, 1996. The results of this initial phase of the development program will determine the future program for the total field development. A letter agreement has been entered into with Mostransgas for the transport and sale of the gas production. The gas price to be received for the first year's production from the Maykop field is $80 per MSCM MSCM Miniature Schnauzer Club of Michigan MSCM Manchester Student Christian Movement MSCM Multispectral Countermeasures MSCM Multi-State Compliance Manager MSCM Master-Slave Connection Matrix before the cost of transportation and within the C.I.S. (equivalent to $2 per MSCF MSCF Mario Strikers Charged Football (gaming) MSCF Minnesota State College Faculty MSCF Master of Science in Computational Finance (degree) MSCF Molecular Sciences Computing Facility after estimated transport cost). The gas price will be adjusted at the beginning of each year on the basis of the European Border prices reported by the World Gas Intelligence. All income received by Fountain is fully convertible into US$. The Maykop Field comprises some 12,500 acres containing proven gas and condensate reserves but current production is minimal. As previously announced, an independent appraisal of the Maykop Field indicates proven recoverable reserves of a minimum of 495 billion cubic feet of gas and 4.3 million barrels of condensate based upon a 60% recovery factor. The appraisal attributes undiscounted net future value to a 31% interest, of a minimum of $141 million (unescalated, and after all capital and operating costs operating costs npl → gastos mpl operacionales ) based upon a well head gas price of $2 per MSCF. Discounted at 10% per annum Per annum Yearly. , the estimated net present value of the future income attributable to Fountain is $91 million. The consideration to be paid by Fountain for it's 31% interest in the Maykop Field is a maximum of $1 million cash and one million shares and is subject to the prior satisfaction of certain conditions related to field and production operations. In addition, Fountain will be responsible for procuring the finance necessary to develop the Maykop Field. Fountain would finance this through a combination of cash flow from production, project finance from conventional sources and international development agencies and from Fountain's own financial resources. Commenting on the news Oisten Nyberg, 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, "The commencement of the development of the Maykop Field has been delayed while Fountain negotiated a formal agreement for the transportation and sale of gas production. Fountain has also been negotiating a contract for its appointment as Operator of the Field. I am delighted with the outcome of these negotiations. Fountain is now organizing for the development of the Field to commence as quickly as possible. Assuming the results of the initial development phase are satisfactory, I anticipate that Fountain would embark upon a two year development program which could cost approximately $25 million and consist of the drilling of 15 wells each year. The reservoir characteristics of the Maykop Field are excellent and each well has the potential of producing a minimum of 4,000 MSCF per day, which is substantially less than predicted by the independent engineering appraisal." Nyberg added "This is a very exciting project for Fountain. There is significant upside potential Upside potential The amount by which analysts or investors expect the price of a security may increase. upside potential The potential price or gain that may be expected in a security or in a security average, generally stated as the dollar in the independently estimated 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 'on trend' with the Maykop Field. It is our intention to test for this possible extension in the first half of 1996". Fountain Oil Inc. is actively acquiring and developing portfolio of oil and gas properties. The company is also developing and 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 heavy oil. MSCM is 1,000 standard cubic meters Noun 1. cubic meter - a metric unit of volume or capacity equal to 1000 liters cubic metre, kiloliter, kilolitre metric capacity unit - a capacity unit defined in metric terms . MSCF is 1,000 standard cubic feet. CONTACT: Liviakis Financial Communications Inc. John M. Liviakis, 916/448-6084 or Fountain Oil Inc. Gary J. Plisga, 713/492-6992 or in Europe Fountain Oil Inc. Nils N. Trulsvik, (47) 66 90 3144 or Burson-Marsteller Dag Dag(h)da great god of Celts; father of Danu. [Celtic Myth.: Parrinder, 68; Jobes, 405] See : Fatherhood Dag (h)da god of abundance, war, healing. [Celtic Myth. Vangsnes, (47) 22 50 45 50 |
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