Fountain Oil to Participate in the Development of a Major Gas Field in the Republic of Adygea, Russia.

HOUSTON--(BUSINESS WIRE)--June 14, 1995--Fountain Oil Incorporated ("Fountain")(NASDAQ/NMS: GUSH), announced today that it has entered into a preliminary agreement to acquire a private company which owns a 31 percent interest in the gas condensate field known as the Maykop Field in the Republic of Adygea, Russia.

Pursuant to the preliminary agreement, the maximum consideration to be paid for the private company by Fountain, which is subject to achieving certain milestones, is USDLR 8 million to be satisfied by the payment of USDLR 1 million cash and the issue of a total of 1 million shares of Fountain Common Stock.

The Maykop Field has some 12,500 acres of proven gas and condensate reserves and currently produces the equivalent of approximately 2 MMCF of gas per day. 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. The appraisal attributes an undiscounted net future value of a minimum of USDLR 141 million to a 31 percent interest in the reserves, based upon current gas prices unescalated. The other participants in the Maykop Field include the local government and the largest gas distribution group in Russia.

In addition to its 31 percent interest in the Maykop Field, the company to be acquired by Fountain has net tangible assets of approximately USDLR 3 million. Fountain's expected cash contribution to the future cost of developing the Maykop Field, after anticipated project financing and reinvestment of project cash flow, is expected to be not more than USDLR 5 million. The preliminary agreement is subject to a number of conditions, including the negotiation of a mutually acceptable definitive agreement and the satisfactory completion of Fountain's due diligence review.

Commenting on the agreement, Oistein Nyberg, president and CEO, said, "This is a very exciting project for Fountain. There is significant upside reserve potential in the Maykop Field and there is very real potential to extend reserves into a neighboring area of approximately 5,000 acres `on trend' with the Maykop Field. A twenty well in-fill development program and work-over of selected existing wells is expected to commence before the end of October 1995 and is expected to generate a growing revenue stream."

Fountain Oil Incorporated 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 technology used to increase the production of paraffinic oil and heavy oil.

CONTACT: Fountain Oil Incorporated

Arnfin Haavik, 713/492-6992 (CFO)

or

Liviakis Financial Communications, Inc.

John M. Liviakis, 916/448-6084 (President)