NCE Petrofund Corp. and Magin Energy Jointly Announce Signing of Letter of Intent.

Business Editors

CALGARY, Alberta--(BUSINESS WIRE)--May 4, 2001

NCE Petrofund Corp. (Petrofund) (AMEX:NCN) (TSE:NCF.UN.) and Magin Energy Inc. (Magin) (TSE:MGY.) today jointly announced that they have signed a letter of intent whereby Petrofund will offer to purchase all of the issued and outstanding common shares of Magin.

The offer will consist, at the election of the shareholder, of 0.896 of a unit of NCE Petrofund or $5.86 in cash per Magin share provided that the total cash component will not exceed $58.7 million and the total number of Petrofund units issued will not exceed 26.087 million. In the event that all shareholders elect cash, each shareholder will be prorated to 0.667 Petrofund units plus $1.50 in cash per Magin share. Petrofund will also assume all of Magin's outstanding debt, working capital deficiency and capital lease obligations of approximately $34.5 million, after giving effect to a separate transaction currently being negotiated by Magin to sell its interest in the Copton property to an unrelated party. Based on the closing price of Petrofund units on May 3, 2001 of $6.63 per unit, the total enterprise value of the transaction is approximately $266 million.

"This transaction benefits both Petrofund Unitholders and Magin Shareholders," said NCE Petrofund President John Driscoll. "The Magin properties are diverse in nature and will provide the Trust with continued strong cash flow performance. In addition, Magin's strong land position will provide significant future upside in the form of exciting gas opportunities. Further, Magin shareholders are receiving excellent value for their assets and will have the opportunity to benefit in future from the further development of these assets by Petrofund."

Griffiths McBurney & Partners ("GMP") and Waterous & Co. were retained by Magin to assist in the process to maximize value for the shareholders. GMP, as financial advisor, has provided the board of directors of Magin with its opinion that the consideration to be received by the shareholders of Magin is fair from a financial point of view.

After giving effect to the Copton sale, the Magin properties are currently producing approximately 9,000 boepd (at 6:1) of which approximately 45% is gas. An independent engineering evaluation estimates the established reserves (proved plus 1/2 probable) at 29.0 mmboe (6:1). In addition, Magin owns approximately 344,000 net acres of undeveloped land valued at $44 million. The key parameters for the transaction are as follows (6:1) (after giving effect to the Copton sale, but prior to the deduction of any land value):

         Reserves acquisition price         $9.17 per boe
         Production acquisition price       $29,630 per boepd
         Cash flow Multiple                 3.9

The acquisition will be accretive to monthly distributions on Petrofund units, which are currently $0.14.

The boards of directors of both Petrofund and Magin have approved the terms of the transaction including that the board of directors of Magin will recommend the offer to the Magin shareholders. Magin and Petrofund will negotiate exclusively with each other to complete a formal acquisition agreement and each will complete confirmatory due diligence. The offer will be conditional on Magin shareholders tendering 66 2/3 percent of all outstanding Magin shares and other customary conditions.

Certain officers, directors and shareholders of Magin will be entering into lock-up agreements under which they agree to deposit their shares under the offer.

The board of directors of Magin has agreed that it will not solicit or initiate any discussions or negotiations with any third party concerning any sale of any material assets of Magin nor any business combination involving Magin, subject to a fiduciary out in favour of the Magin directors. Magin has agreed to pay a non completion fee of $10 million to Petrofund in certain circumstances. Petrofund has the ability to match any competing bid for Magin.

After the transaction, Petrofund will have a net production of approximately 25,000 boepd at 6:1 comprising approximately 12,500 barrels per day of oil and liquids and 75 mmcfd of natural gas for an overall gas weighting on a production basis of approximately 50%. The reserve life index of the combined entity will be 10.5.

NCE Petrofund is an income trust designed to acquire oil and gas properties through the acquisition of oil and gas assets. The resulting cash flow from these properties is distributed to unitholders on a monthly basis.

This news release may include statements about expected future events and/or financial results that are forward-looking in nature and subject to risks and uncertainties. For those statements, we claim the protection of the safe harbor for forward-looking statements provisions contained in the U.S. Private Securities Litigation Reform Act of 1995. We caution that actual performance will be affected by a number of factors, many of which are beyond our control. Future events and results may vary substantially from that which we currently forsee. Discussion of the various factors that may affect future results is contained in the recent filings of NCE Petrofund with the Securities and Exchange Commission, the Ontario Securities Commission and SEDAR.