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MSR EXPLORATION LTD. FILES PETITIONS FOR CHAPTER 11 REORGANIZATION

 MSR EXPLORATION LTD. FILES PETITIONS FOR CHAPTER 11 REORGANIZATION
 CUT BANK, Mont., Feb. 7 /PRNewswire/ -- MSR Exploration Ltd. (AMEX: MSR, Toronto, Vancouver: MSR) with its principal place of business in Cut Bank, and its five subsidiary corporations filed Petitions for Chapter 11 reorganization today. MSR Exploration Ltd. is an independent oil and gas exploration and production company operating in Western Canada and through its subsidiaries in the northern Rockies and Texas. The Chapter 11 Petitions were filed in the U.S. Bankruptcy Court for the District of Montana, Great Falls Division. The filings became effective immediately, providing protection from creditors and time for the companies to reorganize, while continuing in operation.
 These filings were submitted only after detailed assessments of alternatives by the companies' boards of directors. Several factors required the companies to take this action at this time. These factors include:
 -- Various litigation proceedings instituted against the companies related to actions of individuals who were in control of the companies in late 1990 and in 1991 have become a substantial burden upon the companies, requiring reorganization.
 -- Substantial legal fees which the companies are incurring in defending this litigation have become extremely difficult for the companies to afford. The companies presently have six law firms representing them throughout the United States and in Canada, defending these cases. The companies believe they will recognize significant savings in attorneys' fees by allowing these claims to be adjudicated in a single venue before the United States Bankruptcy Court, located in Montana.
 -- The inability of the companies to reach a satisfactory arrangement with their principal secured creditor, Manufacturers Hanover Bank has created a crisis regarding the assets of the companies which serve as collateral for the credit line. While the board of directors and the bank have negotiated for several months regarding restructuring of the companies' line of credit, the bank has insisted upon conditions which a majority of the board believes are impossible given the companies' resources, revenues and operations.
 -- Recent downward fluctuations in world oil prices have diminished the companies' cash flow, making it difficult for the companies to maintain the expensive litigation currently underway and provide debt service to their creditors, while meeting their operational expenses.
 In view of these problems, a conclusion has been reached that a filing under Chapter 11 at this time was essential and would best serve the interests of the companies, their employees and numerous independent contractors, their creditors, and approximately 4,000 public shareholders of MSR Exploration Ltd.
 The companies' plans are to continue business as usual while negotiating with creditors and formalizing a consolidated Plan of Reorganization to ensure the companies' future viability. The companies will announce and implement their Reorganization Plans as they materialize. The companies intend to seek immediate court approval for the use of cash collateral and to continue in place all existing petroleum lease and production executory contracts. The companies intend to seek such additional approvals as are appropriate from the court from time to time in order to reassure the public and its creditors that all of the companies' services will continue to operate smoothly during the reorganization process.
 -0- 2/7/92
 /CONTACT: MSR Exploration Ltd., 406-873-2235/
 (MSR) CO: MSR Exploration Ltd. ST: Montana IN: OIL SU: BCY


AL -- LA027 -- 7975 02/07/92 17:36 EST
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Publication:PR Newswire
Date:Feb 7, 1992
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