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Zarara Extends Funding Agreement and Completes Private Placement With Mawenzi Resources Limited.

SATWA, Dubai, United Arab Emirates--(BUSINESS WIRE)--APRIL 28, 1999--

Zarara Oil and Gas Limited ("Zarara") is pleased to announce that on April 22, 1999 it signed an agreement with its partners in Mozambique, Atlantic Richfield (NYSE:ARC) and Sasol (NASDAQ:SASOY) varying the terms of their existing Participation Agreement. This variation will extend the facility whereby Arco and Sasol meet the funding requirements of Zarara's subsidiary, Zarara Petroleum Resources Limited, in respect of the Temane, Sofala, and M-10 permit areas. Under the new arrangement, Zarara's share of the first US$65 million of expenditures in those areas will be covered. This equates to US$3 million, of which approximately US$1 million has already been spent. These funds, plus a fixed premium in lieu of interest, are repayable out of Zarara's share of revenue in respect of those permit areas.

Zarara is also pleased to announce the completion of a subscription agreement with Mawenzi Resources Limited ("Mawenzi") on April 23, 1999 pursuant to which Zarara has issued 1,746,193 ordinary shares to Mawenzi at a price of 40 pence (US$0.64), representing approximately 3.6% of the then issued share capital.

Mawenzi is a public company listed on the Johannesburg Stock Exchange, with substantial property and potential mining interests in southern Africa.

Further, the Company is pleased to announce the conversion and/or redemption of all of the outstanding secured convertible loan notes issued on August 18, 1998. Of the 655,000 British Pounds of loan notes issued, 418,000 British Pounds are to be converted into ordinary shares at 22 pence (US$0.35) per share and the balance will, if not converted, be repaid on or before June 4, 1999.

Commenting on the above, the Managing Director of the Company, Mr. Dewitt Shreve, observed "The extension of the agreement with Arco and Sasol to cover Zarara's operating costs demonstrates the strength of our relationship with our main partners in Mozambique. We are also pleased to have Mawenzi as a new shareholder. Their interest in the Company shows that investors in South Africa, as well as in North America and Europe, are able to see the strategic importance of natural gas in this part of Africa."

For further information, please contact Mike Boyd toll-free in North America at (888) 988-3788 or visit our web site at www.zararaoil-gas.com.

SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION

This press release contains statements that constitute "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Any statements that express or involve discussions with respect to predictions, business strategy, budgets, exploration and development opportunities or projects, the expected timing of commencement of production or other expectations, beliefs, plans, objectives, assumptions or future events or performance are not statements of historical fact and may be "forward-looking statements". Forward-looking statements are based on expectations, estimates and projections at the time the statements are made that involve a number of risks and uncertainties which could cause actual results or events to differ materially from those anticipated by the Corporation. These include, but are not limited to, the risks of the oil and gas industry (for example, operating risks of exploring for, developing and producing crude oil and natural gas and the uncertainty of reserve estimates), risks in conducting foreign operations fluctuations in oil and gas prices and exchange rates, and the uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects. Additional information concerning certain of these and other factors which could affect the Corporation's operations or financial results is included under the heading "Risk Factors" in the Annual Report on Form 20-F filed by the Corporation with the Securities and Exchange Commission.
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Publication:Business Wire
Geographic Code:6SOUT
Date:Apr 28, 1999
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