Maurel & Prom Acquires Stake in Pebercan

Maurel & Prom and Peberinvest, which hold 20 % and 66 % of the share capital of Pebercan respectively, have entered into an agreement for Maurel & Prom to acquire the majority stake held in Pebercan by Peberinvest. When this acquisition is completed, Maurel & Prom's stake will total approximately 86% of the share capital of Pebercan.

The price agreed to values Pebercan at approximately 95 MUSD, or US $1.21 US per share on a fully diluted basis, which corresponds to 1.77 CAD per share (at an exchange rate of 1.46 USD / CAD).

This agreement is subject to usual closing conditions (including, among others, consent of regulatory authorities and the complete funding of the acquisition). If the conditions are met, the acquisition should be completed prior to the end of the second quarter of 2003.

The potential takeover of control of Pebercan meets the objectives of diversification of the sources of growth with respect to mining and cash flow, accelerated and controlled construction of the critical size with respect to reserves and production necessary for an upstream oil company and the creation of significant value for Maurel & Prom shareholders.

The increase in reserves generated by the project underway would exceed 41% (or a total of 138 Mb), the share represented by Cuba of proven and probable reserves thus being approximately 36%. This operation should approximately double daily production at the end of 2003, which would total around 29/30,000 barrels/day of which approximately 50% would be produced in Congo and 50% would be produced in Cuba. Finally, with the incorporation of approximately 86% of Pebercan's earnings for a full year' Maurel & Prom's proforma 2003 projected net earnings per share would be approximately 86% after taking the depreciation of goodwill into accounts or over 50% higher than what was projected before this operation.

Pebercan began exploration in Cuba in 1993 and its success on Block 7 made it possible to begin production in1999 using semi-horizontal well technology. The company experienced an exceptional rate of success with only one failure out of the thirteen wells produced with Canadian operator Sherritt. This technical mastery has made it possible to double annual production every year since the end of year 2000.

The low production cost of around 3 $/barrel, despite the mediocre quality of the oil produced, provides strong resistance to any potential drop in the reference barrel price and a high gross margin level, which was estimated at over 50 % in 2002.

The increase in reserves in block 7 due to the combined effect of the exploration campaign underway (10 kms explored out of the 70 kms covered by the permit) and the reliance on drilling technologies likely to improve the recovery rate remains a priority objective. The company also has four other onshore blocks covering a significant area and which are the subject of a seismic acquisition campaign.


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