El Paso Closer To Acquiring Velvet Exploration

El Paso Oil & Gas Canada Acquisition, Inc. received an advance ruling on July 9, 2001 from the Canadian Competition Bureau regarding its proposal to acquire all the issued and outstanding common shares of Velvet Exploration Ltd.

The Commissioner of Competition has issued an Advance Ruling Certificate indicating El Paso will not be subjected to the regulatory process dealing with matters of competition. The ruling keeps El Paso on track to complete its acquisition of Velvet in the third quarter of this year. The process is currently underway to obtain the remaining Canadian regulatory approval under the Investment Canada Act, which requires review of significant non-Canadian investments in Canada.

Under the terms of El Paso's offer, which was announced on June 14, 2001, Velvet shareholders tendering their shares to the offer would receive C$8.15 in cash for each Velvet common share. The offer is open for acceptance until 5:00 p.m. Mountain Standard Time on July 31, 2001 unless withdrawn or extended. It is conditional, unless waived or amended by El Paso, upon, among other customary conditions, there being validly deposited under the offer and not withdrawn at least 66-2/3 percent of the outstanding Velvet shares (calculated on a diluted basis).