Puma Energy Signs LOI for Caspian Oil Field Joint Venture

Puma Energy Inc. has announced the signing of a letter of intent with Heinrich Grunewald, by which it will acquire 50 percent of Grunewald & Co., GmbH, the owner of certain interests in the Ramani VII Oil Field in The Republic of Azerbaijan.

The letter of intent outlines the terms under which Puma will obtain the rights to acquire from AzGerneft J.V. a 30 percent indirect interest in the AzGerneft J.V. The Ramani VII Oil Field is part of the Balakhani, Sabunchi and Ramani oil fields under the jurisdiction of the State Oil Company of the Azerbaijan Republic (SOCAR).

These fields are being produced and developed by AzGerneft J.V. and a second company, Balakhanyneft. Puma Energy is currently waiting to begin negotiations for a production sharing agreement in relation to another oil field on the basis of a separate agreement submitted in July 2001 to SOCAR.

The agreement, "On Basic Commercial Principles and Provisions of Rehabilitation, Development and Production Sharing Agreement (RDPSA) for the Block including the Balakhani, Sabunchi and Ramani (BSR) Oil Field in the Azerbaijan Republic," relates to the main BSR field operated by Balakhanyneft.

"This letter of intent in respect of Grunewald & Co., GmbH is a crucial step toward our primary goal of development of energy opportunities in the Caspian region," said Edward W. Blessing, president and chief executive officer of Puma, who heads the company from its international base in Dallas.

"This agreement lays the foundation for future expansion efforts in the area as we continue to pursue every option for development of the Balakhani, Sabunchi and Ramani oil fields."

Upon closure of the definitive agreement by Oct. 31, 2001, Puma will make available to the J.V. an undisclosed sum to be applied for the enhancement of production from the field. This sum will be repaid to Puma from revenues of the J.V.

The final definitive documentation, in addition to the inclusion of customary warranties and representations, will also address the program for the investment of Puma's contribution, including new seismic surveys, identity and ownership of the operating company, the terms of the operating agreement, and the time line for work on the field.

The announcement follows the release of favorable preliminary results from a feasibility study and due diligence review by United Kingdom-based Gaffney, Cline & Associates Ltd. (GCA), indicating substantial petroleum reserves suitable for development in the adjacent, analogous Balakhani, Sabunchi and Ramani field.

To best pursue options for future opportunities in the Caspian region, Puma recently initiated an internal reorganization, which included disbanding its Advisory Board and closing a liaison office in Istanbul.