Drilcorp to Acquire $10.4 in Canadian Producing Properties

Drilcorp Energy has entered into an arm's length agreement to acquire certain producing oil and natural gas properties located in west central Alberta for $10.4 million. The Acquisition will be funded through a combination of existing cash, a new debt facility and the proceeds from Drilcorp's proposed equity financing with Octagon Capital.

The properties to be acquired in the Acquisition currently produce approximately 1.1 million cubic feet per day of natural gas, 35 barrels per day of natural gas liquids and 106 barrels per day of sweet, light crude oil (324 boe/d, natural gas converted at 6:1). An independent engineering report prepared by Sproule Associates Ltd. of Calgary, Alberta, (geological and petroleum consultants) dated June 5, 2002 and effective June 1, 2002 assigned total gross remaining proved developed producing reserves of 5.45 Bcf of natural gas, 347.4 Mbbls of crude oil and 245 Mbbls of natural gas liquids (1.5 million barrels of oil equivalent, gas converted at 6:1) to the properties to be acquired pursuant to the Acquisition.