Eurogas Corporation
TSX VENTURE : EUG

Eurogas Corporation

May 26, 2006 18:27 ET

Eurogas Reports Q1 2006 Results

CALGARY, ALBERTA--(CCNMatthews - May 26, 2006) - Eurogas Corporation (TSX VENTURE:EUG) ("Eurogas" or the "Corporation") today announced its financial results for the three-month period ending March 31, 2006. For the quarter, the Corporation invested $1.2 million in its Castor Underground Natural Gas Storage ("UGS") Project in Spain and $283,400 on its Sfax exploration program in Tunisia. At March 31, 2006, Eurogas had cash of $22.7 million and a line of credit available of $6 million. As the Corporation is in the development stage, it incurred a net loss of $307,800 during the three-month period.

Eurogas has filed its consolidated financial statements and related Management Discussion and Analysis for the period ended March 31, 2006 with Canadian securities regulatory authorities on the System for Electronic Document Analysis and Retrieval ("SEDAR").

During the first quarter of 2006, Eurogas continued to pursue its stated objectives for the Castor Underground Natural Gas Storage Project in Spain and for the Sfax exploration permit, offshore Tunisia. With $22.7 million in treasury and a $6 million line of credit, Eurogas has the necessary financial position to move towards more significant financing to implement its development programs in Spain and Tunisia.

APPOINTMENT OF CHAIRMAN

At the director's meeting following the Annual General Meeting, Mr. Julio Poscente retired as Chairman of the Board of Directors of the Corporation. He has been succeeded by Mr. Ned Goodman. Mr. Goodman is the President and Chief Executive Officer of Dundee Corporation, which owns approximately 51% of the common shares of the Corporation.

Mr. Julio Poscente remains a director of the Company. He was the founder of the Corporation and has provided the vision and leadership through the years in the Corporation's pursuit of world class projects. We thank him for his advice and guidance, lately as Chairman and for many years as the President & CEO.

SPAIN - CASTOR UNDERGROUND GAS STORAGE PROJECT

In March 2006 the Spanish Government adopted the updated Energy Infrastructure Plan (Planificacion de los Sectores de Electricidad y Gas, Revision 2005-2011), in which Castor UGS was granted the "A Urgent" category. This is a key milestone for the project, meaning the project is considered vital for the Spanish gas system and is approved for implementation subject to administrative and environmental approvals, including the grant of a Development Concession. In March 2006 the Corporation filed the full Environmental Impact Study with the authorities. The next major step will be the publication of a notice in the Official Gazette, whereby interested parties will be invited to inspect the relevant documents and to file comments within a 30-day period.

DeGolyer and MacNaughton, petroleum engineering consultant, has been retained to develop a reservoir simulation model incorporating historical data and new data from the 2005 Castor 1 well and 3-dimensional seismic. The simulation model will be completed by mid-2006 and provide key input data for the design of the gas storage facilities, wells and pipelines.

In March 2006 the Corporation commenced the selection process for a contractor in the commissioning of the Front End Engineering and Design Study (FEED), a necessary prerequisite for the grant of an EPC contract, and for completion of project financing. At this stage of a project, concepts developed in pre-FEED studies are taken a stage further to ensure that key aspects of the design are refined sufficiently to enable cost savings and benefits to be assessed to a sufficient degree of accuracy. The FEED study will commence shortly and may take up to 6 months to complete.

TUNISIA - SFAX EXPLORATION PERMIT

The Corporation and its partner Atlas Petroleum Exploration Worldwide, Ltd. ("APEX") have made a strategic decision to enter into a Farmout Option Agreement with Anadarko Petroleum Corporation ("Anadarko") for exploration on most of the Sfax Offshore Exploration Permit located offshore Tunisia in the Gulf of Gabes. Eurogas and APEX currently hold 45 and 55 percent working interests, respectively, in the Sfax Permit.

Under terms of the new multi-phase agreement, Anadarko has committed to acquire, process and interpret a transition-zone 3-D seismic program covering a 420-square-kilometre shallow-water area. Upon completion of this estimated $12 million seismic program, Anadarko will have the option to drill two exploration wells and conduct additional seismic work, or drop the project and earn no interest in the permit except for development concession areas resulting from their exploration success. Assuming conclusion of the multi-phase work program, and upon Anadarko's reimbursement of up to $4.5 million of past costs, Anadarko would own a 75 percent working interest in the farmout area. The work program is scheduled to occur over a 3 1/2-year period. Anadarko, a world class exploration and development company, has a history of success in the region and brings exploration expertise to target high potential hydrocarbon plays.

Specifically excluded from the Agreement are three areas covering a total of 50,400 acres surrounding three prior oil discoveries (Ras El Besh, Jawhara and Salloum). The Sfax permit covers a large area with numerous prospective accumulations requiring a large investment in exploration and evaluation. Eurogas and APEX have completed the evaluation of 348 km2 of 2004 three-dimensional seismic data over two of the previous oil discoveries and are seeking a rig to drill the Ras El Besh development well in the second half of 2006.

The Sfax Permit is located in a hydrocarbon fairway that trends from offshore Libya, through the Gulf of Gabes, to onshore Tunisia, and is surrounded by producing fields to the west, north and east that hold reserves of approximately 1 billion barrels of oil equivalent.

Eurogas is a Canadian oil and gas exploration and development company engaged in development of a major underground natural gas storage facility offshore the east coast of Spain, and the exploration and development of oil and gas in Tunisia's Gulf of Gabes.

Jaffar Khan

President & CEO

Certain information set forth in this document, including management's assessment of the Corporation's future plans and operations, contains forward-looking statements. By their nature, forward-looking statements are subject to numerous risks and uncertainties, some of which are beyond the Corporation's control, including the impact of general economic conditions, industry conditions, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other industry participants, the lack of availability of qualified personnel or management, stock market volatility and ability to access sufficient capital from internal and external sources. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements. The Corporation's actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits the Corporation will derive from there. The Corporation disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.


The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • Eurogas Corporation
    Jaffar Khan
    President & CEO
    (403) 264-4985
    (403) 262-8299 (FAX)
    or
    Eurogas Corporation
    Andrew Constantinidis
    Vice President & CFO
    (403) 264-4985
    (403) 262-8299 (FAX)
    Email: eurogas@eurogascorp.com
    Website: www.eurogascorp.com
    or
    Eurogas Corporation
    250, 435 - 4 Avenue S.W.
    Calgary, Alberta, Canada
    T2P 3A8