Thunder Energy Trust

Thunder Energy Trust
Mustang Resources Inc.

Mustang Resources Inc.
Forte Resources Inc.

Forte Resources Inc.

May 03, 2005 09:15 ET

Thunder Energy Inc., Mustang Resources Inc. and Forte Resources Inc. Announce a Strategic Combination and Creation of a New Oil & Gas Trust, Two Separate Exploration Focused Junior Producers...


NEWS RELEASE TRANSMITTED BY CCNMatthews

FOR: THUNDER ENERGY INC.

TSX SYMBOL: THY



AND MUSTANG RESOURCES INC.

TSX SYMBOL: MUS.A
TSX SYMBOL: MUS.B



AND FORTE RESOURCES INC.

TSX SYMBOL: FRZ

MAY 3, 2005 - 09:15 ET

Thunder Energy Inc., Mustang Resources Inc. and Forte
Resources Inc. Announce a Strategic Combination and
Creation of a New Oil & Gas Trust, Two Separate
Exploration Focused Junior Producers...

CALGARY, ALBERTA--(CCNMatthews - May 3, 2005) - Thunder Energy Inc.
(TSX:THY), Mustang Resources Inc. (TSX:MUS.A)(TSX:MUS.B), and Forte
Resources Inc. (TSX:FRZ)

...and a Coal Bed Methane Resource Company

Thunder Energy Inc. ("Thunder"), Mustang Resources Inc. ("Mustang") and
Forte Resources Inc. ("Forte") jointly announced today that their
respective Boards of Directors have unanimously approved a proposal to
combine the three entities and create a new oil & gas trust ("Thunder
Trust" or the "Trust"), two exploration focused producers ("Thunder
Explorco") and ("Forte Explorco") and a resource based coal bed methane
("CBM") company ("Thunder CBMco"), pursuant to a plan of arrangement
("Arrangement").

As a result of the proposed combination, shareholders of Thunder will
receive one trust unit or exchangeable share of Thunder Trust, one share
of Thunder Explorco and one share of Thunder CBMco for each Thunder
share held. Mustang shareholders will receive 1.1 trust units or
exchangeable shares of Thunder Trust, 1.1 shares of Thunder Explorco and
0.25 shares of Thunder CBMco for each Mustang share held. Mustang class
B shares will be converted to Mustang class A shares based on the
weighted average closing price of the Mustang class A shares for the ten
day trading days commencing May 3, 2005. Forte shareholders will receive
0.35 trust units or exchangeable shares of Thunder Trust and one share
of Forte Explorco for each Forte share held. It is contemplated that the
units of the Trust will be consolidated on a 1:2 basis, the shares of
Thunder Explorco on a 1:3 basis, the shares of Thunder CBMco on a 1:3
basis and the shares of Forte Explorco on a 1:3 basis after the above
mentioned share exchange occurs. A maximum of 15% exchangeable shares
will be issued pursuant to the proposed combination.

"The proposed combination will deliver significant value to our
shareholders through sustainable distributions from the Trust,
participation in a growth focused exploration company and exposure to
the unique upside of our resource based CBM company" said Doug Dafoe,
President and CEO of Thunder Energy Inc.

"We believe this transaction will provide continued per share value
growth for Mustang shareholders through a combination of sustainable
cash distribution in Thunder Trust and exciting upside in both the
Thunder Explorco and Thunder CBMco." said Richard Todd, President and
CEO of Mustang Resources Inc.

"This transaction creates ownership by Forte shareholders in a Trust
with a diversified asset base and balance between oil and gas
production. In addition, the Forte Explorco will provide Forte
shareholders with an opportunity to participate in an exciting growth
story with an exploration focus in significant oil and gas prospects in
west central Alberta, N.E.B.C. and the Peace River Arch" said Tom
MacKay, Chairman and CEO of Forte Resources Inc.

The Trust will own approximately 86 percent of the combined assets of
Thunder, Mustang and Forte. The assets of Thunder Trust are expected to
produce an average of 13,000 boe/d in the second half of 2005 comprised
of 50 mmcf/d of natural gas and 4,700 bbls/d of crude oil and natural
gas liquids. Thunder Explorco will own certain growth assets and
undeveloped lands of Thunder and Mustang and will have initial
production of approximately 850 boe/d. Thunder CBMco will own all of
Thunder's coal bed methane assets, including current production of
approximately 350 boe/d. Forte Explorco will own certain growth assets
and undeveloped lands of Forte and will have initial production of
approximately 600 boe/d.

Management of the Trust will be composed of executives and management
from Thunder and Mustang, led by Doug Dafoe, CEO, Brent Kirkby, CFO,
Steve Gell, V.P. Production and Tom Zuorro, VP Land. Andy Magee,
currently a senior geologist at Mustang, is expected to assume a senior
management position in the Trust. Additional senior management positions
will be added to the Trust. The initial board of trustees of the Trust
will be composed of certain of the current directors of Thunder, two
nominees from Mustang and one nominee from Forte.

Kel Johnston, CEO, and Dave Allen, V.P. Exploration, will lead the
management of Thunder Explorco. Additional senior management will be
added to Thunder Explorco. The board of directors of Thunder Explorco
will be composed of certain of the current directors of Thunder and
other independent directors who possess complementary experience.

Certain key management and employees of Mustang have agreed to provide
services to both the Trust and the Thunder Explorco to ensure continuity
and continued development of the Mustang assets.

Management of Thunder CBMco will be led by Terry Meek, President and
COO. Additional senior management will be added to Thunder CBMco. The
board of directors of Thunder CBMco will include Doug Dafoe as Executive
Chairman, certain of the current directors of Thunder and Mustang and
other independent directors who possess complementary experience.

Thunder Explorco and Thunder CBMco will have access to the Trust
employees on an interim basis pursuant to a Technical Services
Agreement, with such employee services charged on a cost recovery basis.

Management of Forte Explorco will be led by Bruce Hammond, President and
C.O.O., Doug Baker, C.F.O., Tom MacKay, Chairman and C.E.O. and
Christine Robertson, V.P. of Engineering, and will include certain key
employees and management from Forte. The board of directors of Forte
Explorco is expected to be composed of the current directors of Forte.

Benefits of the Transaction

The reorganization is designed to enhance value for shareholders by
combining the mature producing assets of Thunder, Mustang and Forte to
create a larger, more diversified production base capable of maintaining
sustainable distributions for the Trust. Shareholders of Thunder and
Mustang will receive shares in a growth focused exploration company
(Thunder Explorco) with an exciting portfolio of drilling opportunities
that currently exist in Thunder and Mustang plus participation in a
resource company focused on coal bed methane development. Shareholders
of Forte, in addition to their participation in the Trust, will receive
shares in a growth focused exploration company (Forte Explorco) with
significant upside from existing drilling opportunities currently in
Forte.

Management and Directors of Thunder, Mustang and Forte believe that the
transaction provides the following strategic benefits:

- The separation of mature, growth and resource assets aligns the risks
and returns from each asset grouping and provides shareholders with the
flexibility to determine their participation in each.

- The Trust provides a mature and diversified production base to deliver
cash flow to its unit holders in a tax effective manner.

- The Trust's production base will be made up of long-life gas reserves
contributed by Thunder, high quality light crude oil production and
long-life natural gas production contributed by Mustang, a 40% interest
in the Trust's operated Laprise gas property and additional light crude
oil production in Alberta and SE Saskatchewan contributed by Forte.

The Trust will have a large inventory of development drilling and
exploitation opportunities providing it with low cost production
additions capable of maintaining existing production levels.

- With an estimated production base of 13,000 boe/d, the Trust will have
the critical mass and the access to capital to compete more effectively
for acquisitions.

- The respective Explorco's provide their shareholders participation in
growth focused exploration companies each with an exciting portfolio of
exploration and development opportunities that the respective management
teams have accumulated to date.

- Thunder and Mustang shareholders can participate in the rapidly
evolving resource play for non-conventional natural gas through
Thunder's partially developed and significant undeveloped positions in
CBM.

Based on these factors, the Boards of Directors of Thunder, Mustang and
Forte have unanimously determined that the Arrangement is in the best
interests of Thunder, Mustang and Forte. Management and Directors of the
three companies, representing 10% of the outstanding fully diluted
common shares of Thunder, 20% of the outstanding fully diluted common
shares of Mustang and 10% of the outstanding fully diluted common shares
of Forte have agreed to vote in favour of the Arrangement.

Thunder Trust

The Trust's mandate will be to generate stable and sustainable monthly
distributions by focusing on high netback operations together with an
active low-risk development drilling and exploitation program. The Trust
estimates second half 2005 production will average 13,000 boe/d
comprised of 50 mmcf/d natural gas and 4,700 bbls/d of crude oil and
liquids. Revenues generated from the Trust's production base are
expected, on average, to achieve premium pricing with natural gas
averaging $0.30/mcf above AECO posted prices and the crude oil and
liquids blend expected to average 35 degrees API. Operating costs are
expected to initially average $8.50/boe with potential for reduction
given the Trust's anticipated focus on cost reduction. The Trust will
operate approximately 98% of its production base giving it full control
over production levels, facilities and cost reduction strategies.

Using January 1st, 2005 independent engineering reports, as prepared by
GLJ and Sproule, the Trust will have proven reserves of 31.5 mmboe and
proved plus probable reserves of 45.0 mmboe, 70% weighted to natural
gas. Assuming estimated production of 13,000 boe/d, this results in a
reserve life index of 6.6 years for proven reserves and 9.5 years for
proven plus probable reserves.

The Trust will have a significant inventory of low-risk oil and gas
development and exploitation drilling opportunities. The Trust has
identified in excess of 100 gross drilling locations (75 net) with total
capital expenditures estimated at $85 million. The existing inventory
represents 18 months of drilling based on current estimates of cash flow
and distributions. Due to the predictability and low risk nature of
these drilling locations, the management team of the Trust believes that
production can be maintained at or near existing levels contributing to
the sustainability of the Trust's distributions. In addition to the
existing drilling inventory, the Trust has aligned itself with Thunder
Explorco and Forte Explorco through farm-out arrangements and joint
ownership of certain undeveloped lands to ensure mutually beneficial
development of future opportunities.

With an enhanced access to capital, the Trust will pursue a selective
acquisition program with an emphasis on complimentary acquisitions in
areas where the Trust can benefit from existing operating synergies and
expertise. Generally, the Trust will also look to add production and
reserves where such acquisitions are accretive to existing Trust unit
holders.

Based on existing forward commodity prices, the Trust is anticipating an
initial monthly distribution of $0.15/unit after giving effect for a 1:2
consolidation of the Trust units. The Trust expects to maintain this
level of distributions for the balance of 2005 and 2006 by reinvesting
retained cash flow into low-risk drilling and exploitation
opportunities. It is estimated this level of distribution will represent
approximately 65% of the Trust's cash flow. Undistributed cash flow will
be used to fund capital programs estimated at $30 million for the second
half of 2005. There will be approximately 47 million trust units issued
and outstanding after giving effect for a 1:2 consolidation of the
Trust's units. The Trust will have initial net debt of approximately
$135 million which represents one times annual cash flow.

The Trust will initiate a hedging program designed to provide stability
to distribution levels and to maintain sufficient funds to finance
capital programs. In addition the Trust will assume the following
commodity hedges that are currently in place.

January 1 to December 31, 2005 - 500 bbls/d @ $58.80/bbl Cdn.

March 1 to December 31, 2005 - 200 bbls/d @ $61.67/bbl Cdn.

A compensation program will be put in place for the Trust that aligns
Unitholder, management and employee interests. There will be no fixed
percentage bonus plan for management or employees of the trust, or fees
payable to management or employees on acquisitions or dispositions.

Thunder Explorco

Pursuant to the Arrangement, Thunder and Mustang shareholders will also
receive new shares in Thunder Explorco, a diversified natural gas and
light oil producer and explorer focused in Alberta and NE British
Columbia.

It is anticipated that this growth based junior will have approximately
4.0 mmboe's of proven plus probable reserves with current production of
850 boe/d weighted 65% to natural gas and 35% to light oil and natural
gas liquids. In addition, the Company will have a net interest in
approximately 178,000 acres of undeveloped land in Alberta and British
Columbia as well as an interest in production infrastructure in NE
British Columbia and Alberta. The Explorco lands are covered by
extensive seismic data including a new 130 square km 3-D survey in the
Laprise area of NE British Columbia. Other core areas include central
Alberta properties at Sylvan Lake, Arvilla and Bruce where Thunder and
Mustang have enjoyed recent exploration successes.

The Explorco team has identified in excess of 50 seismically defined
exploration and development locations on Explorco lands targeting
natural gas and light oil. In addition, the Company will have access to
additional interests in the Alberta lands through a farm-in arrangement
with the Trust.

A private placement of common shares raising total proceeds of $8.5
million will be made available to the employees, directors and service
providers of Thunder Explorco. The private placement shares will be used
to attract and retain quality management and employees in the Company.
The private placement will have no warrants attached and shall be
subject to escrow. Thunder Explorco will have $5 million of net debt
prior to taking into account proceeds from the private placement. There
will be approximately 30 million common shares issued and outstanding
after the initial private placement and after giving effect for a 1:3
consolidation of Thunder Explorco shares.

Thunder CBMco

Thunder and Mustang shareholders will also receive common shares in a
new pure play coal bed methane resource company. Pursuant to the
Arrangement, Thunder CBMco will receive all of Thunder's CBM interests,
which will be accomplished by an assignment of all rights to natural gas
from coal in certain Thunder properties. A total of 289,000 net acres of
prospective lands will be assigned to Thunder CBMco.

These rights will include the partially developed Horseshoe Canyon CBM
play at Fenn-Big Valley. Current production from this play is estimated
at 2 mmcf/d with a further 150 development drilling locations identified
on the transferred rights. Total resource potential of the Horseshoe
Canyon play is estimated at 30-50 Bcf of gas of which 10 Bcf has been
recognized as proven and probable reserves in the independent reserve
evaluation.

The larger CBM resource play is centered on Thunder CBMco's Mannville
lands. CBMco will own three significant blocks of land with thick
contiguous Mannville coal seams. Total CBM resource in place is
estimated in excess of 1 TCF of natural gas. In addition to the gas
rights from coal, Thunder CBMco will assume ownership and operatorship
of three Mannville pilot projects on trend with industry activity in
Central Alberta.

Thunder CBMco's capital program for the second half of 2005 is estimated
at $15 million and will include the drilling of 30 Horseshoe Canyon CBM
wells at Fenn-Big Valley and up to five horizontal Mannville test wells.
Over the past year, industry participants have been drilling horizontal
wells into the Mannville coals to accelerate both gas production and the
de-watering phase. Thunder CBMco together with its 50% joint venture
partner will drill two horizontal wells at its pilot at Rosalind. Upon
completion of this initial test, Thunder CBMco will drill additional
horizontal wells at its 100% owned pilot at Manola.

A private placement of common shares raising total proceeds of $6
million will be made available to the employees, directors and service
providers of Thunder CBMco. The private placement shares will be used to
attract and retain quality management and employees. The private
placement will have no warrants attached and shall be subject to escrow.
Thunder CBMco will have $5 million of net debt prior to taking into
account proceeds from the private placement. There will be approximately
24 million common shares issued and outstanding after the initial
private placement and after giving effect for a 1:3 consolidation of
Thunder CBMco shares.

Forte Explorco

Pursuant to the Arrangement, Forte shareholders will receive new shares
in Forte Explorco, a diversified natural gas and oil producer and
explorer focused in Alberta and NE British Columbia.

It is anticipated that the Forte Explorco will have approximately 1.8
mmboe's of proven plus probable reserves with current production of 600
boe/d weighted 46% natural gas and 54% oil and natural gas liquids. In
addition the Company will have a net interest in approximately 84,000
acres of undeveloped land in Alberta and British Columbia, as well as an
interest in production infrastructure in Alberta. The Explorco lands are
covered by extensive seismic data including a new 130 square km 3-D in
the Laprise area of NE British Columbia. Core areas, in addition to the
Laprise area, include Alberta properties at Grande Prairie and
Leaman/Niton where Forte has had multi-zone oil and gas discoveries and
has significant new production volumes scheduled to come on stream this
year. Initial Forte Explorco drilling is expected to be concentrated in
west central Alberta, in the Niton/Leaman area, and near Grande Prairie,
pursuing the Explorco's high impact oil and gas projects.

Forte has identified in excess of 40 exploration and development
locations on Explorco lands targeting natural gas and oil. In addition,
the Company will have access to additional interests in both the Alberta
and N.E.B.C. lands through a farm-in arrangement with the Trust.

A private placement comprised of shares and warrants will be made
available to the Forte Explorco employees and directors raising total
proceeds of up to $4.0million. The private placement will have no
warrants attached and shall be subject to escrow Forte Explorco will
have no debt prior to taking into account proceeds from the private
placement. There will be approximately 48.9 million common shares issued
and outstanding after the initial private placement and before taking
into account the planned 1:3 share consolidation.



Pro Forma Attributes of Thunder Trust, Thunder Explorco, Thunder
CBMco and Forte Explorco

THUNDER THUNDER THUNDER FORTE
Trust Explorco CBMco Explorco
---------------------------------------------------------------------
2005E Production (July 1-
December 31)
Oil and Liquids (bbls/d) 4,700 300 0 570
Natural Gas (mmcf/d) 50 3.3 2 3.7
Total (boe/d) 13,000 850 350 1,187
Gas % 65 65 100 52

Reserves(1)
Proved (mmboe) 31.3 2.8 1.0 1.3
P + P (mmboe) 45.0 4.3 1.6 1.9
RLI (P+P)(2) 9.5 14.7 14.6 8.2

Reserve Values(3)
Proved ($mm) 416 35.6 9.3 17.4
P + P ($mm) 545 47.4 13.2 26.9

Undeveloped Land
(net acres)(4) 173,000 178,000 289,000 84,000

Operating Costs ($/Boe) 8.50 7.00 7.00 9.00

Net Debt (working
capital) ($mm)(5) 135 (3.5) (1.0) (4.0)

Basic Units/Shares
Outstanding (mm)(6) 47 30 24.0 16.3


(1) Based on the reserve evaluations of GLJ as at January 1, 2005 for
Thunder and Mustang. Based on the reserve evaluation of Sproule
at January 1 and March 31, 2005 for Forte.
(2) Effective RLI based on 2005 estimated production.
(3) Reserve values are the before tax present values of cash flow at
a 10% discount rate as per the GLJ and Sproule reserve reports as
at January 1, 2005.
(4) As at March 31, 2005.
(5) Estimated net debt (working capital) at closing inclusive of
transaction costs and net of the proceeds of the planned private
placements.
(6) After giving effect to a consolidation of the Trust units on a
1:2 basis, the shares of Thunder Explorco on a 1:3 basis, the
shares of Thunder CBMco on a 1:3 basis and the shares of Forte
Explorco on a 1:3 basis post the above mentioned share exchange.


Arrangement

Pursuant to the Arrangement, shareholders of Thunder will receive one
trust unit or one exchangeable share of the Trust, one share of Thunder
Explorco and one share of Thunder CBMco for each Thunder share held.
Mustang shareholders will receive 1.1 of a trust units or 1.1 of an
exchangeable share of the Trust, 1.1 of a share of Thunder Explorco and
0.25 of a share of Thunder CBMco for each Mustang share held. Forte
shareholders will receive 0.35 of a trust unit or 0.35 of an
exchangeable share of Thunder Trust and one share of Forte Explorco for
each Forte share held. It is contemplated that the units of the Trust
will be consolidated on a 1:2 basis, the shares of Thunder Explorco will
be consolidated on a 1:3 basis and the shares of Thunder CBMco will be
consolidated on a 1:3 basis post the above mentioned share exchange. A
maximum of 15% exchangeable shares will be issued under the proposed
combination.

An information circular detailing the Arrangement is anticipated to be
mailed to security holders in late May 2005. Shareholder meetings of
Thunder, Mustang and Forte to consider the reorganization will occur on
or about June 30, 2005. The Plan of Arrangement will require the
approval of 66 2/3 percent of the votes cast by each class of
shareholders, option holders and warrant holders at each of the
shareholder meetings, the approval of the majority of the shareholders
excluding management and the approval of the Court of Queen's Bench of
Alberta and certain regulatory agencies. In addition, the Board of
Directors of each Company has agreed that it will not solicit or
initiate discussions or negotiations with any third party for any
business combination involving either of Thunder, Mustang or Forte.
Thunder has agreed to pay Mustang and Forte a non-completion fee of $3
million each and each of Mustang and Forte have agreed to pay a
non-completion fee of $2.5 million in certain circumstances.

Financial Advisors

GMP Securities Ltd. and FirstEnergy Capital Corp. (co-lead advisors) are
acting as financial advisors to Thunder with respect to the proposed
transaction. GMP Securities Ltd. and FirstEnergy Capital Corp. have
advised the board of directors of Thunder that they are of the opinion
that, subject to review of the final form of the documents effecting the
reorganization and based on certain assumptions relating to the proposed
transaction, the consideration to be received by the Thunder
shareholders pursuant to the arrangement is fair, from a financial point
of view, to the Thunder shareholders.

Canaccord Capital Corporation is acting as financial advisor to Mustang
with respect to the proposed transaction. Canaccord Capital Corporation
has advised the board of directors of Mustang that it is of the opinion
that, subject to review of the final form of the documents effecting the
reorganization and based on certain assumptions relating to the proposed
transaction, the consideration to be received by the Mustang
shareholders pursuant to the arrangement is fair, from a financial point
of view, to the Mustang shareholders.

Tristone Capital Inc. is acting as financial advisor to Forte with
respect to the proposed transaction. Tristone Capital Inc. has advised
the board of directors of Forte that it is of the opinion that, subject
to review of the final form of the documents effecting the
reorganization and based on certain assumptions relating to the proposed
transaction, the consideration to be received by the Forte shareholders
pursuant to the arrangement is fair, from a financial point of view, to
the Forte shareholders.

CIBC World Markets Inc., Raymond James Ltd. and TD Securities Inc. are
acting as strategic advisors to Thunder in connection with the proposed
transaction.

Conference Call

Thunder, Mustang and Forte will be conducting a joint conference call
and web cast on Tuesday May 3, 2005 at 1:00 PM Calgary time, to discuss
the proposed reorganization and its benefits to their respective
shareholders. The web cast will include a presentation, which will
provide more details regarding the proposed reorganization.

Participants may access the call by telephone or over the Internet.
Participants are advised to visit Thunder's website
(www.thunderenergy.com) before this event to ensure they have the
appropriate computer configuration and software necessary to access the
web cast.



To access the live call:
By Internet: www.thunderenergy.com

By telephone:
Canada/US Toll-Free 1-800-322-0079
International 1-973-409-9258


To access a recorded playback:
By Internet: www.thunderenergy.com
Available until August 3, 2005

By telephone:
Available until May 10, 2005
Canada/US Toll-Free 1-877-519-4471
International 1-973-341-3080
Password for telephone playback: 6024435


FORWARD-LOOKING STATEMENTS

This press release may contain forward-looking statements including
expectations of future production, cash flow and earnings. These
statements are based on current expectations that involve a number of
risks and uncertainties, which could cause actual results to differ from
those anticipated. These risks include, but are not limited to: the
risks associated with the oil and gas industry (e.g., operational risks
in development, exploration and production; delays or changes in plans
with respect to exploration or development projects or capital
expenditures; the uncertainty of reserve estimates; the uncertainty of
estimates and projections relating to production, costs and expenses,
and health, safety and environmental risks), commodity price and
exchange rate fluctuation and uncertainties resulting from potential
delays or changes in plans with respect to exploration or development
projects or capital expenditures. Additional information on these and
other factors that could affect the Company's operations or financial
results are included in the Company's reports on file with Canadian
securities regulatory authorities.

Thunder Energy Inc. is a Calgary-based oil and gas exploration company.
Thunder's shares trade on the Toronto Stock Exchange under the trading
symbol "THY".

Mustang Resources Inc. is a Calgary-based oil and gas exploration
company. Mustang's shares trade on the Toronto Stock Exchange under the
trading symbol "MUS.A" and "MUS.B".

Forte Resources Inc. is a Calgary-based oil and gas exploration company.
Forte's shares trade on the Toronto Stock Exchange under the trading
symbol "FRZ".

-30-

Contact Information

  • FOR FURTHER INFORMATION PLEASE CONTACT:
    Thunder Energy Inc.
    Douglas A. Dafoe
    President & C.E.O.
    403 294-1635
    403 232-1317 (FAX)
    www.thunderenergy.com
    or
    Mustang Resources Inc.
    Richard A. M. Todd
    President & C.E.O.
    403 283-8990
    403 521-5284 (FAX)
    www.mustangresources.com
    or
    Forte Resources Inc.
    Tom MacKay
    Chairman & C.E.O.
    403 237-5163
    403 237-5256 (FAX)
    www.forteresources.ca