Eurogas Corporation

Eurogas Corporation

February 24, 2009 19:07 ET

Eurogas Announces Update on Eurogas International

TORONTO, ONTARIO--(Marketwire - Feb. 24, 2009) - Eurogas Corporation (TSX VENTURE:EUG) announces the following update on Eurogas International Inc. ("Eurogas International").

Delta Hydrocarbons B.V. ("Delta"), a Partner with Eurogas International and Atlas Exploration Worldwide Ltd. ("APEX"), in the Joint Venture, has notified Eurogas International and APEX of its desire to sell its non-earned interest under the agreements pertaining to Delta's farmout on the Sfax Exploration Permit and the Ras El Besh Concession in Tunisia. Discussions are underway between the Partners. To date, Delta has spent approximately US$110 million out of its US$125 million commitment under the terms of the farmout agreements. The 50% participating interest that was assigned to Delta under the agreements is subject to reversal if the US$125 million level of expenditure is not attained.

The Sfax Exploration Permit (the "Permit") covers an area of approximately one million acres which includes four oil discoveries in three geological formations including the REB3 well that was drilled in 2008 and tested 27 degrees API oil over a 10 meter thick pay section in the Reineche formation. Large areas of the Permit remain under-explored and, since 2004, the Partners have acquired 948 km2 of 3D seismic to delineate structures in the central and northwest portion of the Permit area. The participating interests in the Sfax Exploration Permit and the Ras El Besh Concession are Eurogas International at 22.5%, APEX at 27.5% and Delta at 50%.

On January 20, 2009 the Tunisian Hydrocarbon Committee approved a two year extension on the Sfax Exploration Permit which will extend the primary term to December 8, 2011. The extension becomes official upon being publicly gazetted, which is expected to occur in the near future. The Partners have committed to drill one exploration well during this extension period.

The 2009 work program and US$12.8 million budget on the Sfax Exploration Permit and Ras El Besh concession have been approved, subject to agreement between the Partners on technical matters. The work program includes a 380km 2D seismic program to follow up on the REB3 well drilled in 2008 that had the oil show in the Reineche formation. This same formation produces oil and gas from two fields north of the Permit boundary that are located 15 kilometers from REB3. The area is in shallow waters that have been sparsely evaluated due to the high cost of transition zone seismic acquisition. Vintage 2D lines suggest the presence of structures that provide a trap mechanism for Reineche oil pools. As further review is completed the work program may be adjusted. The ultimate timing of the work program will depend upon availability of contractors and crews.

The Partners are re-evaluating the Salloum oil prospect as the next drilling candidate on the Sfax permit. SAM 1, an exploration well located 1.5 kilometers off the east coast of Tunisia, was drilled in 1991 by a previous operator and tested 1800 bpd of 42 degrees API oil with no water. The Salloum structure is adjacent to two producing oil fields that produce from the same targeted formation. Revised mapping based on the 3D seismic program acquired in 2007 suggests the Salloum structure extends towards the shoreline and can be drilled from an onshore location.

The Partners have notified Seawolf Oilfield (Cyrus), Ltd., the owner of the Delta Queen drilling rig which was contracted for the drilling of the REB3 well, that the Partners are disputing various charges associated with the drilling of the well. In January 2009, the Partners filed an application for arbitration as per the provisions of the drilling contract. An arbitration process has commenced. The Partners contend that the drilling equipment provided by the Delta Queen was in poor condition which resulted in significant delays and cost overruns.

Eurogas International is updating its prospectus to include the current information. A revised prospectus will be filed with the securities commissions. A copy of the preliminary prospectus may be obtained at under the profile for Eurogas International.

Concurrently with the filing of the preliminary prospectus, Eurogas International applied to list the Common Shares on the TSX Venture Exchange ("TSXV"). In pursuing this application, the TSXV requested certain structural changes to the spin-out transaction as a pre-condition to listing the Common Shares. As a result, Eurogas International considered its alternatives and decided to abandon its application with the TSXV and seek listing of the Common Shares on the Canadian National Stock Exchange ("CNSX"). The Company has commenced the application process with CNSX. While there are no assurances that a listing will result, Eurogas International has had discussions with CNSX and CNSX has indicated that it does not have structural concerns with respect to the spin-out.

Eurogas Corporation is an independent oil and gas exploration company listed on the TSX Venture Exchange under the symbol EUG and is engaged directly in the development of a major underground storage facility off the east coast of Spain. For more information on Eurogas, visit the website

Certain information set forth in this document, including management's assessment of each 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 them. 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.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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