Eurogas Corporation

Eurogas Corporation

August 15, 2007 18:37 ET

Eurogas Corporation News Release

CALGARY, ALBERTA--(Marketwire - Aug. 15, 2007) - Eurogas Corporation ("Eurogas" or the "Corporation") (TSX VENTURE:EUG) today announced its financial results for the three and six months ended June 30, 2007. In Spain, the Corporation continued to advance the Castor UGS Project and invested $4.0 million during the quarter and $7.3 million year-to-date. In Tunisia, the Corporation prepared for drilling at its Ras el Besh prospect and invested $1.8 million during the quarter and $2.3 million year-to-date. As at June 30, 2007, the Corporation had working capital of $7.9 million and an available $6 million line of credit, making it well positioned to continue the pre-construction phase of the Castor UGS Project and pre-development activities in Tunisia. As the Corporation is in the development stage, it incurred a net loss of $1.2 million during the quarter and $1.6 million year-to-date.

Eurogas has filed its consolidated financial statements and related Management Discussion and Analysis for the period ended June 30, 2007 with Canadian securities regulatory authorities on the System for Electronic Document Analysis and Retrieval ("SEDAR").


As operator, management continued to advance the Castor UGS Project on technical, financial and managerial levels during the second quarter. Castor UGS Project is one of the first underground gas storage projects to be developed under Spain's current energy regulatory regime and, if approved, will become a regulated utility forming a crucial element of Spain's energy infrastructure. The project requires successful completion of a complex permitting process, including the grant of the Exploitation Concession. The Ministry of Industry has initiated the required public review process for the Exploitation Concession, one of the steps before the Concession can be granted. This process involves publication in the Official Gazette whereby, for a period of 20 days ending August 23, interested parties can view project documents and submit their comments. The Exploitation Concession, if granted, will be through a Royal Decree approved by the Spanish Council of Ministers. Other significant permits documentation has been filed, and is awaiting a separate public review process.

On the technical side, the Front End Engineering and Design ("FEED") study will be completed in October 2007, and will provide information for the finalization of a fixed price, time certain Engineering, Procurement and Construction ("EPC") contract. ACS, the largest construction firm in Spain, has qualified as the EPC contractor, subject to agreement on terms and conditions. In addition, the Company has commissioned ACS for detailed engineering for the offshore wellhead platform. This platform will be utilized for the drilling of 12 wells - 8 wells for gas injection/production, 3 wells for observation and 1 for fluid disposal. Optimum reservoir locations for the wells have been selected utilizing advanced seismic modelling. Drilling programs are being finalized, and tenders are being issued for the relevant services and equipment.

Eurogas and Deutsche Bank, the financial advisor on the project, are working diligently on structuring a project financing for Castor UGS. We expect that additional equity for the project will be required by lenders, the level required will reflect market standards for long-life regulated infrastructure projects such as Castor UGS.


Eurogas is conducting exploration and development programs for oil and natural gas offshore Tunisia in the Gulf of Gabes, where the Corporation holds a 45 percent interest in the 1.0 million acre Sfax Permit. Eurogas is the non-operating partner in the permit. Two separate programs are underway: the development of three oil prospects beginning with Ras el Besh, and an exploration program that is funded by Anadarko Petroleum Corporation under the terms of a 2-well Farmout Option Agreement.

(a) Ras el Besh

The Ras el Besh prospect, drilled in the 1990's by a previous operator, tested 612 bopd. Eurogas and its operating partner received a 30-year development concession from the Tunisian authorities to develop the Ras el Besh prospect in 2006. In 2007, partners finalized the purchase, and took possession of a production jack-up platform. In June and July, the operator issued tenders for equipment and services to drill REB-3, and purchased a wellhead and casing required to drill REB-3.

In Q2 2007, the operator completed a reservoir simulation model of the Ras el Besh complex, and retained a reservoir engineering contractor to estimate the potential volume of oil in the reservoir.

(b) Salloum

Subsequent to the end of the quarter, Eurogas participated in a 60 km2 3-D shallow seismic program as part of its evaluation of the Salloum prospect, which tested 1,800 barrels of oil per day from an exploration well drilled in 1997 by a previous operator. Processing and interpretation will take approximately 5 months.

(c) Exploration farmout

Eurogas and APEX entered into a Farmout Option Agreement with Anadarko Petroleum Corporation ("Anadarko") in 2006 consisting of two seismic acquisition programs, drilling two exploration wells, and the reimbursement to partners of up to $4.5 million of past costs. Anadarko completed the first phase of the farmout, a 456 km2 shallow water 3-D seismic acquisition program during the second quarter. Processing and interpretation are underway to delineate potential drilling targets.

The Company is well positioned to move forward with its major projects in Spain and Tunisia.

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
    Eurogas Corporation
    Andrew Constantinidis
    Vice President & CFO
    (403) 264-4985
    Eurogas Corporation
    250, 435 - 4 Avenue S.W.
    Calgary, Alberta, T2P 3A8
    (403) 264-4985
    (403) 262-8299 (FAX)