Eurogas Corporation
TSX VENTURE : EUG

Eurogas Corporation

May 24, 2006 20:17 ET

Eurogas Farmout of Sfax Exploration Permit, Offshore Tunisia

CALGARY, ALBERTA--(CCNMatthews - May 24, 2006) - Eurogas Corporation (TSX VENTURE:EUG) ("Eurogas") is pleased to announce that Eurogas and Atlas Petroleum Exploration Worldwide, Ltd. ("APEX") have entered into a Farmout Option Agreement with Anadarko Petroleum Corporation (NYSE:APC) 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 the estimated $12 million seismic program, Anadarko will have the option to drill two exploration wells and conduct additional seismic work. At the conclusion of this multi-phase work program and upon Anadarko's reimbursement of up to $4.5 million of past costs, Eurogas would own an 11.25 percent working interest in the farmout area, APEX would have a 13.75 percent working interest, and Anadarko would own a 75 percent working interest and serve as operator for any new discoveries. The work program is scheduled to occur over a 3 1/2-year period.

Eurogas is pleased to be working with Anadarko as the company has a history of exploration success in the region and intends to bring its expertise to bear in evaluating the high potential of the Reineche, El Garia and Bireno hydrocarbon fairways running through the Sfax Offshore Permit by beginning the seismic acquisition program in mid-2006.

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) that are deemed by Eurogas and its operating partner to be commercially highly prospective. They will jointly retain a 100% working interest. Eurogas and APEX will continue to focus on evaluation of the retained areas, recognizing that they are of lower risk as each contains a prior discovery that tested oil from an accumulation in either the El Garia or Bireno formations.

Eurogas and APEX continue their plans to drill a well on the 1997 Ras El Besh discovery. The REB 2 well, drilled by a previous operator, tested oil from the El Garia carbonate formation. Based on interpretation of the 2004 three dimensional seismic survey acquired by the two partners, the REB 3 well will test the crest of the Ras el Besh structure in a location that is anticipated to have up to 40 meters of pay. The REB 3 well is planned to be drilled in the later part of 2006, pending rig availability.

The Sfax permit is located on 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 estimated in excess of 1 billion barrels of oil equivalent.

Eurogas Corporation is an independent oil and gas exploration company listed on the TSX Venture Exchange under the symbol EUG and is engaged in exploration and development activities in Spain and Tunisia. For more information on the Company, visit the website www.eurogascorp.com.

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