Eurogas Corporation
TSX VENTURE : EUG

Eurogas Corporation

August 24, 2005 19:21 ET

Eurogas Reports Q2 2005 Results

CALGARY, ALBERTA--(CCNMatthews - Aug. 24, 2005) - Eurogas Corporation (TSX VENTURE:EUG) ("Eurogas" or the "Corporation") today announced its financial results for the three-month period ending June 30, 2005. The Corporation incurred a net loss of $364,822 during the quarter and year-to-date a net loss of $746,220. At June 30, 2005 Eurogas had cash of $1.8 million and working capital of $3.5 million. For the six months ended June 30, 2005, the Corporation invested a total of $13.0 million in Spain and Tunisia. During the quarter, the Corporation achieved significant progress in both Spain and Tunisia, while disposing of its two minor, non-operated properties in Canada.

Eurogas has filed its consolidated financial statements and related Management Discussion and Analysis for the period ended June 30, 2005 with Canadian securities regulatory authorities on the System for Electronic Document Analysis and Retrieval ("SEDAR").

SPAIN

The Amposta Project

The Corporation has accelerated its drive toward the full development of the Amposta Underground Gas Storage Project. The Amposta Project entails the conversion of the abandoned Amposta oil field to natural gas storage and includes an initial oil extraction segment followed by the installation of onshore and offshore facilities connected by a large diameter, subsea pipeline for gas storage operations. The Amposta Project, with a capacity of 1.3 billion cubic meters, will address the urgent need for gas storage in Spain. Eurogas holds a 72% working interest in the gas storage project and a 100% working interest in all hydrocarbons produced on the permit.

The Corporation is gearing up by retaining additional personnel to manage the project, including a senior level project manager with extensive experience in offshore development projects.

PricewaterhouseCoopers, which has an energy practice in Madrid, has been retained to help formulate the business plan for the Amposta Project and to facilitate timely project approvals and contract negotiations.

The Corporation has finalized its oil development design which calls for a production jack-up and a purpose built wellhead structure. Oil will be pipelined to a floating storage vessel and transported by shuttle tanker to the nearby Tarragona refinery. The facilities will handle oil production rates of up to 20,000 bopd and have a targeted startup date in the second half of 2006.

The Corporation is in the final stages of interpreting the 138 km2 3-D seismic program acquired over the Amposta structure in March 2005, with an expected completion date in October 2005. The completed seismic program will be used to optimally locate wells to both maximize the volume of oil recovered and to allow for maximum efficiency of gas storage operations on the Amposta structure.

TUNISIA

Sfax

On the 1.0 million acre Sfax permit located offshore Tunisia in the Gulf of Gabes, the primary phase of processing has been completed on the 3-D seismic acquired in mid-2004. The seismic was shot over a 348 km2 area which included two previously drilled oil bearing structures and several additional prospects. On July 20, 2005, the Seismic Prospecting Permit was converted to an Exploration Permit. Eurogas holds a 45% interest in the permit.

The Corporation is developing plans for the exploitation of the permit beginning with the drilling of a well into the Ras El Besh structure in the second half of 2006, depending on equipment availability. Two wells were drilled in the Ras El Besh structure by a previous operator, with one well on the flank of the structure testing 612 bopd. The results of the new seismic indicate a seventy meter oil column, and a highly deviated well targeted at the top of the structure would achieve significantly higher production rates.

FUNDING

In order to meet its funding requirements to commencement of oil production, the Corporation has filed a preliminary prospectus with securities commissions for their approval. As the Corporation had issued a prior rights offering less than 12 months ago, it is necessary to make the current rights offering through a prospectus rather than through a Circular, which will lengthen the issuing process. The amount, pricing and timing of the rights issue will be determined upon finalization of the prospectus.

Jaffar Khan

President & CEO

This press release contains certain forward-looking statements that reflect the current views and/or expectations of Eurogas with respect to its performance, business and future events. Such statements are subject to a number of risks, uncertainties and assumptions which may cause actual results to be materially different from those expressed or implied. Eurogas assumes no future obligation to update these forward-looking statements.

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
    or
    Eurogas Corporation
    520, 333 - 5th Avenue SW
    Calgary, Alberta, Canada T2P 3B6
    (403) 264-4985
    (403) 262-8299 (FAX)
    Email: eurogas@eurogascorp.com
    Website: www.eurogascorp.com