EOG Resources Canada Inc. announced in late December it would buy Fox Energy Corp., a junior oil and gas company with assets in Western Canada. EOG will acquire all of the issued and outstanding common shares of the Calgary-based company, paying C$0.46 in cash for each Fox common share. EOG’s offer is an 18% premium to the closing price of Fox on Dec. 21, 2001, when Fox closed at C$0.39 after opening at C$0.42. This year, Fox has drilled seven wells in its core assets, with a 71% success rate.

EOG was expected to make a forma offer to Fox shareholders on Dec. 28, 2001. Fox’s board of directors already have unanimously agreed to recommend the offer to shareholders, and the directors, management and employees plan to deposit their shares under the offer. Shareholders of Fox owning approximately 21% of the total issued and outstanding shares have either signed, or indicated that they will sign lock-up agreements with EOG agreeing to tender their shares, and Fox has agreed to solicit additional shareholders to sign lock-up agreements with EOG.

Fox and its board of directors have recently completed a competitive bid process facilitated by Waterous & Co. to maximize shareholder value through the sale or merger of the company. Under EOG’s offer, Fox has agreed to not solicit or encourage any competing transaction. EOG has a right of first refusal with respect to any competing offer, and EOG and Fox have each agreed to pay a non-completion fee in certain circumstances.

Fox has been publicly traded on The Canadian Venture Exchange under the symbol FEC since Aug. 1994, exploring, developing and currently producing approximately 900 boe/d of oil and natural gas in Alberta and Saskatchewan. It has estimated proved and risked probable reserves of 3.3 boe after the takeover of Pyramid Energy Inc. earlier this year. In 2000, Fox achieved record financial and operating results, completed three acquisitions of oil and gas properties and had an 88% success rate in the drilling of 16 wells.

This transaction is subject to a number of conditions including regulatory approval and the acceptance or approval of the transaction by at least two-thirds of Fox’s shareholders.

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