Two Alberta-based producers, Cabre Exploration and Jet Energy,jointly announced a merger last week, in which Cabre will acquireJet and its 43.9 Bcf of proven reserves. Cabre said it will mailits offer to Jet shareholders no later than Oct. 18.

The offer, which is a 42% premium over Jet’s 20-day weightedmarket price, will expire 21 days after the mailing. In order tosucceed, two-thirds of Jet’s 28.1 million shares need to vote infavor of the deal. Jet’s board of directors has already approvedthe transaction.

Cabre said it views the addition as an ideal complement to itsongoing strategy to increase exposure to prolific, long-life,liquids-rich natural gas reserves and accelerate its explorationprogram in the W5 area of western Alberta. Over the past 18 months,Cabre said it has dedicated significant internal resources towardsestablishing a greater presence in that area.

Jet’s operations include several areas near Cabre’s recentdiscoveries in the Willesden Green, Whitecourt and Ferrier areas.With the addition, Cabre said its risked forecast has the potentialof adding an additional 1,100 boe/d over current volumes of 1,300in 2000. Through the merger, Cabre also picked up Jet’s 22.9 Bcf ofprobable reserves, 49,000 net undeveloped acres in the W5 area andan extensive seismic database.

Upon completion of the transaction, Cabre will have productionof approximately 18,000 boe/d, weighted 45% towards natural gas,19.2 million shares outstanding, and net debt of approximately$175-180 million including estimated closing costs.

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