Calgary-based Millennium Energy Inc. and Crossfield Gas Corp. announced that they have entered into a merger agreement under which Millennium will acquire Crossfield through a stock swap. Upon completion, the combined company will be renamed Bear Creek Energy Ltd.

Under the terms of the proposed transaction, Millennium, a public oil and natural gas company, will issue 6.3 Millennium common shares for each Crossfield common share and special warrant, based on an ascribed value of C$0.22 (pre-consolidated) per Millennium common share. In addition, each option of Crossfield will be changed into an option to acquire 6.3 pre-consolidated Millennium common shares. Crossfield is a private oil and gas company formed in December 2001 by the former management team of TriGas Exploration Inc.

The current management team of Crossfield, led by Russell J. Tripp, president and CEO, R. Alan Steele, vice president Finance and CFO, Neil G. Bokenfohr, vice president Engineering, Korby D. Zimmerman, vice president Land, and Douglas C. Hibbs, vice president Exploration will assume their respective positions with the new merged company.

On a pro forma basis, Millennium said the combined company will have a production base of approximately 1,700 boe/d, comprised of 40% natural gas and 60% light oil and natural gas liquids. Based upon independent engineering evaluations by Gilbert Laustsen Jung Associates Ltd. for both companies as at January 1, 2003, the combined company’s total established reserves are estimated to be 4.8 million boe (6:1). The evaluation also revealed that the merged company will have a 35,000 acre net undeveloped land position and the right to earn an interest in an additional 16,000 acres. Millennium said the combined company will have a strong inventory of natural gas prospects in Central and West Central Alberta and light oil prospects in Southeast Saskatchewan.

“Crossfield’s business strategy is to deliver strong per share growth in reserves and production through a combination of full cycle exploration and strategic acquisitions,” said Russell J. Tripp, CEO of Crossfield. “We target high quality, long life natural gas and light oil reservoirs and maintain a focused core area development approach. The Millennium transaction is an excellent fit with these objectives.” Tripp noted that Crossfield’s asset base is concentrated in the Westerose area of Central Alberta through a balanced program of strategic acquisitions and full cycle exploration and development drilling. El Paso Merchant Energy Holding Co. owns 22% of the common shares of Crossfield.

Commenting on the new management structure, Martin Hislop, CEO of Millennium, said that “with the recent internalization of management of APF Energy Trust, which necessitated a change in management of Millennium, we are pleased to have attracted a high quality management team with a strong track record of creating shareholder value. The transaction represents an opportunity for Millennium shareholders to accelerate the development of Millennium’s portfolio of opportunities and participate in Crossfield’s high quality asset base and upside potential”.

The companies noted that the transaction will still require the approval of 66 2/3% of both company’s shareholders and will be subject to all requisite regulatory approvals and other customary conditions. Closing is expected to occur by approximately July 15.

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