For further information contact:
Sue Barnard, Corporate Secretary
(405) 232-2232
sbarnard@canaanenergy.com
CANAAN ENERGY CORPORATION
CLOSES ACQUISITION OF AFFILIATED PARTNERSHIPS
AND INDIAN OIL COMPANY
ALSO ANNOUNCES NEW CREDIT FACILITY
AND LISTING ON NASDAQ NMS
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OKLAHOMA CITY, OK OCTOBER 23, 2000 -- Canaan Energy Corporation
(NASDAQ NMS: KNAN) today announced the completion of the acquisition of eight
private oil and gas limited partnerships previously sponsored by its
affiliates, the acquisition of Indian Oil Company, a privately held oil and
gas company based in Oklahoma City, Oklahoma, and the commencement of trading
of its common shares on The NASDAQ National Market.
Canaan was formed in March 1987 by Leo E. Woodard and John K. Penton.
Mr. Woodard continues to serve the company as Chairman and Chief Executive
Officer and Mr. Penton serves as President and Director. Michael S. Mewbourn
serves as Senior Vide President, Chief Financial Officer and Director; Thomas
H. Henson serves as Senior Vice President-Investor Relations and Director; and
Anthony Lasuzzo will serve as Senior Vice President and Chief Operating
Officer. Outside directors include Michael P. Cross, President and Manager of
Twister Gas Services, L.L.C.; Mischa Gorkuscha, formerly Chief Financial
Officer of Liberty Bancorp, Inc., and Randy Harp, Chief Operating Officer of
Pre-Paid Legal Services, Inc. Significant shareholders in Canaan are Messrs.
Woodard, Penton and Rick Dunning. Most of the approximately 900 shareholders
are former limited partners in the Coral partnerships, who elected to exchange
their limited partnership interest for common stock in Canaan.
In a joint statement, Messrs. Woodard and Penton stated: "We have
been working on this plan of roll-up transaction for over two years. We
received overwhelming acceptance of the plan from our limited partners,
substantially all of whom elected to trade significant cash flow from our
partnerships for an opportunity to grow through stock ownership in larger
entity. We appreciate the vote of confidence this represents and look forward
to implementing our long-term strategy."
In February, 1999, Canaan (formerly known as Coral Reserves Group,
Ltd.), on behalf of itself, its affiliates and eight Coral-sponsored limited
partnerships, entered into a merger agreement with Canaan Securities, Inc. and
Indian Oil Company. Canaan Securities is a registered broker/dealer with the
SEC and NASD and served as the placement agent for the Coral-sponsored limited
partnerships. Canaan Securities was formed and owned by Thomas H. Henson.
Indian Oil Company is an Oklahoma corporation founded in 1981 by Mr. Richard
R. Dunning. Indian Oil has been continuously engaged since that time in the
acquisition, exploration, development and production of oil and natural gas.
Canaan employs approximately 40 people, produces more than 20,000 Mcf
of natural gas per day and 500 Bbls of oil per day, and operates more than 200
of the 800 wells in which it owns an interest. The Company has total proved
reserves in excess of 100 Bcfe, approximately 75% of which are currently
producing. The company also has an inventory of more than 100 proved locations
to drill.
Canaan will seek growth through an active development drilling
program, identification and development of extension prospects and impact
acquisitions. Canaan will concentrate its activities in the Mid-Continent
area, with a focus on natural gas production. The company expects to actively
drill and develop its properties in the Arkoma Basin in western Arkansas, the
Golden Trend in southern Oklahoma
and the Anadarko Basin in western Oklahoma. In addition, the company plans to
lease and develop gas field extensions in Custer and Roger Mills counties and
an oil field extension prospect in the Oklahoma panhandle. The company
recently completed a Viola oil test in Garfield County, Ok for approximately
200 Bbls per day of oil and 1000 Mcf per day of natural gas. Canaan expects to
drill at least two more wells in the field in the fourth quarter and to
participate in the drilling of additional wells operated by others.
Simultaneously with the closing of the transaction, Canaan entered
into a new secured revolving credit facility with a group of banks which
provides for an initial borrowing base on Canaan's oil and gas reserves of
$34.5 million with a maturity date of October 2003. BankOne is leading
Canaan's credit group.
Canaan Energy corporation is an independent oil and gas company
engaged in the acquisition, development, production and marketing of natural
gas and crude oil. The company's holdings are concentrated in the
mid-continent region of Oklahoma.
This press release includes certain statements that may be deemed to
be "forward looking statements" within the meaning of Section 27(a) of the
Securities Act of 1933, as amended, and Section 21(e) of the Securities
Exchange Act of 1934, as amended. All statements, other than statements of
historical facts included in the press release that address activities, events
or developments that the company expec5ts, believes or anticipates will or may
occur in the future, including drilling of wells, reserves estimates, future
production of oil and gas, future cash flows and other such matters are
forward looking statements. These statements are based on certain assumptions
and analyses made by the company in the light of its experience and perception
of historical trends, current conditions, expected future developments and
other factors it believes appropriate in the circumstances. Such statements
are subject to a number of assumptions, risks and uncertainties, many of which
are beyond the control of the company. Investors are cautioned that any such
statements are not guarantees of future performance and that actual results of
developments may differ materially from those projected in the forward looking
statements.