THE WALL STREET JOURNAL: Statoil Reviews First Calgary Sale – Source: “Total (TOT), Royal Dutch/Shell (RD) and Houston-based Anadarko Petroleum Corp. (APC) have also shown a preliminary interest in bidding for First Calgary, the Financial Times said. A Statoil spokesman declined to comment. Shell and Total also declined comment.” (ShellNews.net) 6 Dec 04

DOW JONES NEWSWIRES

December 6, 2004

OSLO -- Statoil ASA (STO) is reviewing the possibility of buying First Calgary Petroleums (FCP.T) among other deals, a source at the Norwegian energy company confirmed Monday.

However the potential sale of the Canadian oil and gas company has no higher priority than several other projects that Statoil is reviewing, the source said.

The Financial Times reported Monday that Statoil is a leading contender in the auction of First Calgary, which is listed in Toronto and on the London Stock Exchange's Alternative Investment Market.

According to its market capitalization on AIM, First Calgary is valued around $2.3 billion.

The report said that, according to people familiar with the matter, the deal would likely go to a company that has existing petroleum interests in Algeria - where First Calgary has licenses and drilled wells, but no producing assets.

Total (TOT), Royal Dutch/Shell (RD) and Houston-based Anadarko Petroleum Corp. (APC) have also shown a preliminary interest in bidding for First Calgary, the Financial Times said.

A Statoil spokesman declined to comment. Shell and Total also declined comment.

A legal source close to the auction said to name any company as a leading contender was "massively premature, and there is absolutely no basis for it." Due diligence, the source said, wasn't expected until January.

One London-based banker familiar with the auction told Dow Jones Newswires that a sale is unlikely given First Calgary's high market capitalization - around $2.3 billion on AIM - and the fact that it has no producing assets.

He added that a partial sale - which would allow both buyer and seller to mitigate their risk in undeveloped assets - would also be difficult to conclude because it would require an ongoing relationship with an owner linked to the Iraq oil-for-food scandal.

Yuri Shafranik, one of First Calgary's owners and board members, was named by the U.S.'s Central Intelligence Agency as one of the top beneficiaries of the Iraq oil-for-food scandal.

That, the banker said, would pose too big a public relations risk for several of the companies.

"The idea that Statoil would stick its neck out for a high-risk deal like this is illogical," the banker said.

"The market cap is so high, but there's nothing to it, other than the licenses in Algeria," he added.

He said any company that buys First Calgary would also have to pay around $3-4 billion to develop the assets, "and it's not even clear if and when the Algerian government would approve it."

An analyst at another London-based bank close to the deal also said First Calgary is overvalued. Even though the natural gas projects would fit into Statoil's portfolio, it would increase its debt-to-equity ratio from around 35% to 52%, she added.

Arnestein Wigestrand, an Oslo-based analyst with Enskilda Securities, said: "I doubt if Statoil is willing to pay such a high price for it." "They have sufficient projects to digest in the portfolio already, and other companies would be in as good - if not better - financial positions to buy it," he added.

Wigestrand disagrees, however, that the Shafranik connection would be a barrier to Statoil considering the deal: "They're buying a company, not a person." He also said that even if Statoil bought a partial stake in First Calgary, "it doesn't mean that the board members would stay in place..."

-By Ian Talley, Dow Jones Newswires, (47) 22 20 10 58; ian.talley@dowjones.com

(David Gauthier-Villars in Paris contributed to this article).