Gulf Indonesia announces plan to repay Corridor loan, appoints two vice presidents

Gulf Indonesia Resources Limited, a subsidiary of Gulf Canada Resources Limited, has announced that it will repay the remaining SU$116 million of loan that was used to finance its Corridor gas project.

The company said in a statement on Friday that it had filed a notice with the Corridor Loan facility agent to repay the entire outstanding balance of the Corridor loan facility on August 8, 2001.

The company plans to use its available cash balances to repay the US$116 million of Corridor Loan that is outstanding from the original loan amount of US$262 million.

This repayment will occur less than three years after the startup of the Corridor Gas Project in October 1998.

High oil prices and strong operating performance to date have provided the necessary cash flow to accelerate the complete repayment of the loan ahead of the originally scheduled date of February 2007.

In connection with the loan repayment, the company has entered into a formal commitment letter with its parent company, Gulf Canada, whereby Gulf Canada will provide a US$65 million revolving credit facility for a three-year term.

As a result of the repayment, Gulf Indonesia will record an after-tax charge of US$3 million in the third quarter due to the accelerated amortization of deferred debt placement costs.

"The repayment of the loan will provide the company with access to cash flows from the Corridor project which had been restricted under the terms of the loan agreement," said Don McKechnie, Vice President, Finance of Gulf Indonesia.

"Even after the repayment, we expect to have sufficient cash balances and internally generated cash flow to fund the development projects that we currently have planned in Indonesia. The revolving credit facility from Gulf Canada will provide us with liquidity to fund future development projects in Indonesia that may arise from further international gas sales, existing and future exploration discoveries, and/or acquisitions."

Two appointments

Gulf Indonesia also announced on Friday the appointments of Donald D. McKechnie as Vice President of Finance and John K. Wearing as Vice President of Operations.

Don McKechnie has extensive business experience with petroleum and energy companies in Canada since 1979. Don was previously the Vice President Finance, Chief Financial Officer and Corporate Secretary of an international energy company headquartered in Calgary prior to joining Gulf Indonesia.

John Wearing was previously employed by Gulf Canada from 1974 to 1996 and from 2000 to 2001 and has extensive experience with production operations, engineering, drilling, gas plant operations, planning, and asset management. From 1996 to 2000, John was Vice President Production and Operations of a junior petroleum company operating in Canada and the US.

Gulf Indonesia Resources Limited, headquartered in Jakarta, is an independent upstream oil and gas company which is traded publicly on the New York Stock Exchange under the ticker symbol GRL. In 2001, the company celebrates its 40th anniversary of operations in Indonesia.

Gulf Indonesia is 72 per cent owned by Gulf Canada Resources Limited, which is a Canadian based independent exploration and production company with primary operations in Western Canada, Indonesia, the Netherlands and Ecuador. Gulf Canada's shares are traded on the Toronto and New York Stock Exchanges under the ticker symbol GOU. (*)