News release: Gulf Indonesia Resources - Proved reserves increase 27 percent; proved plus - probable reserves up by 55 percent

Gulf Indonesia Resources Limited today reported exceptional performance over the past year from all facets of its business, including substantial growth in reserves booked for the Suban gas field.

Drilling of the Suban-4 delineation well in South Sumatra and testing to determine reservoir continuity in the Suban field contributed significantly to the:

- 27 percent growth in the company's estimated remaining gross proved reserves to 311 million barrels of oil equivalent (boe);

- 55 percent growth in estimated remaining gross proved plus probable reserves to 608 million boe, equal to nearly 7 boe per outstanding GRL share;

- 74 million boe of gross proved reserve additions (excluding revisions and before production), replacing 437 per cent of 2000 production volumes - the fifth consecutive year that reserve additions have replaced at least 240 per cent of production; and

- one-year finding and development cost of $1.15 per gross proved reserve added on a boe basis, for a five-year average finding and development cost of $2.13 per boe.

"The reserve bookings in 2000 along with reserve bookings in the previous two years have nearly doubled our reserve base from the time of our initial public offering in 1997 - and at a very competitive cost," said W.T. (Bill) Fanagan, President and Chief Executive Officer. "Importantly, the high productivity of the Suban field and its low carbon dioxide content means that development costs to bring this gas to market are expected to be less than US$1.00 per boe with operating costs of less than US$0.50 per boe during the production phase."

In addition to the success at Suban, the company also reported significant achievements in the fourth quarter of 2000, including:

- Signing of agreements for additional gas deliveries from South Sumatra to Caltex's Duri Steamflood commencing in late 2002; - Completion of the West Natuna Gas Project four months ahead of schedule and under budget, with early gas sales commencing in January 2001; and

- Production from the onshore oil segment at its highest level since the early 1990's, with continued success from development activities increasing fourth quarter onshore crude oil and condensate sales volumes to 14,900 b/d.

And on February 12, 2001, the company entered into agreements for the supply of natural gas from Sumatra to Singapore, beginning in mid-2003. This sales contract is the fourth substantial long-term US dollar gas sales agreement for the company. The combined contract quantity of these four contracts is approximately seven trillion cubic feet (Tcf) of which four Tcf is Gulf-operated and two Tcf is Gulf's working interest share. Using December 2000 average prices

as an estimate of future prices, these contracts could have a combined gross revenue value of $26 billion dollars, of which the company's working interest share of combined gross revenue would be $7 billion over the next 23 years.

The company also reported exceptional financial results, including:

- Fourth quarter cash generated from operations of $66 million ($0.75 per share), up 57 per cent from the same period of 1999, contributing to a record level of cash generated from operations for the year of $271 million ($3.08 per share), nearly double the $137 million generated in 1999 and over six times the $44 million generated in 1998;

- Record quarterly earnings of $27 million ($0.31 per share), an increase of 63 percent compared to the fourth quarter of 1999, for a yearly total in 2000 of $84 million ($0.96 per share), breaking the company record set in 1999 of $33 million and a $114 million improvement compared to the $30 million loss in 1998; and

- A net positive cash position of $62 million at December 31, 2000, an improvement of $204 million compared to net debt of $142 million at year-end 1999.

"With the West Natuna Gas project now on-stream, the Caltex II and Sumatra Gas to Singapore gas contracts signed, and Suban providing considerable potential for the next tranche of sizable domestic and international gas sales contracts, the stage has been set for significant long- term growth towards our goal of becoming the pre-eminent producer of non-LNG gas in Indonesia," said Bill Fanagan. "Add in our strong balance sheet, exciting exploration portfolio, 40 years in Indonesia, and excellent operating fundamentals and you have all the ingredients for an exceptional future."

Cash generated from operations in the fourth quarter of 2000 was $66 million compared to $42 million in the same period in 1999, reflecting the positive impacts of improved realized prices and reduced net cash finance charges, partially offset by the negative impact of $12 million of current taxes related to the Corridor PSC. The company began paying taxes for the Corridor PSC during the fourth quarter of 2000 as high prices in 2000 resulted in the full utilization of the available tax pools.

Fourth quarter earnings increased to a record level of $27 million compared to $17 million in the same period in 1999, reflecting the after-tax impact of the same positive factors as cash generated from operations. Earnings in the fourth quarter of 1999 benefited from the recognition of $10 million of future tax recoveries related to the planned development of the South Jambi B PSC.

The company's net cash position improved significantly during the fourth quarter of 2000 to $62 million at December 31, 2000 as cash generated from operations and non-cash working capital changes during the quarter exceeded capital and exploration expenditures.

On November 8, 2000, the company made its first quarterly disbursement under the Corridor Loan after receiving approval from the lender group to alter the terms of the loan to have disbursements occur quarterly rather than semi-annually. As a result, $30 million that would not have been available to the company until February 8, 2001 was released to the unrestricted cash category.

PRODUCTION & DEVELOPMENT ACTIVITIES

Onshore Gas

Corridor Gas Project

In the fourth quarter of 2000, onshore natural gas sales volumes from the Corridor Gas Project averaged 167 million cubic feet per day (mmcf/d), equivalent to the same period last year. Full year gas volumes averaged 166 mmcf/d in 2000, up three percent from 161 mmcf/d in 1999 when the start-up phase of the Grissik to Duri pipeline restrained sales in January.

Use of a new amine solution at the Grissik gas plant since the third quarter of 2000 has resulted in the ability to reduce the carbon dioxide content of the sales gas stream to significantly less than the sales gas specification of five percent carbon dioxide. As a result, in the fourth quarter of 2000, the company's gas deliveries through the pipeline to Caltex had an energy content that was two per cent higher than the prior year, with the net effect of reducing the pipeline tariff per unit of energy sold.

Onshore gas volumes are dependent on the level of take by Caltex and are targeted to be 150 mmcf/d (25,000 boe/d) in 2001, reflecting a reduction in the company's reported share of Corridor Gas Project results from 60 percent to 54 percent. Since startup of the Project in October 1998, the company has recorded an increased share of production as repayment by Pertamina of certain costs incurred by the company on behalf of Pertamina's working interest share of the Project development. The high level of cash generated from the Corridor Gas

Project since its startup has accelerated the repayment of these costs to December 2000. This will result in an estimated 16 mmcf/d (2,700 boe/d) decline in reported Corridor natural gas production in 2001 compared to 2000.

Additional Gas to the Duri Steamflood

On December 21, 2000, the company entered into definitive agreements for additional gas deliveries from the Corridor production sharing contract (PSC) area to the Duri Steamflood in central Sumatra operated by Caltex. The terms of these agreements include a contract quantity of 1.1 trillion cubic feet (Gulf share 600 bcf) of sales gas to be delivered over a term of 19 years and exchanged for Duri crude oil at an approximate ratio of eight thousand cubic feet per barrel. Startup of gas deliveries is expected to occur in late 2002. By the start of 2003, Gulf's share of contract quantities - 65 mmcf/d - will supplement the 160 mmcf/d of gas (net to Gulf) that is contracted under the original agreement with Caltex for a total combined quantity of 225 mmcf/d. By mid-2003, Gulf's share of contract quantities in the new agreement will increase to offset the contracted decline in the original agreement with Caltex, thereby maintaining the total combined quantity.

Sumatra Gas to Singapore

On February 12, 2001, the company entered into definitive agreements for the supply of 2.27 tcf (Gulf share 700 bcf) of sales gas from Sumatra to Singapore over 20 years. Pricing for the gas sales will be linked to the price of high sulphur fuel oil in Singapore. First gas under these agreements is targeted for mid-2003 at daily contract quantities of 42 mmcf/d (net to Gulf), increasing over time to 110 mmcf/d (net to Gulf) by 2009.

Onshore Oil

The continued success of the company's onshore oil development program contributed to the company's objective to optimize crude oil sales volumes, helping to offset natural production declines in mature fields.

For the fourth quarter of 2000, the average onshore crude oil and condensate volumes were 14,900 barrels per day (b/d), representing the highest quarterly production level from this segment since the early 1990's and up 500 b/d from the same period in 1999. Full year crude oil and condensate sales volumes from onshore operations averaged 14,600 b/d in both 2000 and 1999.

In the Corridor TAC area, the company drilled 28 infill and stepout oil development wells in the Ramba and Bentayan fields during 2000, including six wells in the southeast extension of the Bentayan field following up on the successful Bentayan 53 well drilled in late 1999. Fourth quarter 2000 production from the Corridor TAC increased to 8,600 b/d, up 18 per cent compared to the same period in 1999, and full year 2000 production improved to 8,100 b/d, an increase of 12 per cent year over year.

In the Jambi EOR contract area, the company's share of incremental production was 2,700 b/d in the fourth quarter of 2000, contributing to an annual record of 2,600 b/d for the year, up 13 per cent from 1999.

The drilling of approximately 40 onshore oil development wells has been planned in 2001 with further potential opportunities being identified for additional drilling in the Bentayan field. Onshore crude oil and condensate volumes for 2001 are targeted to average 15,500 b/d, dependent on the success of the development and exploration programs planned for the year.

Offshore Oil and Gas

Offshore crude oil and condensate sales volumes declined to 3,600 b/d for the fourth quarter of 2000 from 5,700 b/d in the same period of 1999 due to the impact of expected production declines. For the full year, the average offshore oil and condensate volumes were 4,300 b/d in 2000 compared to 6,200 b/d in 1999. Brief shut-ins to accommodate West Natuna Gas project work had only a minimal impact on volumes, as the project team worked closely with the oil production group to install the gas processing and other equipment required by the West Natuna Gas Project onto live operating platforms at Kakap. Offshore crude oil and condensate volumes for 2001 are targeted at 3,000 b/d.

West Natuna Gas Project

Construction of the West Natuna Gas project was completed in the fourth quarter of 2000, four months ahead of schedule and under budget. The Kakap upstream gas facilities required for the project were placed into service by early December and the 650-kilometre West Natuna pipeline system was commissioned by year-end. Agreement was reached with the buyer, SembCorp Gas, for the early sales of gas, which commenced in early January, six months prior to commencement of the full sales contract on July 15, 2001. Gas volumes during 2001 will be dependent on the requirements of the buyer and are targeted at 12 mmcf/d (2,000 boe/d) for the year. Gulf's share of full contract quantities will be approximately 20 mmcf/d by the start of 2002.

EXPLORATION & DELINEATION ACTIVITIES

Onshore Gas

During the fourth quarter of 2000, testing was completed on the Suban-4 well, including an extended test to determine reservoir continuity. A commingled test of the well flowed 80 million cubic feet per day, breaking the record for the highest flow rate of any well drilled by Gulf Indonesia in South Sumatra and surpassing the measured flow rate of the Durian Mabok-2 well, drilled in 1999 four kilometers to the southeast of Suban-4. Extended testing confirmed that these wells have penetrated the same structure and that the Suban-4 well is capable of a sustainable production rate in excess of 100 million cubic feet per day, similar to Durian Mabok-2.

The Suban-5 well, located approximately six kilometres to the north of Suban-4, was spudded late in the fourth quarter of 2000 and testing is now underway. The company plans to drill up to three additional delineation wells during 2001 to further establish the size of the Suban field.

Onshore Oil

In late December 2000, the company commenced its delineation program on the Suban Baru oil accumulation that is located in shallow sands above the large Suban gas reservoir. The results of drilling to date are currently under evaluation. If the delineation program is successful, the company intends to develop the field to bring the oil on production by late 2001.

Offshore Oil and Gas

During the fourth quarter of 2000, three wells drilled in the partner- operated Pangkah PSC (Gulf 12% WI) yielded one offshore oil discovery and one delineation success. The Sidayu-1 well, located seven kilometres northeast of the Ujung Pangkah-1 oil and gas discovery well drilled in late 1998, flowed 1,450 b/d of oil during testing from a vertical wellbore. Drilling of the Ujung Pangkah-2 delineation well, located two kilometres west of Ujung Pangkah- 1, confirmed the oil and gas potential of this field. The results of these wells along with the results from the Ujung Pangkah-3 well drilled in early 2001 are being evaluated for the potential submission of a plan of development later in 2001.

In December 2000, the company completed a farmout agreement for the Ketapang PSC as planned, bringing Petronas Carigali into the block with a 50 per cent share. The Bukit Panjang-1 well, the first well of a four well drilling program for this block, was plugged and abandoned. Drilling of the Bukit Tua-1 well is expected to commence in the next few weeks with the drilling of two additional prospects in the Ketapang PSC planned by May 2001.

In the Sebuku PSC, the company has recently completed drilling of the Pangkat-1 well and testing is underway.

OTHER

Jakarta Stock Exchange Listing

The Indonesian securities authorities are expected to issue new regulations specific to Indonesian Depository Receipts (IDRs) in 2001. Once these new regulations are issued, the company plans to evaluate the opportunity to move forward with its listing of IDRs on the Jakarta Stock Exchange.

The company's year-end 2000 conference call will be available via live audio webcast on February 15, 2001 at 6:30 a.m. MST (8:30 am EST). To hear management's comments on the company's fourth quarter and full year 2000 results at that time, visit Gulf Indonesia's website at www.gulfindonesia.com.

An analyst package of additional financial information by segment is also available on Gulf Indonesia's website.

Gulf Indonesia Resources Limited, headquartered in Jakarta, Indonesia, 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.

This report contains forward-looking statements within the meaning of Section 27A of the United States Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including information about estimated remaining reserves, forecasted sales volumes, proposed drilling programs and the results thereof, and the progress of the proposed Jakarta Stock Exchange listing. Although Gulf Indonesia believes that its expectations are based on reasonable assumptions, these assumptions are subject to a wide range of business risks and technical risks, including those inherent in exploration for oil and gas, and there is no assurance Gulf Indonesia's objectives will be achieved.

Contacts: Gulf Indonesia Resources Limited, Glen Valk, Manager, Investor Relations, Jakarta - 62-21-575-4146, Email: Glen_Valk@gulf.ca; Gulf Canada Resources Limited, David Carey, Director, Investor Relations, Calgary - 1-403-233-3427, E-mail: David_Carey@gulf.ca; Gulf Canada Resources Limited, Peter Hunt, Director, Corporate Communications, Calgary - 1-403-233-3040

E-mail: Peter_Hunt@gulf.ca (*)