PRESS RELEASE: Gulf Indonesia announces capital expenditure program for 2001 and provides update on Q4 2000 activities

Gulf Indonesia Resources Limited (GRL: NYSE), a 72 per cent subsidiary of Gulf Canada Resources Limited (GOU: TSE, NYSE), announced today a capital spending program for 2001 of US$150 million.

Two-thirds of the 2001 capital budget will be directed at development opportunities and one-third will be directed towards exploration and delineation opportunities, with the budget split evenly between natural gas and oil opportunities. Of the $75 million targeted towards natural gas opportunities, 80 per cent is planned for South Sumatra gas development projects while 20 per cent is earmarked for South Sumatra gas exploration and delineation activities. The $75 million directed at oil opportunities will be split 50 per cent for South Sumatra oil development and exploration activities, 40 per cent for the offshore oil exploration program, and 10 per cent for other capital requirements.

In 2001, Gulf Indonesia's total sales volumes are targeted to be approximately 45,500 barrels of oil equivalent per day, with Corridor natural gas production predicted to contribute approximately 55 per cent, onshore oil around 34 per cent, and offshore oil and gas about 11 per cent. The high level of cash generated from the Corridor Gas Project since its startup in October 1998 has accelerated the repayment of certain costs incurred by the company on behalf of Pertamina's working interest share of the Project development. To date, the company has recorded an increased share of production as repayment of these costs. By year-end 2000, the company expects full repayment to occur which will reduce the company's reported share of Project results from 60 per cent to 54 per cent. This change will result in an estimated 2,700 barrels of oil equivalent per day decline in reported Corridor natural gas production in 2001 compared to 2000.

``Our capital opportunity portfolio is well balanced between short- and long-term, oil and gas, and exploration and development. The capital allocation in 2001 is targeted to maximize the benefit of these opportunities to enhance shareholder value in the present and the future,'' said Bill Fanagan, President and Chief Executive Officer of Gulf Indonesia. ``Our 2001 capital budget is approximately equal to our projected cash flow for 2001 assuming a $25 WTI oil price, thus maintaining our financial discipline. Our balance sheet is very strong, giving us the opportunity to more vigorously pursue other avenues of growth such as acquisitions in 2001.''

Update on Fourth Quarter Activities

- As announced on November 30, the Suban-4 well in the Corridor Block production sharing contract (PSC) area tested at 80 mmcf/d, with an extended test ongoing to provide additional information about reservoir continuity with the Durian Mabok-2 well drilled in mid-1999. Drilling of the Suban-5 well, located approximately six kilometres to the north of Suban-4, is currently underway with completion targeted by February 2001.

- 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 of four exploration wells to be drilled on the block within the next five months, is currently drilling.

- The construction of the Kakap upstream facilities and the West Natuna Transportation System (WNTS) has been completed, approximately four months ahead of the original schedule, and the gas production from Kakap into the WNTS began on December 6th. Early gas sales to the buyer are expected to commence shortly after commissioning of the onshore receiving facilities in Singapore. Volumes during the early gas period will be dependent on the requirements of the buyer and are not expected to have material impact on fourth quarter 2000 results.

- An offshore oil discovery was made in the partner-operated Pangkah PSC, in which Gulf Indonesia holds a 12 per cent working interest. The Sidayu-1 well flowed 1,450 barrels of oil per day during testing from a vertical wellbore. The well is located seven kilometres northeast of the Ujung Pangkah-1 oil and gas discovery well drilled in late 1998. Drilling of the Ujung Pangkah-2 delineation well, located two kilometres west of Ujung Pangkah-1, is currently underway.

- Onshore oil development activities continued in the fourth quarter with six oil development wells drilled in the Corridor TAC contract area in October and November. Quarterly onshore crude oil and condensate production volumes could exceed 15,000 barrels of oil per day for the first time since the early 1990's. Offshore crude oil and condensate production is targeted to be in line with the third quarter 2000 results.

- Corridor gas production in the fourth quarter of 2000 is targeted to be consistent with the year-to-date results.

- The signing of the contracts for additional gas deliveries to the Duri Steamflood is scheduled for the week of December 18, 2000. The signing of the contracts for South Sumatra gas sales to Singapore has been scheduled by the buyer for mid-January 2001.

``The fourth quarter of 2000 thus far has been very exciting for Gulf Indonesia with results of Suban-4 and the completion of the West Natuna Gas Project construction,'' said Bill Fanagan, President and Chief Executive Officer of Gulf Indonesia. ``Looking forward, we are nearing the conclusion of two major gas sales contract negotiations and our 'big-hit' offshore oil exploration drilling program is now under way with the Bukit Panjang-1 well currently drilling and five more exploration wells planned by May 2001. We believe these activities and the company's financial strength provide the opportunity for significant growth in the future.''

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. 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 release 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 future spending plans, forecasted production volumes, future drilling plans, and the progress and outcome of gas contract negotiations. Although Gulf Indonesia believes that its expectations are based on reasonable assumptions, these assumptions are subject to a number of risks and uncertainties, and there is no assurance the company's objectives will be achieved. (*)