HOUSTON, TEXAS, June 28, 2001—El Paso Corporation (NYSE:EPG) announced today that on June 25, 2001 its indirect wholly owned subsidiary, El Paso Oil & Gas Canada Acquisition, Inc., mailed its previously announced offer to acquire all the issued and outstanding common shares of Velvet Exploration Ltd. (Velvet) (TSE:VLV) to the registered shareholders of Velvet.  The offer was previously announced on June 14, 2001.

Under the terms of the offer, Velvet shareholders tendering their shares to the offer would receive C$8.15 in cash for each Velvet common share.  The offer is open for acceptance until 5:00 p.m. mountain standard time on July 31, 2001 unless withdrawn or extended.  It is conditional, unless waived or amended by the offeror, upon, among other customary conditions, there being validly deposited under the offer and not withdrawn at least 66.67 percent of the outstanding Velvet Shares (calculated on a diluted basis).

Lehman Brothers is acting as financial advisor to El Paso on this transaction and is the soliciting dealer manager for the offer.  

Applications for regulatory approval of the transaction under the Competition Act and the Investment Canada Act of Canada have been submitted by El Paso.

El Paso Corporation is committed to meeting energy needs throughout North America and the world with operations that span the energy value chain from wellhead to electron.  The company is focused on speeding the development of new technologies, such as clean coal and liquefied natural gas, to address critical energy shortages across the globe.  Visit El Paso at www.elpaso.com

This release includes forward-looking statements and projections, made in reliance on the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The company has made every reasonable effort to ensure that the information and assumptions on which these statements and projections are based are current, reasonable, and complete. However, a variety of factors could cause actual results to differ materially from the projections, anticipated results or other expectations expressed in this release. While the company makes these statements and projections in good faith, neither the company nor its management can guarantee that the anticipated future results will be achieved. Reference should be made to the company's (and its affiliates') Securities and Exchange Commission filings for additional important factors that may affect actual results.