Under the terms of the letter of intent, Petrobras will acquire a 30% working interest in the Treasure Bay Project area. BHP Billiton serves as operator with a 44% working interest and Newfield retains a 26% working interest. Substantially all of Newfield's interest in the initial well, and the option well if drilled, will be non-cost bearing. Initial drilling to test prospects in the Treasure Bay area is expected in 2005. Newfield and BHP Billiton Petroleum (Deepwater) Inc. jointly own 60 lease blocks associated with the Treasure Bay project. The Treasure Island Royalty Trust does not hold any interests in the Treasure Bay area.
In addition, Petrobras also will participate in the drilling of the Blackbeard West Prospect. As announced last week, Exxon Mobil Corporation, with BP Exploration and Production Inc. and Petrobras America Inc. holding interests, will operate the Blackbeard West Prospect. Petrobras' participation was previously announced as an "undisclosed third party," pending the recent approval from its board of directors. Under the terms of the letters of intent, the well will spud no later than January 31, 2005. The well is being designed to test prospective objectives that range from 27,000 feet to more than 30,000 feet. The prospect covers multiple blocks in the South Timbalier and Ship Shoal regions offshore Louisiana. Newfield will be carried for a 23% working interest in the Blackbeard West Prospect to the objective depth, subject to certain limitations. The Blackbeard West Prospect is subject to a 1.25% overriding royalty interest held by the Treasure Island Royalty Trust.
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