Texaco Makes Discovery Offshore Brazil

Texaco announced that oil has been discovered by joint venture partners Texaco Brasil S.A., Shell Brasil S.A., and Petrobras in the BS-4 offshore exploration block, located 125 miles southeast of Rio de Janeiro, in Brazil's Santos Basin.

The discovery well, 1-SHEL-4-RJS, is in 5,099 feet of water and was drilled to a total depth of 13,485 feet. The well encountered 223 feet of net oil pay in Tertiary deepwater sands. Initial results indicate the oil is low API gravity crude.

Commenting on the announcement, Gregory T. Himes, Upstream Director - Brazil, said, "This well was the first of five wells Texaco and its partners are drilling in the Santos and Campos Basins, offshore Brazil this year. Texaco is pleased that this first well resulted in a discovery, although considerable work remains before a heavy oil discovery in these water depths can be declared commercial. Texaco identified offshore Brazil as a promising exploration play several years ago and aggressively pursued a investment strategy that is now beginning to yield positive results."

Although significant quantities of oil are present in the reservoir, determination of recoverable reserves will depend on the results of further drilling and production testing. A follow up well and test is planned for August of this year. Well 1-SHEL-4-RJS is 12 miles northeast of well BSS-69, a smaller non-commercial discovery drilled by Petrobras in 1993.

The Shell Brasil S.A.-operated 1-SHEL-4-RJS well was drilled with the Stena Tay semi-submersible rig and spudded on Feb. 25, 2001. The Agencia Nacional do Petroleo (ANP) has been notified that indications of oil have been encountered in well 1-SHEL-4-RJS. This is in line with the obligations of the Concession Contract for block BS-4, which lies in the northern part of the Santos Basin. This was the first of two obligatory wells drilled in Block BS-4.

Texaco Brasil S.A. has a 20 percent interest in Block BS-4 with partner/operator, Shell Brasil S.A. and Petrobras each holding a 40 percent interest. The work program for BS-4 included acquisition and interpretation of 2D and 3D seismic surveys, a detailed study of BSS-69 and 2 exploratory wells.