Vintage Petroleum Updates Exploration Activities

Vintage Petroleum reports the results and status of its recent exploration and significant exploitation activities and plans for the second half of 2004. During the second quarter, Vintage made total non-acquisition capital expenditures of $62.9 million, bringing the total for the six months of 2004 to $115.2 million.

United States - Exploration

Vintage began 2004 with the largest inventory of domestic exploration prospects in its history and has currently budgeted $43 million for exploration. The company is focusing its U.S. exploration efforts primarily in the Gulf Coast, California and on new initiatives focused on unconventional gas resources. Production commenced from the Tres prospect (High Island 55-L) in early July as facility and pipeline construction was completed. This company-generated prospect in Texas state waters resulted in three successful wells that were drilled based on a Miocene gas exploration target coupled with the re-development of additional Miocene oil and gas sands. Current daily net production of gas and condensate is approximately 10 MMcfe (20 MMcfe gross). It is anticipated that the daily production will continue to increase during the third quarter to a net daily rate of approximately 15 MMcfe (30 MMcfe gross). Vintage is the operator and has a 65 percent working interest in this prospect. As a result of this success, Vintage acquired the High Island 56-L lease on an adjacent block and recently drilled and completed a well which targeted the same formation. This well will be produced through the High Island 55-L platform facilities and is scheduled to commence production during the fourth quarter of 2004. At the company's East Donner prospect in Terrebonne Parish, La., Vintage is participating in the drilling of a well targeting multiple Miocene sands at a planned total depth of 16,500 feet. Vintage has a 38 percent working interest in this well which is currently drilling below a depth of 14,000 feet. Vintage also holds a 12.5 percent working interest in and is participating in the drilling of a well at East Cameron 43. The well, also targeting Miocene sands, is currently drilling at 10,000 feet with a planned total depth of 14,300 feet. In California, Vintage has drilled a well in the San Joaquin basin to a total depth of 12,700 feet to test an oil prospect in which it holds a 50 percent working interest. Testing is underway and, if successful, production could commence during the fourth quarter 2004. Pending the results of this well, multiple offset locations could be drilled.

The company and its partners were recently high bidders on two Gulf of Mexico lease blocks. Vintage acquired a 15 percent interest in West Cameron block 145, a gas prospect targeted to spud early in the fourth quarter. Vintage also secured a 25 percent interest in West Cameron block 242, which is anticipated to spud immediately following the drilling of the West Cameron 145 well. Both of these prospects are located in the federal waters offshore Louisiana and target Miocene age formations at depths of approximately 12,000 to 15,000 feet. Activity is also underway on a Miocene prospect at Matagorda Island 639 with drilling planned to commence during the third quarter of this year. Vintage holds a 25 percent working interest in this offshore Texas prospect. Also, in the onshore Texas Gulf Coast, the company has secured an opportunity to re-develop a Frio gas field with exploration upside. A 3-D seismic survey of the area will commence in October with drilling to be initiated by the second quarter of 2005. Vintage controls a 53 percent working interest and will operate this prospect.

Late in 2003, the company began evaluation of the potential of unconventional gas resource plays with the objective of establishing a land position in two play concepts prior to year-end 2004. To date, the company has identified and established an acreage position in two unconventional gas resource plays and is in the early stages of acquiring a lease hold position in a third play. Based on this progress, the company is increasing its 2004 exploration budget in order to fund the drilling of up to five wells to test these unconventional plays. In the Palo Duro basin of Texas, the company has secured a substantial lease position and plans to spud the first of two exploratory wells in the third quarter to evaluate commercial potential of the play. The company has also secured a substantial lease position in the Cherokee-Forest City basin of southeastern Kansas. Drilling operations are underway on the first of two core holes that are planned to provide information required to assess the gas resource potential of this coal bed methane prospect.

International - Exploration

Based on the company's drilling success to date in Yemen and in order to accelerate the drilling program at its An Nagyah field, Vintage has increased its 2004 capital spending budget for exploration and development in the country by $11.5 million. The additional spending targets raising productive capacity of the field toward the 10,000 barrel of oil per day capacity of the central processing facility scheduled for completion early in the second quarter 2005. The increased spending is allocated for the drilling of additional development wells at its An Nagyah field, two exploratory wells and other workover activity aimed at increasing production in the near term. The most recent well, the An Nagyah #9, has been drilled and completed with testing activity currently underway. With the addition of the An Nagyah #9, productive capacity in Yemen has risen to 2,080 net (4,000 gross) barrels of oil per day. Preparation to spud the nearby Al Hareth X-1, an exploratory well targeting the Alif formation, is also underway with the well anticipated to spud by mid-August. Following the Al Hareth well, additional wells at An Nagyah are planned during the second half of 2004. During the second quarter, the company also drilled the Harmel #2 well for the purpose of obtaining cores from the supra-salt oil reservoirs discovered in 2000 by the Harmel #1. Following evaluation of the core analysis, completion and stimulation work will commence to further test commercial potential of these shallow, heavy oil reservoirs. It is anticipated that this activity will commence during the fourth quarter of 2004.

In its Po Valley gas exploration play in Italy, the company drilled its first exploratory well in the Bastiglia concession late in the second quarter. The play targeted shallow gas sands in stratigraphic traps defined by 2-D seismic and a geochemical survey. The target sands encountered in the Bastiglia 1-D well did not contain commercial quantities of hydrocarbon, therefore the well was plugged and abandoned. Further analysis of the information gained from this well is underway, with a decision regarding future exploration drilling in this play anticipated before year end. In addition, 1,575 kilometers of 2-D seismic acquired during 2003 covering the company's Bulgarian Black Sea concession is under interpretation to aid in the detailed mapping of large deep water structural features. After completing the current geological and geophysical work, the company expects to secure majority participation by an industry deep-water partner to drill and operate this prospect.

Exploitation Activity

U.S. exploitation activity in the second quarter continued to generate a significant volume of net production from the four net wells drilled and 39 net workovers completed year-to-date. First and second quarter activities have realized net daily production of 1,900 barrels of oil equivalent (BOE). During the second quarter, the company initiated a drilling and workover program in its Main Pass 116 complex, in offshore Louisiana. A recompletion on the Main Pass 111 A-1 well resulted in initial net daily production of 2.5 MMcf (3.0 MMcf gross). The Main Pass 116-8 well was recently drilled and completed resulting in net initial daily production of 4.6 MMcf (5.5 MMcf gross) from two zones. In addition, the company has drilled the Main Pass 112-1 sidetrack and is completing three of six zones, having logged over 100 feet of hydrocarbon bearing sands.

At its South Gilmer field in East Texas, the company has recently initiated a five well drilling program which will continue through the fourth quarter. Also, the company began a 12 well program to deepen, drill or sidetrack wells in its Luling, Darst Creek and West Ranch field areas in the second quarter. One well has been completed and is producing at a net daily rate of 1.1 MMcf (1.3 MMcf gross).

In Argentina, drilling and workover activity continues at a historically high level. Currently, there are four drilling rigs and seven workover rigs operating in the company's core areas located on the southern flank of the San Jorge basin. With the recent agreement to acquire a wholly-owned subsidiary from Rio Alto Resources International, Inc. which holds property on the northern flank of the basin, plans are to further expand activity by adding a fifth drilling rig by year end. During the second quarter, 18 wells were drilled and completed. For the first six months of 2004, 37 wells have been drilled and completed with a 97 percent success rate, while another eight wells are in various stages of drilling or completion. Vintage's successful drilling program continues to be predicated upon the use of 3-D seismic to pinpoint development locations. During the last year, the company has added 201,000 acres of new 3-D seismic to its existing inventory to support current and future development activity. In addition to the seven workover rigs currently in operation, the company plans to add up to three additional workover rigs by year end. For the first six months of 2004, 48 workovers were accomplished with another seven in progress. Consistent with the company's plan to initiate additional waterfloods in 2004, a significant portion of these workovers targeted waterflood projects. Although production results are not expected this year from these workovers, waterflood response is anticipated to contribute to enhanced production results in 2005.