Shell Makes Deepwater Discovery at Deimos Prospect

Shell Exploration & Production Company has encountered hydrocarbons at its Deimos prospect located in approximately 3,000 feet of water in Mississippi Canyon Block 806. The Deimos well was spudded by Transocean's Deepwater Nautilus in June 2002 and reached total depth in September. Deimos is located adjacent to the huge Mars discovery, which has been producing from a Shell-operated tension leg platform since 1996. Additional drilling will be required to delineate the actual field potential.

"Oil was present in excess of 535 vertical net feet of sands, which included both exploratory sections and known producing field pays," remarked David Loughman, vice president exploration and development, SEPCo. "We are currently evaluating appraisal drilling options."

"This discovery reinforces the validity of our current exploration strategy," said Raoul Restucci, SEPCo President and CEO, "which includes both a vigorous greenfield component as well as a nearfield program, of which the Deimos discovery is an excellent example. We continue to be pleased with the richness in the Mars Basin. We have confirmed about two billion barrels so far in the Basin, with developments and discoveries such as Mars, Ursa, Crosby, Europa, King, Princess, and Deimos. This gives us strong encouragement regarding other similar prospects in our inventory."

Recently, Shell announced the discovery of Great White, a greenfield prospect located in Alaminos Canyon Block 857 in the prospective Perdido Foldbelt of the Western Gulf of Mexico.

SEPCo, as operator, has a 72 percent interest in the prospect; BP has a 28 percent interest.