EEX Announces Deepwater Plans

The semisubmersible drilling rig, Arctic I, is expected to return to EEX before the end of May. At that time, the rig will move to the Llano field to drill an appraisal/development well. Following the evaluation of the results from this latest proposed well, the Llano owners will be able to agree upon, submit and have approved by the MMS a plan of development before the end of the first quarter 2002.

Since the December 2000 announcement of a discovery well at the Jason prospect on Garden Banks Block 344, EEX has completed an extensive series of reservoir evaluations. "The Jason well encountered approximately 100 feet of hydrocarbon-filled pay with no indication of where the limit of the hydrocarbon column might be. The height of the column strongly impacts the size of the accumulation. It has been clear from the outset that Jason was at least a tie-back candidate to another development in the area, however more information was needed before deciding whether it warranted development on its own. An analysis of the extensive amount of pressure information collected from the well indicates a strong likelihood that the hydrocarbon column could be quite large, suggesting the need for further appraisal. We intend to initiate appraisal activity at Jason following the next Llano appraisal well," said Tom Hamilton, chairman and president and chief executive officer. "We remain convinced that Llano and Jason are fault segmented reservoirs of the same hydrocarbon accumulation that includes our Rex, Travis and Devils Island prospects," he added.

In the most recent offshore lease sale, EEX successfully added five new blocks to the DeepShelf exploration prospects on the continental shelf of the Gulf of Mexico. EEX acquired a 100% interest in these blocks at a cost of approximately $1.2 million.

"While we pursue a development plan for the Llano area, our future offshore exploration investments will focus primarily on the deep targets we have identified in shallower water. While the geological risk of drilling deeper targets may be similar to that of deep water, the financial risk of deep drilling on the shelf is dramatically reduced," said Hamilton. "Due to the existing pipeline and marketing infrastructure, the lead times to initial production are significantly shorter -- a matter of months compared to years in the deep water. We anticipate unveiling this DeepShelf play over the next few months as partners are secured and drilling locations proposed," said Hamilton.