Treasure Island Test Well will not be Drilled in 2003

Newfield Exploration reported that BP Exploration & Production Inc., the operator of all 26 Treasure Island lease blocks in which Newfield and the Treasure Island Royalty Trust currently own an interest, has stated its intent to not drill a Treasure Island test well in 2003. Treasure Island is an "ultra-deep" exploration concept to explore for oil and gas in the shallow waters of the Gulf of Mexico.

Pursuant to the current agreement between BP and Newfield (as successor to EEX Corporation), if BP does not commence drilling the initial well by December 31, 2003, the agreement will terminate and the interests in the 20 leases assigned to BP under the agreement will be reassigned to Newfield for nominal consideration. Newfield and BP are discussing alternatives.

There is no production and there are no proved reserves associated with Treasure Island and no wells have yet been drilled to test the exploration concept. As a result, ultimate commercialization of any one or more of the currently identified prospects may never be realized because the prospects are never tested, because oil or gas is not discovered or, if discovered, because the costs of development may make commercialization uneconomic.