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Summary

Bayu-Undan

Bayu-Undan

The Operator of the Bayu-Undan liquids development project, Phillips Petroleum (91-12) Pty Ltd, a subsidiary of Phillips Petroleum Company, has made a release concerning further progress with the project.

Santos Limited expects to be in a position to announce its decision on participation in the project during the second half of November 1999.

10/26/99 Phillips Petroleum Company

Majority of Co-venturers Approve Development Of Bayu-Undan Liquids Project

Companies to continue development work, Monitor Timor Gap Treaty process

BARTLESVILLE, Okla., Oct. 26, 1999 Phillips Petroleum (91-12) Pty Ltd., a subsidiary of Phillips Petroleum Company [NYSE: P], and co-venturers will proceed with development of the Bayu-Undan gas/gas condensate field. Under terms of an operating agreement, the majority of the co-venturers have approved the gas recycle development phase of the project. First production of liquids should begin by late 2003 or early 2004.

The $1.4 billion gas recycle project will involve producing and processing natural gas, separating and exporting condensate and liquefied petroleum gas liquids, and re-injecting lean gas back into the reservoir.

The plan allows for the future export of lean gas, subject to future co-venturer and government approval of a gas export development project. Phillips and its co-venturers are continuing to make progress toward the establishment of gas markets for Bayu-Undan gas resources.

Phillips has had substantive and encouraging discussions with all relevant parties involved in East Timors transition to independence. The company and its co-venturers will continue to monitor the legal, fiscal and administrative arrangements under the Timor Gap Treaty and will proceed with development in a manner warranted by these arrangements.

The Bayu-Undan field is located in Area A of the Timor Gap Zone of Cooperation (ZOCA) between East Timor and Australia. The field is about 185 miles northwest of Darwin, Australia, in 240 feet of water. Phillips and its co-venturers in ZOCA block 91-13 discovered the Bayu field with the drilling of the Bayu #1 well in 1995. In 1995, BHP Petroleum and its co-venturers in ZOCA block 91-12 confirmed an extension of the field with the Undan #1 well. The field was subsequently unitized under terms of the Timor Gap Treaty. In April 1999, Phillips acquired BHP’s interest in the Bayu-Undan field. To date, a total of nine successful appraisal wells have been drilled on the field. Phillips is operator of the Bayu-Undan field with a 50.3 percent interest.

Phillips co-venturers in Bayu-Undan include: Santos, 11.8 percent; Inpex, 11.7 percent; Kerr-McGee Corp., 11.2 percent; Petroz, 8.3 percent; and British-Borneo, 6.7 percent.

Phillips is an integrated petroleum company engaged in oil and gas exploration and production worldwide; refining, marketing and transportation operations primarily in the United States; chemicals and plastics manufacturing and sales around the globe; and technology development. Founded in Bartlesville, Okla., in 1917, the company has

16,400 employees, $15 billion of assets and $12 billion of revenues on an annual basis.