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Summary

Santos Has Successful Gas Extension In The USA

Esenjay Exploration Inc., the Operator of the Runnells-5 well in which Santos USA Corp. has a 30% interest, reported that the Runnells-5 well has logged approximately 100 feet of net natural gas pay. The well is a delineation well in an apparent separate fault block from the Runnells-3 discovery, a significant deep geopressured Frio discovery made in 2000. Based on preliminary log data in three pay zones, all of which were productive in the discovery well, Runnells-5 extends the areal extent of the Runnells field and enhances its reserve potential.

On Saturday, May 12, 2001, a blowout occurred as a result of mechanical failure at the Runnells-5 well. Although equipment was damaged, there were no injuries or fire at the well site. It is estimated that the process of bringing the well under control could take up to two weeks. At this time, it is uncertain whether the well can be salvaged. Santos expects the cost of the damage from the blowout to be covered largely by insurance. Due to the blowout the well has only been drilled through 14,520 feet of a target depth of 16,000 feet.

John Ellice-Flint, Santos Managing Director said:

“Runnels-5 continues Santos’ successful gas exploration program in South Texas since the beginning of 2000 and is the second success in the Frio trend.”

“The well extends the reserve potential of the Runnels field and is the first of the four well exploration program planned for 2001”.

“The Runnels-5 pay zones are the same as the Runnells-3 discovery. In the shallower Anomolina reservoir section the Runnells-5 well is in a separate fault block, which increases the potential for the other fault blocks in the field”

The Runnells-5 well is located approximately 2,500 feet from the Runnells-3 discovery. The well had a planned total depth of 16,000 feet and was intended to extend the limits of the gas reservoirs logged in the discovery well, as well as to test a deeper 1,500 foot prospective pay section not tested by the Runnells-3. The blowout resulted in a premature halt in drilling at a total depth of 14,520 feet.