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Santos USA Corporation announced today that it is well placed to expand its interests by up to 9 exploration blocks in the Central Gulf of Mexico.

This follows bidding in the US Offshore Continental Shelf Lease Sale No. 166 which was conducted by the US Federal Government on 5 March 1997 in which Santos USA Corporation was the high bidder on 9 blocks.

Santos USA is part of a joint venture with Murphy Exploration and Production Company (which holds a 60% interest and is operator) and Callon Petroleum Company (which holds a 20% interest). Santos USA Corporation holds 20%.

Commenting on the announcement, Dr John Armstrong, President – Santos Americas and Eurpoe said, “The acquisition of these blocks will be a significant addition to the Santos USA portfolio of acreage in the Gulf of Mexico”.

Santos USA currently has interests in 8 blocks and produces 3.1 million cubic feet of gas and 476 barrels per day of liquids in the Gulf of Mexico.

The Gulf of Mexico is currently an area of renewed interest for the oil and gas industry. The basin continues to deliver exploration success, driven by use of 3-Dimensional seismic. Average success rates are currently around 45%.

Santos, Murphy and Callon have aligned in the venture based on shared principles of full coverage with 3-Dimensional seismic, shallow water depth (less than 350 ft), proximity to infrastructure and identified prospects.

It is expected that possibly two of these prospects will be drilled later this year, with the balance likely to be addressed during 1998. The wells to be drilled are primarily on low risk gas prospects, with typical targets being around 50 billion cubic feet (gross).

Santos USA Corporation’s share of the bid and first year lease costs is $US 6.3 million.

The award is subject to the US Minerals Management Service determining that the bids are acceptable.

Murphy Oil is a US listed oil and gas company. It operates 21 separate field areas in the Gulf of Mexico and has working interests in 31 Gulf of Mexico properties operated by other companies.

Three-Dimensional seismic is a widely used technique for imaging subsurface geology to identify likely oil and gas accumulations.