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Summary

Santos to Target U.S. Growth through Esenjay Acquisition

South Texas Exploration Acreage Expected To Increase More Than Four-fold

Santos Ltd (ASX: STO, NASDAQ: STOSY) today announced that Santos Americas and Europe Corporation (“Santos”), and Esenjay Exploration, Inc. (NASDAQ: ESNJ) (“Esenjay”) have entered into a definitive merger agreement under which Santos will offer to purchase for cash all of the outstanding common shares of Esenjay for US$2.84 per share, a 4.4% premium to its closing price, March 15, 2002, in a transaction valued at approximately US$80 million, including net debt and working capital of approximately US$24.2 million.

The boards of directors of both companies have approved the agreement. Certain directors and shareholders of Esenjay who own a majority of the outstanding Esenjay shares have signed agreements supporting the transaction and have agreed to tender their shares and vote in favour of any related matter, subject to certain circumstances involving the termination of the merger agreement or the tender offer. These directors and shareholders who own a majority of the outstanding Esenjay shares have also granted Santos an option to purchase their shares in the event the merger agreement and tender offer are terminated.

About Esenjay
Esenjay is a Texas based oil and gas exploration and production company that has established an extensive portfolio of exploration opportunities, with interests predominantly located in the prolific trends along the onshore Texas Gulf Coast. Esenjay has been successful in growing through exploration, having achieved annual reserves replacement of approximately 150% over the past four years.

Exploration Portfolio, Reserves and Production to be acquired
The acquisition is expected to substantially increase Santos’ U.S. portfolio of exploration opportunities, provide an increase to reserves, boost production, increase the level of operatorship and strategically align with existing U.S. operations. The acquisition is expected to contribute:

* Thirty-two exploration prospects with an average working interest of 40% (approximately 80% operated), together with over 40,000 net acres of leases, in the prolific Frio, Wilcox, Yegua, and Deep Vicksburg trends and the Hackberry Embayment (an increase from 11,500 net acres).
* Over 3,300 square miles of 3D seismic data (of which 1,800 square miles is proprietary).
* Estimated proved and probable reserves of 47.3 billion cubic feet of natural gas and 1.0 million barrels of oil at year-end 2001.
* An additional 16 million cubic feet equivalent per day of production, at low operating costs (approximately US$0.20 per thousand cubic feet).

Santos Ltd’s Managing Director John Ellice-Flint said, “Santos is growing steadily in the United States, through a combination of successful exploration, production optimisation and acquisitions. The acquisition is expected to provide a base for further growth and result in an increasing contribution to the Santos Ltd Group activities. The United States, with a 23 trillion cubic feet a year gas market, provides world competitive opportunities and attractive gas market fundamentals. In particular US gas margins are generally better than in Australia.”

Building on Progress in 2001
The proposed acquisition follows several gas discoveries in the onshore Texas Gulf Coast in 2000 and 2001 and the recent purchase of a range of interests and assets in the Frio trend by Santos. This acquisition would continue the re-positioning of Santos’ U.S. operations to the onshore Texas Gulf Coast and is consistent with its strategy to operate assets and concentrate efforts on basins that combine moderate risk with high-reward prospects. The portfolio includes some non-core interests, that are expected to be divested in 2002.
Operatorship Provides Potential for Added Value
Esenjay currently operates fields that account for approximately 80% of its net production volumes, which is commensurate with Santos’ existing operating position in the United States. Santos believes that the application of its world class fracture stimulation experience, which has been developed over many years of operation in the Australian Cooper Basin, has the potential to add additional value to these assets. This expertise has already been successfully applied to the current U.S. operated assets of Santos.

Exploration Portfolio Expanded
During 2000 and 2001, Santos made two significant onshore Texas wildcat exploration discoveries in the high pressure, multi-zone Frio Trend located at depths greater than 12,000 feet. This acquisition is expected to result in the addition of a number of higher impact exploration and delineation opportunities to Santos’ exploration portfolio. Access to a significant seismic data base and geological and geophysical assessment is expected to identify further drilling prospects.

Increased US Reserves and Production
On a proforma basis, the acquisition is expected to increase Santos’ total year-end 2001 proved and probable reserves in the United States to 107 billion cubic feet of gas and 2.25 million barrels of oil and liquids for a total of 119 billion cubic feet equivalent.
The total U.S. production is expected to be over 3 million barrels equivalent in 2002; a 200% increase over 2001. Production resulting from successful exploration and development of the acquired properties is expected to facilitate further rapid growth over the next three years.

Terms of the Offer
Santos’ acquisition subsidiary will commence a tender offer shortly for all, but not less than a majority, of the outstanding shares of Esenjay common stock on a fully diluted basis, at a net cash price of US$2.84 per share. If a majority of the outstanding shares are purchased in the tender offer, any remaining shares will be exchanged for cash of US$2.84 per share in a merger of Esenjay and Santos’ acquisition subsidiary. The transaction is subject to satisfaction of customary conditions. Completion of the merger is expected during the second quarter of 2002.

The acquisition will be funded using the Santos Group’s existing cash reserves and is expected to be earnings accretive in 2002.

Merrill Lynch acted as exclusive financial adviser to Santos in relation to this acquisition and will serve as dealer manager for the tender offer.