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ZEG Begins Deepwater Operations Study

Maritime Activity Reports, Inc.

November 16, 2006

Ziff Energy Group (ZEG), a leading North American energy consulting firm, with offices in Houston and Calgary, announces the launch of the 6th edition of its Deepwater Reducing Field Operating Costs (RFOC) study, which will evaluate 2006 operating costs for more than 2 dozen Deepwater producing assets in the Gulf of Mexico.

Participation will include 9 Deepwater operators, who collectively account for over 80% of the 1.36 million barrels of oil equivalent per day (MMBOE/d) produced in the Deepwater region of the Gulf of Mexico (see map below for the locations of the floating production assets to be included; the study will also include fixed and subsea assets). Ziff Energy’s last Deepwater study was conducted 3 years ago, assessing 2003 data. Many changes have occurred since then, including production from many new Deepwater assets including 8 new spars (Red Hawk, Gunnison, Constitution, Holstein, Mad Dog, Devil’s Tower, Front Runner and Medusa), 3 new Tension Leg Platforms (Magnolia, Matterhorn and Marco Polo), a semi-submersible production host for 6 oil & gas fields (Na Kika), and dozens of new subsea wells. Offshore Brazil is another major Deepwater area, operated primarily by Petrobras, and West Africa (Nigeria and Angola) is an important emerging Deepwater region. The U.S. Deepwater has both the broadest range of operating systems, and diversity of Deepwater operators, and therefore is the leading incubator for the worldwide Deepwater industry.

The Gulf of Mexico Deepwater is the most important domestic oil supply area for the U.S. oil & gas industry, although the impact of the hurricanes led to significant declines for both oil and gas production in late 2005 and 2006. The Gulf of Mexico Deepwater has continued to have new ‘world class’ discoveries and significant new field developments, though fewer new assets came online in 2005 and 2006 compared to 2004. The pace of new field developments will continue for the next several years, with both Independents and Super-Majors making significant contributions to the growth of Deepwater production and reserves. Corresponding with the increase in the water depth of new developments, 2007 and 2008 will see first production from new semi-submersibles (BP’s Thunder Horse and Atlantis projects, Anadarko’s Independence Hub, and Chevron’s Blind Faith). A majority of Deepwater gas production is associated, and growth in Deepwater production will be essential to offset the rapid gas production decline in the Gulf of Mexico Shelf during the remainder of the decade New water depth records for exploratory wells are being set, and Chevron’s announced record setting production test on the Jack #2 well at Walker Ridge Block 758 indicates the potential for larger future Deepwater discoveries in the Tertiary zone, which would alter the future production trend.

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