Benton Announces the Next Phase of the Assessment and Optimization Plan for the South Monagas Unit.

Business Editors

CARPINTERIA, Calif.--(BUSINESS WIRE)--Jan. 17, 2001

Benton Oil and Gas Company (NYSE:BNO) today announced that it has launched a comprehensive technical review of its South Monagas Unit (SMU) in Venezuela.

This review, which is expected to be completed around mid-year, represents the next phase of Benton's strategy to optimize the value of its SMU developed and undeveloped reserves. Benton, through its 80 percent owned subsidiary, Benton-Vinccler, operates the SMU which includes the Uracoa, Tucupita and Bombal Fields. It is currently Benton's largest producing asset with over 100 million barrels of proved oil reserves and represents virtually all of its current production.

The review includes the completion of an extensive geologic and reservoir computer simulation study to optimize field management and the remaining development drilling program. The computer simulation study will update and extend the 1998 study on a portion of the Uracoa Field to the entire SMU. It will incorporate all new geologic and reservoir information as well as the total production and drilling history from the more mature Uracoa Field and the underdeveloped Tucupita and Bombal Fields. The Company expects several benefits from the study including an optimum production profile of oil and gas, a revised water and natural gas injection strategy, more efficient development locations and improved well completion techniques. Reservoir management changes are expected to lower operating expenses and improve margins. The Venezuelan State Oil Company, PDVSA; our alliance partner, Schlumberger; and the Company jointly agreed to complete the study with the shared objective of maximizing the recovery of reserves from these fields at the lowest possible cost.

Dr. Peter J. Hill, Benton's President and Chief Executive Officer, stated, "In the past four months since embarking on Benton's plan to reposition the Company, much of management's attention has been focused on maximizing returns from Venezuela. We have an excellent reserve base at South Monagas. We believe we can both improve operating results and reduce our drilling costs further to improve profitability. In addition, the reservoir management changes expected as a result of the review are very timely as they may allow the early recovery of up to 200 billion cubic feet of natural gas. New volumes would be available for sale through a contract with PDVSA, which is currently under discussion. Based on the state of the art computer modeling and analysis which will be part of the study, we expect to be able to drill more efficient and better located wells, and, in turn, lower costs, accelerate the production of the remaining oil and gas reserves and more effectively manage the natural gas cap and water production."

The Company has designated a production enhancement team, comprised of Benton and Schlumberger technical and operating personnel, to focus on maximizing existing production levels. However, until the study is complete and the results, which are expected to reduce future capital requirements, have been incorporated into the strategic operating plan, rig economics make it prudent to interrupt the infill drilling program. Benton anticipates the drilling program will resume during the third quarter of 2001. This temporary development drilling suspension will reduce production during the first half of 2001 by an average of 1,000 to 2,000 bopd from the 27,000 bopd average for the fourth quarter of 2000.

Dr. Hill continued, "Going forward, we believe the refinements expected as a result of this study will enable us to accelerate production for less cost. Our SMU capital expenditures are expected to be in the $20 to $25 million range this year compared with $48 million in 2000. Although this past week we have achieved our target of 30,000 bopd, we know there will be a decline in the first half of 2001. We are firmly of the belief that South Monagas has the potential to produce over 40,000 BOE of high-value daily production in the next two years. The free cash flows generated during this review period may be used to reduce payables and invest in other core assets, particularly Arctic Gas."

Benton Oil and Gas Company, headquartered in Carpinteria, California, is an independent oil and gas exploration and development company with principal operations in Venezuela and Russia.

This press release may contain "Forward-Looking Statements" within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. All statements other than statements of historical facts included in this release may constitute forward-looking statements. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Actual results may differ materially from the Company's expectations due to changes in operating performance, project schedules, oil and gas demands and prices, and other technical and economic factors.