Benton Oil and Gas Company Commences Drilling First Well in China; Shell/Benton/CNPC Venture Drills First Exploration Well in Liaohe.

CARPINTERIA, Calif.--(BUSINESS WIRE)--Jan. 20, 1999--A drilling rig operating on behalf of Benton Oil and Gas Company and operator Shell Exploration China Limited (SECL) has begun the drilling of a deep well in the Qingshui Block in the Liaohe Basin, Liaoning Province. The well will be drilled to a target depth of 14,850 feet.

On August 6, 1996 SECL signed a production sharing contract (PSC) with the China National Petroleum Corporation (CNPC) for the deep rights (below 10,000 and 10,600 feet) in the 139,000 acre Qingshui Block. The Block is in the Liaohe Basin, a proven hydrocarbon province, and is surrounded by large shallow oil discoveries with more than 4 billion barrels of oil in place. On October 7, 1997 Benton Oil and Gas Company entered into an agreement to obtain half of Shell's interest in the Block. If the exploration activity is successful, the companies may elect to enter into a 15-year production period, with CNPC, through the local Liaohe Petroleum Exploration Bureau (LPEB), as a partner holding up to 51%.

The No. 1 Drilling Company of LPEB has been contracted to carry out the drilling of the deep well, which is expected to take about 4 months. The LPEB and SECL have worked closely together to ensure that operations meet international standards on health, safety and environment. The operations will be managed utilizing the first-ever Health, Safety and Environment Case (HSE Case) constructed for a Chinese drilling rig. The drilling location is in the Shuangtaizi River Mouth Nature Reserve.

Environmental considerations have therefore been at the forefront during the extensive planning of the drilling program, which includes the recommendations of the Environmental Impact Assessment study. The EIA was commissioned by SECL and carried out by Peking University Environmental Department in January 1998. A comprehensive consultation process involving national and international stakeholders has also been undertaken to ensure that the environmental impact of the project is restricted to an absolute minimum. Benton and SECL have also made contributions toward the protection and monitoring of the protected species of bird and their habitat within the Reserve.

Benton Oil & Gas Company Chairman, CEO and President Alex E. Benton said, "The start of drilling in China is an important and exciting new chapter in our company's history, as we move into yet another highly promising international oil province. We look forward to a long and profitable relationship with our partners Shell and China National Petroleum Corporation."

Added SECL Managing Director Dr. Tony Marsh, "The start of drilling is an important step forward for Shell exploration and production operations in China, and for our cooperation with China National Petroleum Corporation. We've been particularly impressed with the planning and preparation work done by Liaohe Petroleum Exploration Bureau, and are confident that the drilling activity will be carried out to high standards. We've also worked closely with both local and international environmental organizations in order to minimize disturbance to local wildlife from this initial exploratory well."

Benton Oil and Gas Company, with headquarters in Carpinteria California, is an independent oil and gas exploration and development company with operations in six countries worldwide. SECL is part of the Royal Dutch/Shell Group of Companies.