Conoco Enters Malaysian Exploration and Production Business.

Business/Energy Editors

HOUSTON--(BUSINESS WIRE)--Nov. 1, 2000

Conoco (NYSE:COCA) (NYSE:COCB) announced today that Malaysia's national oil company, Petronas, has given its approval for Conoco to acquire one-half of the 80 percent interest held by two Royal Dutch/Shell subsidiaries in two exploration and production blocks offshore Malaysia.

With Petronas' approval and as part of the agreement, Conoco gains exposure to more than 1.5 million acres in a proven hydrocarbon province and will commit to drill at least four wells on the deepwater blocks designated as "G" and "J," and offshore the Malaysian state of Sabah.

"Conoco set out several years ago to make Southeast Asia a major area of operations for our company," said Rob McKee, Conoco executive vice president for exploration and production. "Part of that strategy is the aggressive pursuit of significant oil and natural gas opportunities in areas like offshore Malaysia and other countries that are highly prospective, but under-explored. Conoco sees considerable potential in the deepwater arenas of the world and we have developed the tools and the talent to economically explore and produce from deepwater."

Malaysia's Blocks "G" and "J" are located near the Baram/Champion deltas of northwest Borneo where 13 billion barrels of oil equivalent have been found to date. Water depths range between 650 - 3,200 feet (200-1,000 meters) for Block "J" and 2,300 - 5,900 feet (700-1,800 meters) for Block "G." To date, Shell has drilled two exploratory wells on these blocks and has made one gas discovery and one oil and gas discovery.

"Shell has been active in Malaysia for more than a century. Obviously, they have considerable experience in the country and we are pleased to have entered into this partnership," McKee added. "Conoco is already active in Malaysia on the refining and marketing side of the business and we are looking forward to further strengthening our relationship with Petronas as we enter Malaysia's upstream sector."

Conoco has been an active player in the Malaysia refining sector since 1995 when it joined forces with Petronas and Statoil to build a highly complex, 100,000-barrel-per-day refinery near Melaka. The facility came on-line in 1998 and utilizes Conoco's proprietary coking technology. On the retail gasoline side, Conoco is opening stations under the ProJet brand and an accompanying convenience store offering called "destina." Conoco plans to open 20 outlets in the coming year, with further expansion to follow.

Conoco and its partners announced in September that it will supply all of the natural gas for a 1.5 trillion cubic feet (TCF) sale between Indonesia and Malaysia. Conoco serves as operator of the South Natuna Sea Block B Production Sharing Contract (PSC) in Indonesia. The natural gas will be delivered to Malaysia over a 20-year period beginning in late 2002 or early 2003.

An additional Southeast Asian area of growth for the company has been in Vietnam where Conoco has made several acquisitions and recently announced a significant oil discovery in Block 15-1. Conoco currently holds interests in five offshore blocks totaling over 5.75 million acres (23,285 sq. km.) and has become the largest foreign acreage holder in the country.

Conoco also owns exploration and production rights to more than 5 million acres (20,575 sq. km) located in the overlapping claims area between Cambodia and Thailand. This year, Conoco opened its 110th retail outlet in Thailand and has plans for additional growth in the coming year. These gasoline stations and modern convenience stores operate under the Jet brand.

Conoco is a major, integrated energy company active in more than 40 countries.

This release contains forward-looking statements about Conoco's business plans and operations. These statements are not guarantees of future performance, involve certain risks, uncertainties, and assumptions that are difficult to predict, and are based upon assumptions as to future events that may not prove accurate. Actual outcomes and results may differ materially. Among the factors that could cause such differences are changes in oil and gas prices; unsuccessful exploration and development drilling activities; failure to achieve expected reserve or production levels due to operating hazards, drilling risks, and the inherent uncertainties in interpreting engineering data relating to underground accumulations of oil and gas, inability to obtain government approvals for project development; inability to develop deepwater discoveries due to technological difficulties; inability to obtain markets for natural gas production; interruption of operations due to accidents or political events, as well as other risks discussed in Conoco's publicly available filings with the Securities and Exchange Commission.