Conoco announces first oil production from Norwegian Sea Facility.

HOUSTON--(BUSINESS WIRE)--Oct. 18, 1995--Conoco, developer of the Heidrun Tension Leg Platform (TLP), announces first oil production from the Norwegian Sea facility today and the transfer of its operatorship to Statoil, Norway's state oil company.

Heidrun, the first concrete floating production platform in the world, is expected to reach a plateau oil production rate of 200,000 barrels per day in first quarter of 1996. The partnership, with Statoil as production operator, is currently working to optimize processing equipment which may increase production to as much as 250,000 barrels per day.

"Despite a full year delay early in the project's approval process, Heidrun first oil will be realized within two months of the date planned six years ago," said Mike Johnson, president, Conoco Norway Inc. "This is a tribute to the hard work from Conoco's staff combined with excellent partnering with Statoil and the many contractors who contributed to Heidrun's development."

The crude oil will be transported to shore by a direct tanker shuttle loading system.

The NOK 26.4 billion (US $4.2 billion) Heidrun TLP is the single largest development undertaken by Conoco and its parent company DuPont and represents many technological firsts for the petroleum industry such as the first floating platform built entirely of lightweight aggregate concrete, a titanium drilling riser and the use of a direct shuttle tanker loading system.

Initially, gas from the Heidrun field will be reinjected into the reservoir and later will be delivered to the Statoil/Conoco owned methanol plant when it is constructed in Mid-Norway. A 16-inch pipeline from the field to the shore will be laid in the summer of 1996. The methanol plant will be Norway's first mainland industry development utilizing natural gas transported to shore by pipeline.

The Heidrun field in the Norwegian Sea sits under 350 meters (1,150 feet) of water and is located 70 miles south of the Arctic Circle. It is the northernmost offshore oil and gas field to be developed. The giant field, which was discovered in 1985, contains recoverable reserves of 750 million barrels of oil and 1.6 trillion cubic feet of natural gas.

Statoil holds a 76.875 ownership in Heidrun. Conoco holds an 18.125 percent and Neste Petroleum a.s. holds 5 percent.

Editor's Note: The plan for development and operation was filed in November 1989 and first oil was projected for August of 1995 based on development approval in 1990. Important political and national policy issues, primarily related to the gas offtake, had to be resolved prior to final approval which resulted in delay of approval by the Norwegian Storting (Parliament) to 1991.

Conoco Norway President and Managing Director Mike Johnson made the following comments as first oil production from the Heidrun field was recorded and operatorship of the project was handed over to Norway's state oil company, Statoil:

"Heidrun is a good investment for Conoco and for Norway. The cost to develop the field's 750 million barrels of oil and 460 billion cubic feet of gas is roughly $5 per barrel oil equivalent. Field operating costs over the next five years will average around $1 per barrel, with an additional $2 per barrel to transport the oil. Even with oil prices as low as $8.60 per barrel, the Heidrun field development will break-even. At $12 per barrel, Heidrun will provide a pre-tax return of 7 percent. At today's oil prices, revenues will exceed NOK 75 billion ($12 billion) over the life of the field.

"The current estimate for the development phase is NOK 26.4 billion ($4.2 billion), which is less than a 5 percent increase over the 1991 Master Control Estimate of NOK 25.3 billion ($4 billion).

"More importantly, the entire Heidrun project has a significant upside to its profitability. Here's why:

"First, sales from the gas cap have not been included in the project's economics due to the uncertainty surrounding the timing of sales. However, once gas infrastructure is available in Mid-Norway, gas cap reserves can be developed cheaply and sold to the European market on a competitive basis.

"Second, the field is also likely to produce more than Conoco's original estimate of 750 million barrels. Recent data obtained through the pre-drilled wells and updated reservoir models suggest that a higher oil recovery factor may lead to significantly more oil production than originally thought.

"Third, the Heidrun area has several prospects which could extend plateau production or add future processing revenues.

"Fourth, the Heidrun platform has been built with space for an extra module that can be used to develop satellite fields or expedite gas cap sales.

"We have found an important partner in Statoil. Our two companies have become partners internationally with a heavy oil project in Venezuela and an oil refinery in Malaysia. We anticipate an excellent performance from Statoil while operating the Heidrun field, meeting the partnership's target of reduced cost and increased production. Statoil's highly professional staff is one of the best in the world and I feel confident they will successfully operate this key asset."

Mike Johnson President and Managing Director Conoco Norway Inc.

CONTACT: Conoco Inc.

Teresa Wong, 713/293-1066

Oyvind Kvaal, Stavanger, 47-51-41-60-21