ENSERCH, READING & BATES AGREE ON GULF PROJECT

Enserch Exploration Inc., Dallas, has agreed to farm out an interest in a deepwater Gulf of Mexico prospect in return for drilling and production services at the site by a unit of Reading & Bates Corp., Houston.

Under a letter of intent signed late last month, Reading & Bates Development Co. is to earn about a 20% interest in Enserch's Green Canyon Block 254 field development project. Site is in 3,300 ft of water about 100 miles off Louisiana.

Enserch is to retain an 80% interest in the project. The company acquired full ownership of the block in late first quarter 1995 from a unit of Exxon Corp.

In exchange for its interest, R&B Development agreed to:

Upgrade its M.G. Hulme Jr. third generation semisubmersible drilling rig for the field's development drilling program under a 3 year contract plus options.
Convert its Rig 41 second generation semi or an equivalent unit to a floating production system (FPS) with capacity to process as much as 70,000 b/d of oil. The FPS would be moored in 2,100 ft of water on Block 254 about 7 miles from the project's subsea well cluster, itself in about 3,200 ft of water.

Enserch in second quarter 1994 cut 400 net ft of Pliocene and Pleistocene pay in five zones below 12,000 ft with a sidetrack hole drilled to delineate about 350 ft of pay discovered in 1991 below 13,000 ft.

While Enserch has not booked reserves from Green Canyon Block 254, industry sources estimate reserves at about 100 million bbl.

DEEPWATER SYNERGY

R&B Development conducted preliminary studies of the feasibility of using an FPS to develop Green Canyon Block 254 under a previous technical services agreement with Enserch.

In addition, Reading & Bates Drilling Co. signed a letter of intent with Enserch to provide drilling services with the M.G. Hulme Jr. on Block 254 prior to the vessel's upgrade.

Enserch plans a delineation well on the tract in second quarter 1995.

If carried to a successful conclusion, R&B estimates its total involvement on Green Canyon Block 254 will generate revenue of more than $359 million during the 5-7 year life of the project.

An Enserch official said R&B Development's participation in the project will allow the prospect to proceed to development in the most economical way possible.

Paul B. Loyd Jr., chairman and chief executive officer of R&B Corp., said, "This project graphically illustrates the inherent synergy between deepwater offshore drilling and floating production in terms of technical disciplines and operations.

"We also believe this commitment by Enserch will be the first of several by various clients to similar floating production projects in the Gulf of Mexico and other parts of the world."