LOUISIANA OPERATOR PLANS BOHAI BAY EXPLORATION PROGRAM

Exploration Co. of Louisiana Inc. (XCOL), Lafayette, La., and China National Oil Development Corp. (Cnodc) have tentatively agreed to a 7 year exploration program for an area in Bohai Bay off eastern China. The memorandum of agreement XCOL and state owned Cnodc signed covers a 197 sq km area in less than 20 ft of water near Tianjin, about 135 miles southeast of Beijing. The Zhao Dong contract area is immediately off the Dagang oil field complex one of China's main producing areas. Since

June 1, 1992

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The memorandum of agreement XCOL and state owned Cnodc signed covers a 197 sq km area in less than 20 ft of water near Tianjin, about 135 miles southeast of Beijing.

The Zhao Dong contract area is immediately off the Dagang oil field complex one of China's main producing areas. Since its discovery in 1964, Dagang has produced more than 500 million bbl of oil.

CONTRACT DETAILS

XCOL and Cnodc expect signing of a final contract this month in Beijing, pending approval of terms by China's Ministry of Foreign Affairs.

Tom Fetters, president of XCOL Exploration & Production Inc., said the preliminary agreement covers one 3 year and two 2 year phases, each committing XCOL to undisclosed spending. The memorandum calls for XCOL to drill at least seven Zhao Dong wildcats during the 7 year period. XCOL plans to start first phase drilling in first quarter 1993.

In addition, XCOL has agreed to reprocess more than 700 line km of 2D seismic data collected by Chinese crews in 1986-88. XCOL has been reprocessing Cnodc seismic data for about the past 18 months.

Fetters said XCOL likely will conduct seismic surveys on the block throughout the 7 year period.

GEOLOGIC SIMILARITIES

XCOL notes Zhao Dong's geologic setting is similar to that of the U.S. Gulf Coast, the company's main operating area (Chart).

"It's Miocene, Oligocene, and Eocene, for the most part sitting on a Paleozoic unconformity," Fetters said. "It's very much like the Knox Arbuckle, in which we're also involved.

"The biggest difference is the depositional environment is lacustrine and very oil prone, as opposed to being open marine and gas and condensate prone, as with the Gulf Coast."