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Marine Log

September 5, 2006

Gulf deepwater discovery "may be bigger than Prudhoe Bay"

Chevron and its partners may have made what could be the largest U.S. oil discovery in 38 years--in the deepwater U.S. Gulf. Already there is speculation that it could be bigger than Alaska's Prudhoe Bay.

The announcement from Chevron Corporation (NYSE: CVX) reported that it has successfully completed a record setting production test on the Jack No. 2 well at Walker Ridge Block 758 in the U.S. Gulf of Mexico.

Chevron announced discovery of the Jack prospect in September 2004. It is approximately 270 miles southwest of New Orleans and 175 miles offshore. Chevron is the operator with a 50 percent working interest. Devon (NYSE: DVN) and Statoil (Oslo: STL) each own a 25 percent working interest.

The Jack well was completed and tested in 7,000 feet of water, and more than 20,000 feet under the sea floor, breaking Chevron's 2004 Tahiti well test record as the deepest successful well test in the Gulf of Mexico.

The Jack No. 2 well was drilled to a total depth of 28,175 feet.

The test was conducted during the second quarter of 2006 and was designed to evaluate a portion of the total pay interval.

During the test, the well sustained a flow rate of more that 6,000 barrels of crude oil per day with the test representing approximately 40 percent of the total net pay measured in the Jack No. 2 well.

"Test results are very encouraging and may indicate a significant discovery." said a statement from Statoil. "The full magnitude of the field's potential is still being defined."

"The results of the Jack test are very encouraging. They further support our positive view of the lower Tertiary trend and demonstrate the growth potential of our high-impact exploration strategy on long-term production, reserves and value," said Stephen J. Hadden, senior vice president, exploration and production, Devon Energy. "With 273 blocks under lease and 19 exploratory prospects already identified, Devon's lower Tertiary position could more than double our current reserve base of about two billion equivalent barrels in the coming years."

Chevron and its co-owners plan to drill an additional appraisal well in 2007.

Chevron reports that more than a half a dozen world records for test equipment pressure, depth, and duration in deepwater were set during the Jack well test. For example, the perforating guns were fired at world record depths and pressures. Additionally, the test tree and other drill stem test tools set world records, helping Chevron and co-owners conduct the deepest extended drill stem test in deepwater Gulf of Mexico history.

"Chevron continues to demonstrate its leading position employing deepwater exploration technology to develop new supplies of U.S. crude oil and natural gas with projects such as Jack," said George Kirkland, executive vice president Upstream and Gas. "Our strong strategic position in the deepwater Gulf of Mexico will continue to be a platform for future growth for years to come."

Gary Luquette, president North America Exploration and Production, added, "The results of the Jack test allow Chevron and its co-owners to better understand the deliverability of the emerging Lower Tertiary Trend, a trend where Chevron is the largest leaseholder."

Chevron continued to emphasize safety as a priority during the Jack well test. The team achieved no days away from work incidents, and no spills.

Chevron is the largest lease holder in the deepwater Gulf of Mexico, and is currently developing the $3.5 billion Tahiti project located in Green Canyon Block 640. The project is scheduled to commence production in 2008.

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