Interim Results - Part 1

ENTERPRISE OIL PLC
3 September 1999

Part 1

1999 INTERIM RESULTS

Enterprise Oil, one of the world's leading independent oil exploration and
production companies, today announced its results for the six months ended 30
June 1999. The main points are:

- Operating profit up five-fold to £70 million (£13 million in the first half
of 1998 on an adjusted basis*) with a comparable oil price;

- Profit after tax of £36 million, as against a loss of £2 million* in the
corresponding period last year;

- Cost of sales per barrel reduced to £5.08 (1998: £5.80*) for the first half,
with the full year figure expected to be below £5.50; 

- Earnings per share of 6.5 pence, compared with a loss of 1.0 pence* in the
first half of 1998;

- Interim dividend of 2.8 pence payable on 2 November;

- Production growth assured with four new fields - including the
Enterprise-operated Pierce oil field - commissioned in the first half of 1999,
and five more projects due on stream in the short term;

- Continued drilling success in the core areas (most recently the successful
appraisal of the Corrib gas field offshore the west coast of Ireland) -
leading to reduced exploration dry hole costs.


* figures shown on an adjusted basis to exclude the gain arising on the
disposal of a package of North Sea assets sold to Intrepid in 1998 and the
contribution from those assets in the first half of 1998.


Announcing the results, Sir Graham Hearne, Chairman, said: 'Trading conditions
in our business have been exceptionally volatile over the last year. However,
at Enterprise we have not only weathered the storm of very low oil prices, we
are well on the way to adapting the company to thrive without reliance on
higher oil prices. We have enjoyed good operational results so far this year
based on further drilling success - most recently the Corrib appraisal in
Ireland - and the commissioning of new fields. The prospect of rising cash
flow matched with investment opportunity demonstrates that we are in a
position to create further growth as activity levels recover.'

Pierre Jungels, Chief Executive, commented: 'Our results for the first half of
1999 show the positive impact of our cost reduction efforts. Whilst the recent
oil price recovery is welcome, we continue to base our longer term plans on
mid-cycle prices of around $15 per barrel. Cost reductions, rigorous
investment discipline and active portfolio management activities all
contribute to our objective of improving underlying profitability at lower
average oil prices.'


A copy of the Stock Exchange Announcement is attached.

Copies of the Interim Statement are due to be posted to the Company's
shareholders on Monday 6 September 1999. Copies will be available to the
public at the registered office at Grand Buildings, Trafalgar Square, London
WC2N 5EJ.

For further information please contact:

Pierre Jungels, Chief Executive                            0171 925 4198
Andrew Shilston, Finance Director                          0171 925 4476
Patrick d'Ancona, Head of Public Relations                 0171 925 4160
Peter Reilly, Head of Investor Relations                   0171 925 4476


Highlights


                                        Six months ended    *Six months ended
                                            30 June 1999         30 June 1998
                                             (unaudited)          (unaudited)
                                                                   (restated)
                                                      £m                   £m

Turnover                                             293                  288
Operating profit                                      70                   13
Profit before tax                                     58                   10
Profit (loss) after tax                               36                  (2)

Earnings (loss) per share                           6.5p               (1.0p)
Dividends per share                                 2.8p                 6.9p


Average production (barrels of oil 
equivalent per day)                              197,235              190,772

Average realised oil price                 £8.36($13.54)        £8.26($13.60)

Cost of sales per boe produced                     £5.08                £5.80

Operating expenditure per boe produced             £2.29                £2.65


* Adjusted to exclude the gain arising on the disposal of a package of North
Sea assets sold to Intrepid in 1998 and the contribution form those assets in
the first half of 1998 (see note 2 to the accounts).  Also restated for the
effects of applying FRS12 (see note 1 to the accounts).


Chairman's Statement

Trading conditions in our business have been exceptionally volatile over the
last year.  In our Annual Report for 1998, written when oil prices were around
$12 per barrel, we commented on the difficulty of predicting when prices would
improve. The tasks required in that environment were expressed as, first,
weathering the storm of very low oil prices whilst retaining financial
flexibility and, second, adapting the company to thrive without reliance on
higher oil prices. We have achieved the first of those objectives, while
retaining the core elements of our current investment programme and our key
skills, and are well on the way to succeeding in the second.

Despite the oil price for the period being only slightly higher than the
equivalent six months in 1998, operating profit rose more than five-fold to
£70 million in the first half of 1999 (1998: £13 million, adjusted to exclude
the contribution from assets disposed of in the first half of 1998). Profit
after tax was £36 million, compared to a loss of £2 million in the
corresponding period last year, again on an adjusted basis. Earnings per share
were 6.5 pence, as against an adjusted loss of 1.0 pence in the first half of
1998. The Board has declared an interim dividend of 2.8 pence per share. The
dividend will be paid on 2 November, to shareholders on the register on 17
September.

We have also enjoyed good operational results so far this year, based on
further drilling success (most recently the Corrib appraisal in Ireland), and
the commissioning of new fields. The prospect of rising cash flow matched with
investment opportunity demonstrates that we are in a position to create
further growth as activity levels recover from the depressed levels of 1999,
notwithstanding some production deferrals resulting from reduced drilling
activity.

Although the period of acutely low oil prices has called some commentators to
question both the intrinsic profitability and the place of exploration and
production companies within the oil industry, the Board continues to believe
that Enterprise has a bright future as an independent company based on its
proven track record of finding and producing hydrocarbons profitably. We do,
however, acknowledge that the upstream industry must do more to improve
financial returns through oil price and investment cycles. We intend to
achieve this by a combination of driving for higher margins, moderating
investment levels to be sustainable and profitable at an oil price of $15 per
barrel, and continuing to diversify our portfolio. These measures are
discussed more fully in the Chief Executive's Review. 

Flexibility and creativity also remain important. We are mindful that measured
risk taking is a key part of the E&P business and we will continue to be
opportunistic in seeking new avenues for growth. By utilising the skill and
commitment of management and staff, and maintaining financial discipline, I am
confident of the group's ability to provide continued operational success and
improved value for shareholders. 


Chief Executive's Review

In the first six months of 1999, Enterprise recorded an operating profit of
£70 million, as against £13 million in the corresponding period of last year,
adjusted to exclude the contribution from assets disposed of in the first half
of 1998. The average realised oil price was slightly higher at £8.36 per
barrel (1998: £8.26 on an adjusted basis). Production was 197,235 boepd, an
increase of 3 per cent over the same period last year, again on an adjusted
basis.

In the 1998 Annual Report, I stated that we were working hard to restore
margins. Cost reductions, rigorous investment discipline and active portfolio
management activities are all significant contributors to our objective of
improving underlying profitability at lower average oil prices. Our results
for the first half of 1999 show the positive impact of our efforts,
particularly from reduced costs:

- We have reduced cost of sales from £5.80 on an adjusted basis to £5.08 per
barrel of oil equivalent with the full year figure expected to be below £5.50;

- We have reduced our exploration and appraisal spend to an anticipated £95
million for 1999, with write-offs expected to be significantly lower than in
recent years; and

- We are on target to achieve a £20 million reduction in annual overheads.

In addition, it is anticipated that capital expenditure, including exploration
and appraisal spend but excluding capitalised interest, for the whole of 1999
will be around £450 million, as opposed to £623 million last year.  

Whilst the recent oil price recovery to around $20 per barrel has been
considerably sharper than the more modest rise generally expected, and is
welcome for the direct improvement it will have on profitability for the
second half of this year, we continue to base our longer term plans on
mid-cycle prices of around $15 per barrel. We also remain alert to the
opportunities created by short term volatility.

We have recently revitalised our investment sanction processes, regular asset
'health checks' and post investment review procedures, to strengthen return on
investment.  Our other priorities remain management of financial risk in the
business (primarily by measuring investment levels carefully), and also
seeking to create new opportunities for the longer term. We aim to improve the
consistency of returns through, for example, more diversity in the risk and
reward profiles of our investments. 

The overall framework we have adopted to measure our performance is, in
summary, a combination of the following goals, none of which can be taken in
isolation:

- competitive returns on investment in excess of our cost of funds;

- a level of reserve addition sufficient to replace production and provide
growth;

- continued pressure on costs to drive cost of sales per barrel below £5.50
and finding costs towards 80 pence per barrel of oil equivalent;

- net debt reduced to no more than 80 per cent of capital and reserves once
the current investment programme is complete;

- a dividend pay-out covered at least two times by earnings through the cycle.

These goals are not intended to be a substitute for thinking hard about what
is best for our shareholders and the company, and we will continue to manage
the portfolio actively, as we have in the past.

Current return on fixed assets (one of the measures we are targeting at the
corporate level) at 3 per cent for the first half is abnormal, reflecting the
substantial proportion of available capital invested in fields not yet in full
production. This investment will provide rapid production and cash flow growth
in the next 18 months. Returns from the existing portfolio of assets are
capable of climbing to between 12 and 15 per cent by 2001, with oil prices in
a corresponding range of $15 to $18 per barrel constant nominal. 

The focus on capital efficiency and investment discipline, in the light of 20
year lows in commodity prices, has led to a curtailment of in-fill drilling
programmes among operators causing deferrals in production. These decisions,
taken at low oil prices for economically sound reasons, will not be reversed
until later in the year, and as a result output next year will be some 5-10
per cent less than the 300,000 barrels of oil equivalent per day previously
indicated.

We expect to provide long term growth in value to our shareholders, as well as
competitive current returns. Post 2000 our existing portfolio is capable of
providing annual production growth in excess of 5 per cent. We also expect to
develop the 500 million potentially commercial barrels of oil equivalent in
the portfolio. To this end, we are actively appraising the three play making
discoveries made recently (Corrib in Ireland, Skarv/Idun in Norway, and Llano
in the US Gulf of Mexico), and it is already apparent that there are exciting
new drilling opportunities coming forward for the next few years, both within
our core areas and in Brazil, Greece, Morocco and the Atlantic.


Financial Review 

Summary

The results reflect the inevitable consequences of cyclical lows in the oil
price that continued well into the first half of 1999. However, a near
five-fold increase in operating profit reflects success in reducing our cost
of sales and the level of exploration costs written off. Having come through
the period of low oil prices with core investment programmes maintained and
financial flexibility intact, Enterprise is now well positioned for the oil
price recovery.

The group made a profit after tax of £35.6 million in the first half of 1999,
compared with a 1998 first half loss of £1.5 million, adjusted to exclude the
gain arising on the sale of a package of UK assets sold to Intrepid in 1998
and the contribution from those assets in the first half of 1998. Earnings per
ordinary share were 6.5 pence, against a loss of 1.0 pence in the first half
1998, similarly adjusted.

Underlying production, after excluding the effect of the sale of assets in
1998, was 3 per cent higher than in the same period last year.

Cost of sales have been reduced to £5.08 per boe representing a 12 per cent
reduction from the rate of £5.80 per boe in the first half 1998, adjusted to
exclude the contribution from assets disposed of in the first half of 1998.
The full year number is expected to be higher as explained below. Exploration
costs written off have reduced significantly from £59.5 million in the first
half 1998 to £27.0 million in 1999. 

The result shows that the group has made significant progress in adapting to a
lower oil price environment, with depressed prices prevailing through much of
this period. Maintaining financial strength in past years has also allowed the
group to maintain core investment in the development of new fields.
Nevertheless we have continued to exercise capital discipline by deferring or
cancelling some infill drilling and more marginal projects. 

Restatement of prior periods

In September 1998 the Accounting Standards Board issued Financial Reporting
Standard (FRS) 12 'Provisions, Contingent Liabilities and Contingent Assets'.
The main impact on the group is to require a change in the method of providing
for decommissioning costs. In the past, the provision for decommissioning
costs has been built up on a unit of production basis over the life of each
field. In accordance with FRS 12, full provision now has to be made, when the
installation of facilities is deemed to have had an environmental impact, for
the net present value (NPV) of the group's estimated decommissioning
liabilities. The corresponding cost is recognised as part of the cost of the
field, which is amortised within cost of sales over the life of the field in
line with production. The unwinding of the discount inherent in the NPV
estimation is included in the profit and loss account as a financial item and
shown as a notional interest charge. The implementation of FRS 12 has resulted
in a prior year adjustment which has increased the net assets of the group at
31 December 1998 by £58.8 million (see note 1 to the accounts). The current
period earnings effect, through cost of sales and net interest, is not
material. Prior year numbers in the financial review have been restated as
appropriate.

Turnover

Turnover for the first six months of 1999 was £293.4 million, a decrease of
£27.4 million over the same period in 1998 reflecting the disposal of UKCS
North Sea interests in July 1998. The average realised oil price for the
period was £8.36 ($13.54) per boe compared with £8.15 ($13.42) for the same
period last year. Adjusted to exclude the contribution from assets disposed of
in the first half of 1998 turnover and the average oil price for the first
half of 1998 would have been £287.7 million and £8.26 ($13.60) respectively.

Production fell by 7 per cent (or 15,697 boepd). However, adjusted to exclude
the contribution from assets disposed of in the first half of 1998 (which
contributed 22,160 boepd to production in the first half 1998), production for
the first six months of 1999 was 3 per cent higher than the first half 1998.

Operating profit

Cost of sales fell 21 per cent from £230.8 million last year to £181.5 million
in the first half 1999. Cost of sales per boe fell from £5.80 in the first
half 1998, adjusted to exclude the contribution from assets disposed of in the
first half of 1998, to £5.08 in 1999. This reflects a reduction in operating
costs, a small write back of past ceiling test provisions and a one off charge
in the first half of 1998 in respect of the modification of a transportation
agreement. 

Cost of sales per boe in the second half 1999 are expected to increase from
the first half reflecting maintenance projects and other costs deferred from
the first half of the year. Nevertheless, the figure for the full year is
still expected to be below the target rate of £5.50 per boe.

Exploration costs written off as a percentage of expenditure were 51 per cent
in the first half 1999, compared with 73 per cent in the first half 1998. The
spend for the period was £52.7 million compared with £81.0 million in the
first half 1998. This reflects reduced spend and a change in emphasis to the
appraisal of recent discoveries such as Llano in the US Gulf of Mexico, Corrib
in Ireland and Skarv in Norway.

Administrative and selling expenses totalled £15.1 million, a reduction of 4
per cent over the same period in 1998. The cost savings expected to arise out
of the recent restructuring programme will start to be reflected in the second
half. Following last year's reorganisation programme, savings of approximately
£20 million per annum in total business running costs are anticipated in 2000
and beyond.

The operating profit for the first half 1999 was £69.8 million compared to
£14.8 million in the first half 1998. Adjusted to exclude the contribution
from assets disposed of in the first half of 1998, first half operating profit
in 1998 would have been £13.1 million.

Profit before tax 

The net interest charge for the period, after capitalisation, was £13.0
million, an increase of £6.5 million over the same period in 1998. Interest
capitalised increased from £22.5 million in the first half 1998 to £30.0
million as a number of development projects neared completion. 

Taxation

The tax charge for the period was £22.6 million (1998 first half : £2.8
million). The UK petroleum revenue tax charge was £12.3 million compared with
£12.0 million in the first half 1998. UK corporation tax increased from a
credit of £15.2 million in the first half 1998 to a charge of £2.3 million in
1999, reflecting higher UK profits and adjustments in 1998 to prior year
estimated liabilities. Overseas taxes increased by £2.0 million to £8.0
million in 1999 as a result of higher Norwegian profits.

The resulting profit after tax was £35.6 million, compared with a loss of £1.5
million on an equivalent basis for the first half of 1998.  This equates to a
return on fixed assets of 3 per cent for the first half.  This measure of
returns on capital employed has the merit of being linked directly with the
level of cash returns and cash invested. It is defined as operating cash flow,
gains or losses on fixed assets, less taxes paid, exploration expense and
depreciation divided by the average capital invested in oil and gas fixed
assets. Both depreciation and fixed assets are adjusted to exclude the effects
of interest capitalised. 

Capital expenditure

Capital expenditure, including capitalised interest, for the six months to 30
June 1999 totalled £256.6 million against £334.7 million for the same period
last year. Development expenditure decreased from £250.2 million in the first
half 1998 to £202.6 million in 1999 as a number of development projects,
including Siri in Denmark and Pierce in the UK North Sea, were completed. Full
year 1999 capital expenditure is forecast at approximately £450.0 million
before capitalised interest, including approximately £95.0 million for
exploration and appraisal.

Cash flow and financing

Operating cash flow after tax and finance costs was £94.3 million compared to
£177.7 million in the first half of 1998. This reflects higher interest and
taxation payments together with an increase in working capital balances. Net
cash payments on capital items decreased by 16 per cent as the investment
programme neared completion.

The first six months of 1999 saw the group draw close to completing its
current major investment programme in new fields. Consequently net debt rose
to £935.1 million compared with £770.2 million at the end of 1998. The
increase in production resulting from this investment programme will help the
group maintain strong cashflows providing considerable flexibility over debt
reduction and future capital expenditure commitments. The recent firming of
the oil price will accelerate the achievement of the target of reducing net
debt to no more than 80 per cent of capital and reserves. 

In July 1999 the group issued £125 million of ten year sterling bonds to fund
capital expenditure.  


Review of First Half Operations

Exploration and Appraisal

The group invested £52.7 million in exploration and appraisal activity in the
first half of 1999. Of the nine wells completed, four were successful. In
addition a further four wells have been completed since 30 June, of which two
were successful. Highlights include:  

Corrib:

The second appraisal well on the Corrib gas field 70 kilometres offshore the
west coast of Ireland was successfully tested in August, with flow rates of up
to 64 million standard cubic feet of gas per day. 

The well, drilled in 350 metres of water, 2 kilometres from the first
appraisal well, successfully delineated the southern end of the reservoir. The
results, though requiring further evaluation, have already demonstrated enough
reserves to justify beginning development feasibility studies for the field.

Further evaluation of the hydrocarbon potential of the region is underway with
the drilling of the Shannon exploration well, on a prospect 8 kilometres to
the south of Corrib. The well spudded in mid August, and is likely to conclude
operations in October.

Idun:

The Idun discovery (previously known as Sara) in Norway in May confirmed the
hydrocarbon potential of the licence, in which Enterprise first acquired an
interest in 1997.

The well on licence PL159 was drilled on the Idun prospect approximately 170
kilometres off the coast of Helgeland in a water depth of 392 metres and
encountered gas. Idun is located just north of the 1998 Skarv discovery in
block 6507/5, which is currently being appraised.

The drilling of the Skarv appraisal well which spudded in August will give
additional indications of the full extent of the region's hydrocarbon
potential.

Cerro Falcone:

January saw the conclusion of the successful testing of the side-track drilled
from the Cerro Falcone-1 well in the Volturino concession in Southern Italy.
The well tested at a maximum rate of 5,435 barrels per day, and became the
most productive drilled to date in the Cerro Falcone field. It is expected to
have the capacity to produce at a rate in excess of 8,000 barrels per day when
put on permanent production.

The test was conducted on a 1,367 metre horizontal section drilled from the
1992 discovery well. The horizontal side-track established the operator's
ability to access and establish high productivity in comparison to the low
flow rates from the original vertical well.

Later this year, a long-term test on Cerro Falcone-2 will commence and an
appraisal well will be spudded. Further production testing is also planned on
Cerro Falcone-1 around year end.

Llano:

The appraisal of 1998's Llano discovery in Garden Banks Block 386 in the US
Gulf of Mexico confirmed the presence of hydrocarbons, though the well was
suspended after reaching a depth of more than 22,000 feet. While the well did
not test all the objectives, it successfully delineated the eastern side of
the field. A second appraisal well is due to be spudded shortly, with results
expected in early 2000.

Portfolio Development

Enterprise has continued to strengthen and broaden its portfolio during 1999. 

In August, the company announced its entry into Brazil with the signing of an
agreement for an offshore exploration block. The licence, BC2 in the Campos
Basin (Enterprise 15 per cent) covers approximately 2,600 square kilometres,
and marks the group's first move into the country. The Campos Basin has proven
and probable reserves of approximately 12 billion barrels of oil, qualifying
it as a world class petroleum province.

In Norway there was success for the group with three licence awards in the
recent North Sea Licensing Round.

The company received a 35 per cent interest in Block 3/6 adjacent to the
Norway/Denmark border, where Enterprise has a significant presence including
its interest in the Siri field. It also received 50 per cent in Block 16/1,
immediately west of licence PL001 where Enterprise already has an interest. In
addition, the company was awarded 50 per cent in an area comprising a small
section of Block 25/4 and all of the unlicensed parts of Blocks 25/2 and 25/5
in the South Viking Graben, to the north of the Jotun field.

Production and Developments

Oil and gas production in the first half of 1999 averaged 197,235 barrels of
oil equivalent per day as against 212,932 boepd in the corresponding period
last year. 79 per cent of this total was crude oil production, as against 78
per cent in the first half of 1998. This lower output reflects the sale of a
package of UKCS North Sea assets last year. Adjusted to exclude the
contribution from these assets, production increased by 3 per cent compared
with the first half of 1998.

Production on the UKCS accounted for 73 per cent of first half production (76
per cent in 1998), with 25 per cent (23 per cent) coming from Norwegian and
Danish fields and 2 per cent (1 per cent) from Italy.

New fields on stream in 1999 include:

Pierce:

The Pierce field (Enterprise operator, 74 per cent), located in UKCS blocks
23/22a and 23/27 approximately 280 kilometres east of Aberdeen, came on stream
in February. The oil is produced using a Floating Production Storage and
Offloading vessel (FPSO), the Berge Hugin, with oil export being via shuttle
tanker. Initial production rates were 20,000 barrels of oil per day, and peak
rates in the region of 53,000 barrels per day have now been achieved, although
this build up has taken longer than expected.

At development sanction in 1997 the field had estimated recoverable reserves
of 84 million barrels of oil and 202 billion standard cubic feet of gas.
Subsequent development drilling added approximately 20 million barrels of oil
to the field's reserves, and the eight well drilling programme is now
complete.

Banff:

January saw first oil from the Banff field (Enterprise, 27.9 per cent) in
blocks 22/27a and 29/2a in the UKCS. The FPSO vessel came on stream in
January. Initial output of about 30,000 barrels of oil per day will rise to
plateau rates of 60,000 barrels and 40 million standard cubic feet of gas per
day once commissioning is complete. Daily rates of more than 65,000 barrels of
oil and 32 million standard cubic feet of gas per day have been achieved,
though again, this build up has taken longer than anticipated.

Buckland:

This sub-sea development (Enterprise, 14.43 per cent) tied back across the
Beryl facilities came on stream in August six weeks ahead of schedule, with
initial rates of 15,000 barrels of oil per day expected to rise to 30,000
barrels per day in early September as the third production well is brought on
stream.

Siri:

The Siri field offshore Denmark (Enterprise, 20 per cent) came on stream in
March, with initial production rates of approximately 5,000 barrels of oil per
day. Current rates are over 50,000 bopd.

The group currently has interests in 11 developments. These include:

UKCS

Bittern - (Enterprise, 15.07 per cent). This field is being developed jointly
with the Guillemot West and Guillemot North West fields using an FPSO in a
composite development know as Triton. Development drilling has been completed
and production start-up is anticipated in the first quarter of 2000.

Bell - (Enterprise, equity interest to be determined - anticipated to be
approximately 12 per cent). After successful appraisal last year, a
development plan comprising two production wells with a dual off-take route
through the Indefatigable and Callisto infrastructure was agreed for this
field. First gas through Indefatigable is scheduled for September this year
with initial rates of 70 million standard cubic feet of gas expected.

Cook - (Enterprise operator, 25.77 per cent). The company's third operated
field received government sanction for its development proposal in May 1999.
The field, 180 kilometres east of Aberdeen in Block 21/20a, has recoverable
reserves initially estimated at 20 million barrels of oil and 15 billion cubic
feet of gas. Production rates will plateau at 20,000 bopd in 2001. First oil
is planned for the second half of 2000.

Norway

Jotun - (Enterprise, 45 per cent). The project, employing a wellhead platform
and floating production system, is currently anticipated to achieve first
production in the fourth quarter of 1999. The wellhead jacket was installed in
November 1998 and development drilling is ongoing. The vessel sailed away from
Stavanger in August, and work on the final stages of commissioning continues.
The field in Block 25/8A is expected to produce at a plateau rate of
approximately 90,000 barrels per day by early 2000.

Italy

Val d'Agri - (Enterprise, estimated interest 38 per cent subject to
unitisation). The signing of a set of agreements between the operator ENI and
the Basilicata Region in June formalised the consents for construction of the
Val d'Agri oil centre, which was already under way. First oil is planned for
early 2001. Enterprise will contribute 38 per cent of ENI's costs under the
agreements. The recent conclusion by Enterprise of a pre unit agreement with
ENI for the Monte Alpi and Monte Enoc fields also marks significant further
progress for the development. This agreement establishes a current working
interest of 29 per cent in the Monte Alpi/Monte Enoc concessions. The
additional production planned from the Cerro Falcone concession in which
Enterprise holds 55 per cent results in a production share at plateau
predicted to be 38 per cent overall. Current production from Monte Alpi stands
at around 9,800 boepd. Production is set to rise to 45,000 bopd (excluding
associated gas) from early 2001 and thereafter to over 100,000 bopd.

US

Garden Banks 161 - (Enterprise, 65 per cent). First oil from this field,
expected in the fourth quarter of this year, will mark the group's first
production in the US Gulf of Mexico since its entry to the region in 1996. The
field employs a phased sub-sea development tied back to the nearby Garden
Banks 72 platform. With recoverable reserves estimated at 20 million barrels
of oil equivalent, initial production rates of 13,500 bopd are expected.


Year 2000

The group is fully aware of the potential threat posed to the continuity of
its business operations by the year 2000. Good progress has been made by the
group's Year 2000 Project, initiated in March 1997, in safeguarding its
computer applications and chip-based control systems, and the key milestone of
readiness by mid 1999 has largely been achieved. 

Work has continued on the four strands of operational issues, information
technology, and business and office integrity across the group, including
local projects at overseas offices to ensure Year 2000 readiness. Activity
across the group has been conducted in tandem with an internal communications
programme to explain the issues to staff and raise awareness.

In the key area of operations, the group is confident that both its operated
North Sea facilities, Nelson and Pierce, are Year 2000 ready. This was
underlined by UKOOA/Government sponsored peer reviews in February. Operated
drilling over the New Year period will be limited to work on the Cook field,
and arrangements have been made to audit the rig's Year 2000 readiness.

Current work is focused on the completion of necessary remedial action,
contingency planning and programme records. Activity in the final quarter of
this year will concentrate on finalising preparations for the operating period
and associated contingency action over the New Year. The first quarter of 2000
will see the emphasis on monitoring and managing the response to any problems
that arise, together with handling the Leap Year rollover using the experience
gained.

Enterprise's participation in the IMPACT Year 2000 Development Group (a
cross-industry body) has given the group access to a wide range of
organisations' preparations, including those of government bodies, utility
companies, manufacturers, and those in the retail and service sectors. Our
membership of the UKOOA Year 2000 Task Force has enabled the group to share
and compare work with others in our sector, and provided a forum for
addressing issues of mutual dependence.

Expenditure to date has totalled less than £3 million, with ultimate costs
expected to be within the budgeted £4 million.

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