Sheridan Energy Inc. intends to form a joint venture withAmerada Hess Corp. to explore, develop and produce from all ofHess’s Sacramento Basin, CA, gas properties. The joint venture willalso seek to explore, develop and produce oil and gas from otherHess U.S. onshore and offshore properties. Sheridan has agreed tocontribute $58 million and other considerations, and Hess willcontribute its California properties along with certain other U.S.properties. The agreement is subject to due diligence and customaryconditions. The parties intend to sign a definitive agreement, byDec. 15 and to close the transaction not later than Jan. 15.Sheridan anticipates financing its contribution through additionalbank borrowings, cash flow and third party debt or equityfinancing. Should a joint venture agreement not be reached,Sheridan will proceed to acquire the California properties for $58million, closing Jan. 15.

Current net production from the California properties is about20 MMcf/d. The agreement includes unitized and prospect acreagetotaling 37,000 net acres. A total of five fields – Lindsey Slough,Elkhorn Slough, Maine Prairie, Bunker and Rio Vista – are includedin the California properties with the largest, Rio Vista, havingbeen discovered in the 1930’s with cumulative production of 3.5Tcf. Bill Berilgen, Sheridan CEO, said, “This joint venture adds toour recent Peterson Ranch acquisition in the Sacramento Basin andthe 220 square miles of 3-D seismic we have over much of theCalifornia properties’ acreage. In addition to a large number of3-D based exploration prospects, we are excited about thesignificant exploitation potential of these properties.”

Sheridan Energy is a domestic oil and gas exploration andproduction company whose operations are conducted mainly inArkansas, Louisiana, Oklahoma and Texas.

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