Tesoro E&P Company L.P., a wholly-owned affiliate of TesoroPetroleum Corp., announced earlier this week it purchased a 50%working interest from Sheridan Energy in the Stiles Ranch Fieldnorth of Amarillo, TX.

Tesoro bought the interest for $8.3 million plus a 25% interestin a Tesoro prospect covering 5,300 acres in Zapata County, TX. Thecompany, which will serve as field operator, expects to produce 2.6MMcf/d of natural gas from the field’s Granite Wash formation.

There also is “good upside potential” for additional gasproduction in the field’s Morrow formations, said Susan Pirotina, aspokeswoman for Tesoro.

Overall, she said Tesoro E&P plans to drill 50 onshore wellsduring 1998 in the Wilcox Trend, the Frio Vicksburg Trend, the EastTexas Basin, and in the Val Verde Basin in West Texas. Pirotinanoted that 1998 has been one of the busiest years – drilling-wise -for the company. At the end of 1997, Tesoro E&P reporteddomestic reserves of about 150 Bcf, mostly natural gas.

The sale of the interest in the Stiles Ranch Field is “part ofan ongoing plan to sell non-strategic assets between now andyear-end to reduce the company’s indebtedness and re-deploy thecapital to opportunities that have a higher potential rate ofreturn,” said B.A. (Bill) Berilgen, president of Sheridan Energy,an independent oil and gas producer.

He estimated the sale of this property and others should resultin a gain of $1.2 million for the company in the third quarter of1998.

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