press release

Texaco Press Release - Texaco and Partners Discover Oil in Santos Basin, Offshore Brazil


Houston, Aug. 20 - Texaco today announced that oil has been discovered by joint venture partners Texaco Brasil S.A., Shell Brasil S.A., and Petrobras in the BS-4 offshore exploration block, located 125 miles southeast of Rio de Janeiro, in Brazil's Santos Basin.

The discovery well, 1-SHEL-4-RJS, is in 5,099 feet of water and was drilled to a total depth of 13,485 feet. The well encountered 223 feet of net oil pay in Tertiary deepwater sands. Initial results indicate the oil is low API gravity crude.

Commenting on the announcement, Gregory T. Himes, Upstream Director - Brazil said, "This well was the first of five wells Texaco and its partners are drilling in the Santos and Campos Basins, offshore Brazil this year. Texaco is pleased that this first well resulted in a discovery, although considerable work remains before a heavy oil discovery in these water depths can be declared commercial. Texaco identified offshore Brazil as a promising exploration play several years ago and aggressively pursued a investment strategy that is now beginning to yield positive results."

Although significant quantities of oil are present in the reservoir, determination of recoverable reserves will depend on the results of further drilling and production testing. A follow up well and test is planned for August of this year. Well 1-SHEL-4-RJS is 12 miles northeast of well BSS-69, a smaller non-commercial discovery drilled by Petrobras in 1993.

The Shell Brasil S.A. operated 1-SHEL-4-RJS well was drilled with the Stena Tay semi-submersible rig and spudded on February 25, 2001. The Agncia Nacional do Petrleo (ANP) has been notified that indications of oil have been encountered in well 1-SHEL-4-RJS. This is in line with the obligations of the Concession Contract for block BS-4, which lies in the northern part of the Santos Basin. This was the first of two obligatory wells drilled in Block BS-4.

Texaco Brasil S.A. has a 20 percent interest in Block BS-4 with partner/operator, Shell Brasil S.A. and Petrobras each holding a 40 percent interest. The work program for BS-4 included acquisition and interpretation of 2D and 3D seismic surveys, a detailed study of BSS-69 and 2 exploratory wells.

Note: This press release contains a number of forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. In particular, statements made concerning Texaco's expected reserves, performance and financial results in future periods are based upon Texaco's current expectations and beliefs and are subject to a number of known and unknown risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements.

The following factors known to Texaco, among others, could cause Texaco's actual results to differ materially from those described in the forward-looking statements: incorrect estimation of reserves and related assets; inaccurate scientific data; mechanical, chemical and technological failures; decreased demand for alternative fuels and other products; above or below-average product and technology demands; worldwide and industry economic conditions; higher costs, expenses and interest rates; the outcome of pending and future litigation and governmental proceedings; continued availability of financing; and strikes and other industrial disputes. In addition, you are encouraged to review Texaco's latest reports filed with the SEC, including, but not limited to, Texaco's Annual Report on Form 10-K filed with the SEC on March 26, 2001, which describes a number of additional risks and uncertainties that could cause actual results to vary materially from those listed in the forward-looking statements made in this press release.

The SEC permits oil and gas companies, in their filings with the SEC, to disclose only proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. Texaco may use certain terms in this press release, such as estimated barrels and recoverable barrels of oil, that the SEC's guidelines strictly prohibit us from including in filings with the SEC. U.S. Investors are urged to consider closely the Supplemental Oil and Gas Information disclosure in our 2000 Annual Report on Form 10-K filed with the SEC on March 26, 2001, File No. 1-27, available from us at:

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You may also obtain this form from the SEC by calling 1-800-SEC-0330.

Updated: August 2001