Elf Exploration Inc., the US oil and gas subsidiary of Elf Aquitaine (NYSE:ELF) announces that it has confirmed and tested a second deep water discovery, the Matterhorn well (Mississippi Canyon 243 #2) in 2,835 feet of water in the Gulf of Mexico. In March of this year, Elf announced the Aconcagua discovery (Mississippi Canyon Block 305).

The Matterhorn appraisal well was drilled by the Global Marine Celtic Sea semi-sub to a total depth of 8,165 feet and encountered 370 gross feet (112 meters) of oil bearing (36° API gravity) reservoirs in two zones. Production tests showed a daily flow rate of 6,640 barrels of good quality oil as well as associated gas.

Elf Exploration, Inc. is the 100% working interest owner of Mississippi Canyon Block 243, which was purchased in the March 18, 1998 Offshore Louisiana Sale (OCS Sales 169). This discovery is another significant step in the Elf Exploration Inc.’s aggressive deep water program in the Gulf of Mexico. It anticipates drilling appraisal wells on both the Matterhorn and Aconcagua fields before the end of the year.

Elf Exploration Inc. currently holds 139 blocks in the Gulf of Mexico; 83 are in deep water.

Elf Exploration, Inc. is currently producing a total of 18,000 barrels of oil equivalent per day offshore in the Gulf of Mexico and is in the process of setting a platform to develop its Virgo discovery at Viosca Knoll 823 in 1,130 feet of water. Elf is the operator on this block with a 64% working interest, in association with Coastal Oil and Gas Corporation, Pogo Producing Company and Nippon Oil Exploration U.S.A. Limited. First oil from Virgo is anticipated before the end of 1999. The production start-up of this field will participate in doubling Elf’s production in the US in the next two years, before the increase in production resulting from the expected development of Matterhorn and Aconcagua now under study.

Quality basins located in deep or very deep water, where Elf is continually reinforcing its presence, are targets for strong potential. Since 1996, the Group has made important deep offshore discoveries in different parts of the world and has decided to consecrate a significant part of its exploration budget to exploring these basins over the next five years.