In December 1996, we acquired Crestone Energy Corporation. Subsequently renamed Benton Offshore China Company, its principal asset is a petroleum contract with China National Oil Corporation (CNOOC) for the WAB-21 area. The WAB-21 petroleum contract covers 6.2 million acres in the South China Sea, with an option for an additional 1.25 million acres under certain circumstances, and lies within an area which is the subject of a border dispute between the People's Republic of China and Vietnam. Vietnam has executed an agreement on a portion of the same offshore acreage with another company. The border dispute has lasted for many years, and there has been limited exploration and no development activity in the WAB-21 area due to the dispute.
The WAB-21 contract area is located in the West Wan’an Basin (Nam Con Son) on the South China Sea. Its western edge lies approximately 50 miles southeast of the Dai Hung (Big Bear) Oil Field. The block is 15 miles to the east of the significant Lan Tay and Lan Do production gas fields, which are reported to contain two trillion cubic feet of natural gas. WAB-21 is also adjacent to BP's reported $2 billion development of the Hai Thach and Moc Tinh Gas Fields. In 2006, nearby activity saw the Rong Doi and Rong Doi Tay Gas Condensate Fields come on stream and the Dua and Blackbird exploration discoveries successfully test oil and gas.
The WAB-21 contract area covers a large unexplored area of the Wan’an Bei Basin where the same Lower Miocene through to Upper Miocene plays, successful to the west, are present. Exploration success in the basin to date has resulted in discoveries with in excess of 500 million barrels of oil and 7.5 trillion cubic feet of natural gas. Several similar structural trends and geological formations, each with significant potential for hydrocarbon reserves in traps with multiple pay zones similar to the known fields and discoveries to the west are present within WAB-21.
We operate WAB-21 and have a 100 percent interest. Due to the border dispute between China and Vietnam, we have been unable to pursue an exploration program during phase one of the contract. As a result, we have obtained license extensions, with the current extension in effect until 2011.