Between 1995 and 1998, Texaco completed a $40 million environmental remediation program reflective of Texaco's approximate 1/3 share of the oil-producing consortium with Petroecuador. In 1998, the Government of Ecuador declared and certified that the remediation met Ecuadorian and international standards and released Texaco from future obligations or liabilities.

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Texaco Petroleum Company (a subsidiary of Texaco) was a minority partner in a government-owned oil consortium in Ecuador from 1964 - 1992. Petroecuador, the state oil company of Ecuador, was the majority partner and has exclusively operated the oil fields since 1992. Texaco Petroleum's involvement in the project was governed by a concession agreement, where all activities were conducted with the oversight and approval of the government of Ecuador.

At the end of the concession agreement, two audits were conducted to address the impact of the consortium operations on the soil, water and air, and assess compliance with environmental laws, regulations and generally accepted operating practices. Such audits are part of our standard operating procedures. The two internationally recognized consulting firms that conducted the audits were AGRA Earth & Environmental Ltd. (formerly HBT AGRA Ltd.) and Fugro-McClelland (FM). Each independently concluded that Texaco Petroleum acted responsibly and that there is no lasting or significant environmental impact from the former consortium operations.

Additionally, Texaco Petroleum conducted a remediation program reflective of its 1/3 share of the oil-producing consortium with Petroecuador in which producing wells and pits formerly utilized by Texaco Petroleum were closed, produced water systems were modified, cleared lands were replanted, and contaminated soil remediated. All remediation activities were inspected and certified by the Ecuadorian government.

The $40 million remediation program began in 1995 and was completed in late summer 1998. During the process, all remediation activities were inspected and certified by the Ecuadorian government on a site by site basis. On September 30, 1998, Ecuador's Minister of Energy and Mines, The President of Petroecuador and the General Manager of Petroproduccion signed the "Final Release of Claims and Delivery of Equipment." This 1998 agreement finalized the Government of Ecuador's approval and certification of Texaco Petroleum's environmental remediation work and stated that Texaco Petroleum fully complied with all obligations established in the remediation agreement signed in 1995. In addition, the Municipalities in the area of the drilling operations signed a negotiated settlement with Texaco Petroleum that released the Company from any future claims and obligations.

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