Scotia Waterous (USA) Inc. (“Scotia Waterous”) has been retained as exclusive financial and technical advisor by TOTAL E&P USA, INC. (“TOTAL” or the “Company”) to advise and assist in the sale of its interest in Virgo Field located in federal waters of the Offshore Continental Shelf Gulf of Mexico (the “Transaction”).

BACKGROUND

TOTAL discovered the Virgo field in 1997 after which it was appraised, developed, and brought on to production in 1999. The field has produced over 100 Bcfe to date and TOTAL is the current operator. Virgo Field has been and remains a high quality asset in the Company’s portfolio but is outside their current E&P exploration strategy and focus. As a result, TOTAL is exploring alternatives with regard to asset monetization of Virgo with a preference for cash offers.

ASSET OVERVIEW

The Company is offering its operated 64% working interest in the Viosca Knoll 823 Unit which encompasses two leases, Viosca Knoll Blocks 822 and 823. The field produces from a water depth of 1130 ft from turbidite channel levee deposits of lower Pliocene to middle Miocene age. Five wells currently produce from a fixed platform. Significant upside potential remains including new well locations, sidetracking to proven potential, returning shut-in wells to production, behind pipe recompletions, operational improvements to reduce costs and increase production, and deep exploration potential. July 2008 net production averaged 7.6 MMscfe/day (84% gas weighted).

KEY INVESTMENT HIGHLIGHTS  

• TOTAL is offering a controlling, operated, majority working interest in the VK 822 /823 leases
• Partners do not have preferential rights to purchase TOTAL’s interest
• July 2008 production of 12.4 gross (7.6 net) MMcfe/day from 5 wells
• Production from multiple reservoirs (nine sands) of lower Pliocene to middle Miocene age at a depth of 7,000 to 13,000 feet TVDSS
• Current annualized cash flow based on average from first four months of 2008 is $24.1MM
• Numerous upside opportunities included in the offering
• Multiple PUD and additional upside drilling/sidetrack locations
• Multiple behind pipe recompletion opportunities
• Deep Norphlet exploration potential
• Operational upside with returning SI wells to production, removing near wellbore skin, compression and gas lift optimization, unloading wells, and returning to previously produced zones
• Operational cost synergies for operators in the area
• No abandonment liabilities for platform, facilities, or pipeline as the Virgo’s owners will receive a $3MM payment with transfer of platform to third party at end of field life
• Third party processing revenue potential with unused platform capacity

 

TRANSACTION PROCESS

The expected timetable for the Transaction is as follows:

Milestone	Date
Confidential Information Memorandum/online VDR	Week of Sept 8th, 2008
Data Room opens in Scotia Waterous' Houston Office	Sept 15th, 2008
Bids Due	October 30, 2008
Closing Date	Late November, 2008

Upon signing the attached TOTAL Confidentiality Agreement, Scotia Waterous will distribute to interested parties a copy of the Confidential Information Memorandum. The completed Confidentiality Agreement can be faxed to the attention of Ignacio Scuseria at Scotia Waterous at 713-437-5040 or by email to Ignacio Scuseria at Ignacio_Scuseria@scotiawaterous.com. After executing the Confidentiality Agreement and providing sufficient evidence of financing capability, interested parties may then be provided access to the on-line Virtual Data Room, and the physical Data Room. The physical Data Room will be located in Scotia Waterous’ office in Houston, Texas.

CONTACTS

At no time should you contact anyone at TOTAL regarding the Transaction, unless otherwise directed by Scotia Waterous. Should you have any questions regarding the Transaction, please feel free to contact a Scotia Waterous representative listed below:

Scotia Waterous
Adrian Goodisman Managing Director (713) 437-5050 adrian_goodisman@scotiawaterous.com	Ron Gajkica Managing Director (832) 476-6401 ron_gajdica@scotiawaterous.com
Raymond Wong Associate Director (832) 476-6404 raymond_wong@scotiawaterous.com	Jonathan Chung Associate (832) 426-6029 jonathan_chung@scotiawaterous.com
Rebekah Killian Geologist (832) 426-6016 rebekah_killian@scotiawaterous.com	Ignacio Scuseria Analyst (713) 437-5049 ignacio_scuseria@scotiawaterous.com

Neither this letter nor any additional information delivered to you by TOTAL or Scotia Waterous with respect to the Transaction, including the Confidential Information Memorandum, shall constitute an offer to sell any securities to any person.

Scotia Waterous ( USA) Inc.
Pennzoil Place - South Tower
711 Louisiana, Suite 1400
Houston, Texas
USA 77002-2716
Tel: (713) 222-0546 Fax: (713) 222-0572
Email: houston@scotiawaterous.com