VPI Vintage Pete

Vintage Petroleum, Inc. (NYSE:VPI) announced today the results and status of its second quarter operational activities and plans for the second half of 2005. In the three months ending June 30, 2005, the company made capital investments totaling $79.7 million, with $60.8 million going to a variety of lower-risk exploitation projects, $12.9 million spent on potentially higher-impact exploration programs in the United States and Yemen and $6.0 million on domestic acquisitions. This brings total capital expenditures for the first six months of 2005 to $144.0 million. The 2005 non-acquisition capital budget has been raised 14 percent to $285 million as a result of increased spending planned for exploitation in the United States and Yemen, as well as domestic unconventional resource exploration. United States - Exploitation Based on the company's success to date in domestic exploitation activities and the opportunity to expand the drilling program in several fields, Vintage has increased its 2005 domestic capital spending budget for exploitation by $30 million to a total of $70 million. Active drilling programs and workovers in the Luling, Darst Creek and West Ranch fields in South Central Texas continue, where nine wells were drilled and ten workovers were completed during the second quarter. Work is currently underway to drill an additional 18 wells and complete eight workovers. Another eight workover projects are also under evaluation. Activity in the second quarter of 2005 included the continuation of an infill drilling program at the South Gilmer field of East Texas, where two wells were successfully completed in the second quarter with another well in progress. The expanded budget includes two Gilmer wells for the second half, with another two under evaluation for possible drilling in the future. At the company's Main Pass 116 complex in the federal waters of the Gulf of Mexico, three workovers were completed in the second quarter, and the company is evaluating several additional drilling prospects in the field. At the end of the second quarter of 2005, the company had returned to production virtually all of the estimated 6,100 net BOE per day of production which had been temporarily shut-in due to the mudslides experienced in California during January. The company spent a total of approximately $5.7 million through June 30, 2005, to repair mudslide damage. Of this amount, approximately $2.2 million was incurred during the second quarter. The company estimates an additional $2.5 million will be needed in the third quarter to finalize repairs to equipment and roads providing permanent access to production facilities. United States - Exploration The focus of domestic exploration activity is split between onshore unconventional gas resource plays and conventional exploration targeting principally the Gulf Coast. The capital budget for U.S. exploration has been reduced somewhat overall to $60 million from $64 million with the allocation to unconventional resources raised to $31 million, up 19 percent from $26 million. The capital budget for U.S. conventional exploration has been reduced to $29 million from $38 million principally due to delays in planned drilling caused by the difficulty in obtaining drilling rigs on a timely basis. The budget allocated to the unconventional gas resource exploration program targets the drilling of 13 wells, pending rig availability, to test five separate play concepts during 2005, an increase over the prior allocation to drill ten wells to test four play concepts. In one of these unconventional plays, located in the Palo Duro Basin of Texas, the company has secured a substantial lease position of approximately 145,000 net acres. Two exploratory wells have been drilled and cored. The first well (Echols 2 #1) was fracture stimulated in early July. Analysis of the core samples from the second well drilled (Burleson 60 #1) is nearly complete and frac design work is underway. Currently, the company plans to fracture stimulate the Burleson well later in the third quarter. Results of long-term production tests from the Echols and Burleson wells will then be analyzed before additional drilling is undertaken in the Palo Duro Basin. Vintage owns working interests in this venture which range between 65 and 75 percent. To date, approximately 128,000 net acres have been acquired in four additional, separate unconventional play concepts located in other areas of the country with the intention of accumulating additional acreage and drilling wells later in the year to test each play concept. The company is currently securing a rig that will allow drilling operations to commence during September on the second play concept to be tested (shale play "A"). Twenty-nine million dollars has been allocated to conventional exploration activities primarily targeting natural gas that can be brought to production quickly. This reflects a $9 million reduction in planned conventional exploration as Vintage has adjusted or deferred participation in selected prospects for the remainder of 2005 principally due to the tight rig market. Vintage anticipates drilling four exploration wells to test prospects primarily located in the onshore and offshore Texas Gulf Coast. Two Miocene prospects were drilled at Matagorda Island 639 and 640 during the second half of 2004 with both encountering apparent pay sands. Vintage holds a 25 percent working interest in this offshore Texas gas prospect and expects these wells to be brought online with the completion of production facilities in August. Vintage recently acquired an additional lease covering 720 acres in the Nueces Bay on the Texas Gulf Coast, where the company holds a 53 percent working interest in a 1,000 acre prospect that is targeting gas in underdeveloped Frio and Vicksburg sands. The drilling of two wells on this prospect has been approved for the fourth quarter. Other wells planned or underway include a prospect in the Texas State waters of the Gulf of Mexico targeting gas in the deep Marg Tex sands, and an exploration well updip to existing productive sands near Lafayette, Louisiana. The company owns 20 percent and 25 percent interests, respectively, in these two prospects. The company also owns a 15 percent interest in a prospect in West Cameron 145, located in the federal waters of offshore Louisiana, that targets Miocene age formations at depths of approximately 12,000 to 15,000 feet. This well is targeted to spud in the fourth quarter of 2005 or early 2006. Argentina The company's forecasted production growth in 2005 is supported by an increase in Argentina capital spending of 23 percent over 2004 levels to $115 million, which targets the drilling of 110 wells. Second quarter activity included the drilling of 27 wells, with 15 in progress, and the completion of 21 workovers. Currently there are six drilling rigs and ten workover rigs active on the company's concessions in the San Jorge and Cuyo Basins. Further, a portion of 2005 capital spending is budgeted for the implementation of four waterflood projects which could enhance production in 2006. Procurement and installation work was initiated on three of these projects in the second quarter. Second quarter activity continued to build on the company's substantial existing inventory of more than 800 combined proved undeveloped and probable and possible locations which provide significant future production visibility. Based solely on drilling a majority of this inventory, Vintage's Argentina production is projected to rise at a compound annual rate of 10 percent over the next seven years, exclusive of acquisitions. Furthermore, given the company's production growth and high drilling success rate predicated upon its 3-D seismic surveys over the past nine years, additional production locations are likely to be generated as the existing inventory is drilled, existing 3-D seismic is further evaluated and new 3-D seismic surveys are conducted. Only about one-half of the company's more than one million acres in Argentina have been surveyed using 3-D seismic. With Argentina currently accounting for approximately one-half of company production, Argentina's projected growth provides strong support for total company volume growth. Yemen The 18 mile (28 km) permanent pipeline in Yemen was completed as planned at the end of the second quarter, and it is currently transporting approximately 8,800 gross barrels of oil per day (4,600 net). Completion of the central processing facility at An Nagyah is scheduled for the fourth quarter, however, key portions of the facility are expected to be fully operational by the end of the third quarter. Daily production is expected to increase to 10,000 gross barrels of oil (5,200 barrels net) by mid-third quarter. The company increased its 2005 exploitation budget by $7 million to accommodate additional development drilling in the field. The An Nagyah #16 horizontal well is currently drilling, and the company plans to drill the An Nagyah #17 to test and develop a potential northwest extension of the Lam reservoir immediately thereafter. The An Nagyah #18, another horizontal well targeting the Lam formation, is planned to follow in the fourth quarter. All of these wells, including the An Nagyah #15 drilled earlier this year, are horizontal wells located and designed to optimize recovery of oil from the An Nagyah field. International Exploration Approximately $8 million has been allocated to international exploration in 2005, with the majority dedicated to the exploration program in the company's Block S-1 in Yemen. An exploration well on the company's Wadi Markhah prospect was drilled and partially tested during the second quarter. The primary objective resulted in non-commercial shows, but a shallower prospective zone remains to be tested. The well is suspended until a workover rig can be secured for additional evaluation of this shallow zone. Also in Yemen, the company installed two pumping units and began a long-term test during the second quarter to assess the economic feasibility for further development of the shallow reservoirs at its Harmel discovery. Vintage to Webcast Second-Quarter 2005 Conference Call The company's teleconference call to review second quarter 2005 results will be broadcast live on a listen-only basis over the internet on Thursday, August 4, 2005, at 3 p.m. Central time. Interested parties may access the webcast by visiting the Vintage Petroleum, Inc. website at www.vintagepetroleum.com and selecting the microphone icon, or at www.fulldisclosure.com and typing VPI in the ticker search box and selecting "Go". The teleconference may be accessed by dialing 800-362-0574 and providing the call identifier "Vintage" to the operator. The webcast and the accompanying slide presentation will be available for replay at the company's website. An audio replay will be available until August 9, 2005, by dialing 402-530-9315. Forward-Looking Statements This release includes certain statements that may be deemed to be "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All statements in this release, other than statements of historical facts, that address future production, exploitation activities, exploration, operating costs, capital spending, planned drilling levels, proved undeveloped, probable and possible locations, and events or developments that the company expects or believes are forward-looking statements. Although Vintage believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in the forward-looking statements. Factors that could cause actual results to differ materially from those in forward-looking statements include oil and gas prices, company realizations, exploitation and exploration successes, actions taken and to be taken by foreign governments as a result of political and economic conditions or other factors, changes in foreign exchange rates and inflation rates, continued availability of capital and financing, and general economic, market or business conditions as well as other risk factors described from time to time in the company's filings with the SEC. The company assumes no obligation to update publicly such forward-looking statements, whether as a result of new information, future events or otherwise. Vintage Petroleum, Inc. is an independent energy company engaged in the acquisition, exploitation and exploration of oil and gas properties and the marketing of natural gas and crude oil. Company headquarters are in Tulsa, Oklahoma, and its common shares are traded on the New York Stock Exchange under the symbol VPI. For additional information, visit the company website at www.vintagepetroleum.com.