GeoPetro Resources Company Provides Update on the Cook Inlet LEA #1 Well
SAN FRANCISCO, Feb. 10, 2011/PRNewswire/ -- GeoPetro Resources Company (NYSE Amex: GPR) ("GeoPetro", "we", "our" or the "Company") is pleased to announce that Linc Energy Ltd. ("Linc"), the Operator of the Alaska Leases in the Cook Inlet region, reported today that their analysis has confirmed that the LEA #1 well penetrated three significant sand formation intervals that appear to be gas charged and that LEA #1 gas samples have confirmed 99% to 100% purity of dry natural gas. As previously announced late last year, the LEA #1 well, located in the Point Mackenzie Block of the Cook Inlet Basin, Alaska encountered a number of gas bearing horizons and was completed in November 2010. External contractors were engaged to conduct advanced petrophysical log analysis. Planning was also initiated for a gas flow testing program to define the commercial outcome.
The advanced petrophysical well log analysis (ELAN analysis by Schlumberger) was performed on the electrical logs run in the hole. The results of the analysis have confirmed three significant sand formation intervals that appear to be gas charged and which possess apparent permeability values indicating they are good candidates for a flow test.
This data supports the strong gas shows that were observed throughout the initial drilling of the LEA #1 exploration well. Linc Energy reported that the gas shows were first encountered soon after drilling penetrated the top of the target Tyonek Formation. Down hole gas pressures increased as the LEA #1 well was drilled deeper, which meant that the drilling team had to increase the density of the drilling fluids to maintain safe conditions and constrain the free flow of gas to the surface. The well site team collected physical gas samples for lab analysis.
Linc reported that gas from LEA #1 was sampled from 31 intervals from depths of 1,500 feet to the total depth of 6,323 feet. The completed analysis of that gas confirmed that all 31 samples contain pure, dry natural gas (methane: CH4) in the range of 99% to 100%. Natural gas of this purity does not require treatment or conditioning before delivering it to market. The well is located approximately 1.5 miles from a major pipeline capable of carrying the gas to market.
The adverse weather and freezing conditions in Anchorage prevented Linc from completing the planned flow tests over the Christmas period. These severe weather conditions can alter the results of the flow test and significantly increase testing costs. The Operator is planning to carry out these tests as soon as the severe cold temperatures of the Alaskan winter have passed. The Operator has reported that they are aiming to have a Flow Test Rig on site in late March 2011.
Stuart J. Doshi, President and CEO of GeoPetro Resources Company, said, "The recent announcement by Linc on the LEA #1 is promising. We are excited about the potential of a commercial gas discovery in Alaska. This could be the beginning of an aggressive drilling program on the Alaska Leases."
In addition to testing LEA #1 and continuing to develop the Point Mackenzie Block, Linc Energy has confirmed that it will push ahead with the start up of phase two of the Alaskan natural gas drilling program by the middle of this year in the Trading Bay Block leases which are located on the northwest side of the Cook Inlet approximately 70 miles from the site of LEA #1. These leases hold a number of promising prospects that Linc plans to aggressively pursue.
Under the terms of the Purchase and Sale Agreement with Linc, GeoPetro will receive US$4.0 million from the proceeds of the first seventy-five percent (75%) of 8/8ths of the oil and gas production produced from or attributable to the Alaska Leases. After GeoPetro has received the US$4.0 million payment, GeoPetro will thereafter receive an overriding royalty interest of ten percent (10%) of 8/8ths of the proceeds of oil and gas production produced from or attributable to the Alaska Leases.
GeoPetro will provide additional updates as it gains further information on LEA #1 well.
GeoPetro is an independent oil and natural gas company headquartered in San Francisco, California. GeoPetro currently has projects in the United States, Canada and Indonesia. GeoPetro has developed a producing oil and gas property in its Madisonville Field Project in Texas. Elsewhere, GeoPetro has assembled a geographically-diversified portfolio of exploratory and appraisal prospects.
This news release contains forward-looking information. Statements contained in this news release relating to future results, events and expectations are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements may involve known and unknown risks involving market prices for natural gas and oil, economic and competitive conditions, regulatory changes, resource estimates, estimates of proved and probable reserves, production forecasts, geological and engineering uncertainties, potential failure to achieve production from development drilling projects, capital expenditures and other risks and uncertainties, which may cause the actual results to be materially different from those expressed or implied by such statements. Additional risk factors include, among others, those described in the Company's Annual Report on Form 10-K on file with the U.S. Securities and Exchange Commission. We do not have any intention or obligation to update forward-looking statements included in this press release after the date of this press release, except as required by law. No stock exchange or regulatory authority has approved or disapproved of the information contained herein.
SOURCE GeoPetro Resources Company