GeoPetro Resources Company Provides Update on the Cook Inlet Project in Alaska
SAN FRANCISCO, July 13 /PRNewswire-FirstCall/ -- GeoPetro Resources Company (NYSE Amex: GPR) is pleased to provide the following update on the status of the Alaska Cook Inlet Project owned by its wholly-owned subsidiary, GeoPetro Alaska LLC ("GeoPetro", "we", "our" or the "Company").
Pursuant to the terms of the Lease Purchase and Sale Agreement with Linc Energy (Alaska) Inc. ("Linc"), GeoPetro has conveyed to Linc its 100% working interest in certain leases comprising approximately 122,000 acres in its Cook Inlet Project, Alaska (the "Alaska Leases"). GeoPetro has received the previously escrowed amount of US$1.0 million which was released to GeoPetro upon approval of the assignments of the Alaska Leases to Linc. The Company will receive an additional 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.
The transfer of GeoPetro's State of Alaska and Alaska Mental Health Trust oil and gas leases was approved by the Commissioner of Alaska Department of Natural Resources and the Trust Land Office in June, 2010. With this pivotal approval, GeoPetro has successfully transferred nearly 122,000 acres of the Alaska Leases to Linc.
Linc intends to drill the first well on a conventional natural gas play originally developed by GeoPetro. Linc plans to spud the first well, the LEA #1, in September, 2010. Project permitting is underway.
The LEA #1 will be a vertical well drilled to a depth sufficient to test for dry gas in the sands of the Middle and Lower Tyonek Formations, as well as depths at the stratigraphic equivalent of the Hemlock Formation in the area. The location of the LEA #1 is close to one of the lines of seismic data which were purchased and reprocessed by GeoPetro during the development of the prospect. During the reprocessing of this seismic data, a potential direct hydrocarbon indicator ("DHI") was identified on the line nearest to the LEA #1 location.
Initial Exploration Well
The initial target in the Cook Inlet Project was identified by GeoPetro after the Company reprocessed certain 2-D seismic data which it acquired from AMOCO on the Point MacKenzie Block. GeoPetro has identified a sizeable initial target with an estimated resource potential of up to one trillion cubic feet of natural gas. The prospect covers approximately eighteen (18) sections (11,500 acres) under structural closure, and the LEA #1 well will target conventional gas in the Middle and Lower Tyonek Formations as well as the Hemlock Formation. A striking feature of this prospect is the presence of a DHI overlying the target formations that is visible on the seismic data. A DHI is a seismic anomaly that is indicative of a natural gas accumulation. The North Cook Inlet and Beluga River Gas Fields, both located approximately forty (40) miles southwest of the Point MacKenzie Block, are estimated to have had original ultimate recoverable reserves of 2.3 and 1.2 trillion cubic feet of gas, respectively, before substantial production commenced in the 1970s.
The well will be located less than two miles from the Enstar 20" natural gas pipeline which has abundant spare capacity. This proximity to a major pipeline provides rapid and relatively inexpensive access to the lucrative Anchorage gas market where the 2010 natural gas price approximates $7.00 per thousand cubic feet (Mcf), significantly higher than the current gas prices in the lower forty eight states of the United States.
Additional Prospects Targeted in the Cook Inlet Project
Preliminary log analysis and seismic data indicate the Point MacKenzie and Trading Bay Blocks may contain conventional accumulations of natural gas reserves in Tertiary sandstones in addition to the prospect identified at the LEA #1 location. Structural anticlines and/or domes within the Alaska Leases may contain large undrilled gas reservoirs. Sandstone units also pinch-out toward the margins of the basin and may have formed stratigraphic traps within the Alaska Leases. In the past, oil and gas exploration has focused on oil production and anticlinal gas traps, but stratigraphic accumulations have been largely unexplored in the Cook Inlet.
One of the prospects identified as a high priority target on the Trading Bay Block is the Cottonwood Creek Prospect. This prospect is based on a well which was drilled by Shell in 1967 looking for Hemlock Formation oil. The well encountered significant gas shows in the shallower Tyonek sandstone formation at approximately 3,000 feet which were corroborated by an apparent gas column on the well logs. The well was drilled on a closed structure identified from Shell's 2-D seismic data (GeoPetro has acquired and reprocessed certain Shell seismic data). A gathering line of approximately five (5) miles would be required to tie in the Cottonwood Creek Prospect location into the Chevron-Marathon 16" regional pipeline which runs through the Trading Bay Block.
GeoPetro Management Comments
Commenting on the successful Cook Inlet Project transaction and the imminent commencement of drilling operations, GeoPetro's Chairman, President and CEO Stuart J. Doshi said:
"GeoPetro has spent five years acquiring and evaluating the Alaska Cook Inlet acreage and the seismic data. During that time, we have developed attractive drilling prospects with sizeable potential reserves on this acreage. The spudding of the first well in the Cook Inlet Region is a significant milestone for the Company. Given the potential for approximately one trillion cubic feet of natural gas, this is an exciting time for us and may represent a transformational event for the Company".
GeoPetro is an Alaska limited liability company and a wholly-owned subsidiary of GeoPetro Resources Company. GeoPetro Resources Company is an independent oil and natural gas company headquartered in San Francisco, California. GeoPetro Resources Company currently has projects in the United States, Canada and Indonesia. Through another wholly-owned subsidiary, GeoPetro Resources Company has developed a producing oil and gas property in its Madisonville Field Project in Texas. Elsewhere, GeoPetro Resources Company 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 GeoPetro Resources 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
Web Site: http://www.geopetro.com/
Posted: July 13, 2010
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