SAN FRANCISCO, May 2, 2011 /PRNewswire/ -- GeoPetro Resources Company (NYSE Amex: GPR) ("GeoPetro", "we", "our" or the "Company") announced that Linc Energy (Alaska) Inc. ("Linc"), the Operator of the Alaska Leases in the Cook Inlet region, reported today that the drilling and testing of the LEA #1 well, located in the Point MacKenzie Block of the Cook Inlet Basin, has been completed. Three sandstone targets were tested separately. Although encouraging gas shows were encountered while drilling through a section containing a significant number of coal seams, the sandstone targets were too tight and not able to produce commercial quantities of gas. As such, Linc's conclusion from the testing is that although gas is trapped within the coal, there is not sufficient natural fracturing in the coal to allow for the recovery of commercial quantities of gas.
Although LEA#1 has not proved to be commercial, a significant amount of information has been acquired by Linc about the area and the regional coal measures. Linc Energy has indicated that they will be able to utilize the expertise and valuable information they gained in drilling the LEA # 1 well to continue its Cook Inlet Basin exploration program at an aggressive pace.
Trading Bay Block
Permitting is well underway for the Trading Bay prospect, which is the next exploration well planned to be drilled in the Cook Inlet Basin located approximately 55 miles southwest of the LEA #1 well site.
The Trading Bay area was initially explored by Shell Oil ("Shell") in the 1960s, where Shell found natural gas in the area. However, their exploration objective was oil and not gas. Natural gas at that time had little value in the Cook Inlet, and hence the opportunity was not pursued by Shell.
The historical exploration data is being further reviewed by Linc to refine the initial exploration target in the Trading Bay Block. The Operator will access into this area by using the existing roads and tracks constructed for the earlier exploration work. Linc is expected to mobilize a rig into the Trading Bay site later this year when the ground is frozen. This timing will allow the work to proceed with minimal impact on the access roads.
Addressing the results of the LEA #1 well, GeoPetro's President and CEO, Stuart J. Doshi commented "The gas discovered at LEA#1 well is non-commercial and disappointing. However, the positive results achieved by Shell in the Trading Bay Block are highly encouraging. Based on electric logs and well control, numerous sandstone reservoirs are developed in the vicinity of the Trading Bay Block, which provide a sound geological basis for a sizeable potential commercial discovery. We are also pleased with Linc's plan to aggressively move ahead with permitting the Trading Bay prospect and drilling the well this year."
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 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