Farm out to GGP
On 5 March 2010 the Company announced it had farmed out a 15%
working interest in the Napoleonville Salt Dome to Golden gate Petroleum
Ltd (ASX Code: GGP).
The final agreement was concluded on 31 March 2010 and under the terms
of the agreement GGP will pay 23% of all drilling and completion costs to
earn a 15% working interest, in addition GGP will pay US$300,000 to
participate in each three well program, the first payment has been made.
Grand Gulf announced on 12 January that it had reached agreement with
Waterloo to earn a further 21.5% of the Napoleonville Salt Dome Project.
Under this agreement Grand Gulf also becomes operator of the project.
Pursuant to the Golden Gate agreement Grand Gulf will retain operatorship
but reduce its expenditure commitment for each well drilled thereby being
able to drill more wells with existing finances. The Golden Gate farm out is at
the same value per percentage point as the Waterloo farmin.
Preparations have begun to drill the first three well
program with the initial well expected to spud in May
2010. The first three wells are targeting a total of 9.2 BCF
of gas and 1.6 MMBO of oil at shallow depths from 5,000
feet to 10,000 feet with over half the targeted potential
classified as low risk proven undeveloped reserves (PUDís).
The first well is testing the Big Hum and Operc Sands with
an amplitude anomaly targeting 1.2 MMBO and 3 BCF
gas. If the well is successful initial flow rates are expected
to be around the 200+ barrels of oil per day and 1,000
MCF per day. Total dry hole costs are estimated at
US$800,000. GGE will have 39% of the first well.
Well # 2
The second well is testing the Operc C and Cris R II Sands
as primary objectives with 300,000 barrels and 1.2 BCF of
gas classified as a PUD with further upside in secondary
exploration objectives in the Marg A and Cris R I of
300,000 barrels of oil and 1.2 BCF of gas. If the well is
successful initial flow rates are expected to be around
the 200+ barrels of oil per day and 500 MCF per day.
Total dry hole costs are estimated at US$700,000.
The third well is testing a primary objective in the Big Hum
sand with 5 BCF classified as a PUD and targeting further
exploration upside objectives in the Tex W of 100,000
barrels oil. If the well is successful initial flow rates are
expected to be around the 5,000 MCF per day and 100+
barrels of oil per day. Total dry hole costs are estimated