ASX/Media Release                                                                                               

1 February 2008

Year end 2007

Proved and Probable Reserves

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Grand Gulf Energy Limited [ASX Code: GGE] is pleased to report the Proved and Probable reserve position on its Oklahoma, Louisiana (excluding the Napoleonville Salt Dome) and Texas, USA properties as at 31 December 2007.

Highlights:

·         Proved Reserves of 2.76 billion cubic feet and 32,600 barrels of oil

o       Net Present Value 10% of $A11,542,196

·         Probable reserves of 0.38 billion cubic feet and 90,400 barrels of oil

o       Net Present Value 10% of $A 4,012,930

·         Total 1 & 2P Reserves of 3.14 billion cubic feet and 123,300 barrels of oil

o       Net Present Value 10% of $A 15,555,126

Managing Director and CEO Mr James Trimble said ‘This is a very pleasing culmination to Grand Gulf Energy’s first calendar year of exploration and production from its new focus in the proven areas of Oklahoma, Louisiana and Texas’.

‘The NPV of the Proven and Probable Reserves as stated are greater than our current market capitalisation and does not include the value of our Napoleonville Salt Dome property or the Fee Minerals assets’ Mr Trimble said.

‘Grand Gulf will look to build on these reserves in 2008. In particular we will soon have PUDs, Prospects and Leads generated from our Napoleonville Salt Dome 3D Seismic project where Grand Gulf has a 25% interest.’ Mr Trimble said.

PROVED AND PROBABLE RESERVES

The reserves estimates were prepared by T.J. Smith & Company, Inc. Oil and Gas Consulting, Houston, Texas, USA and as such the reserves are of the Proved and Probable Reserve category as defined by the Society of Petroleum Engineers standards.  Details of the Proved and Probable Reserves are outlined below.

Net Present Values (NPVs) are generated by using production attributable to working interests less royalties, operating costs, ad valorem taxes and, where appropriate, capital costs. The 16 January 2008 NYMEX oil and gas prices used are $8.126 per MMBtu for gas and $90.37 per barrel for oil less appropriate price differentials attributable to the particular area.

For further information contact:

For more information visit www.grandgulfenergy.com and sign up for email news.

COMPETENT PERSON STATEMENTS

Reserve Estimation

The information in this report that relates to reserve estimations is based on information compiled by Mr Kenneth H Dwight BSc, who is a member of the Society of Petroleum Engineers Inc and Registered Professional Engineer, Texas. Mr Kenneth H Dwight is a full time employee of TJ Smith & Company, Inc., consulting petroleum engineers to the Company.  Kenneth H Dwight has at least 5 years experience as a petroleum engineer. Kenneth H Dwight consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

Dollars means US dollars unless otherwise stated.

Reserves – Background Data

Grand Gulf Energy Limited (Grand Gulf) commissioned T.J. Smith & Company, Inc. Oil and Gas Consulting, Houston, Texas, USA to undertake the estimate of the Proved and Probable Reserves at Grand Gulf’s properties in Oklahoma, Louisiana and Texas excluding the Napoleonville Salt Dome.

The Proved and Probable Reserves estimates determined for the properties as at 31 December 2007 are based on the following data;

§          Proved and Probable Reserves estimated by T.J. Smith & Company, Inc.

§          Cost data supplied by Grand Gulf

§          Oil and Gas prices sourced from NYMEX as at 16 January 2008 with appropriate price differentials as per area applied.

Proved and Probable Reserves Estimates - Compliance with the SPE standards criteria

This Proved and Probable Reserves statement has been compiled in accordance with the standards defined by the Society of Petroleum Engineers Inc. Classification of the Proved and Probable Reserves was completed by T.J. Smith & Company, Inc. in conjunction with Grand Gulf.

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