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3 March
2009
Drilling
Update & Finances
____________________________________________________________
Drilling
The Dugas & LeBlanc #1 (Napoleonville
#14-144) (26.4% - paying 29.3%) spudded on 5th February and
reached Total Depth 9,500 ft on 28th February. Electric logs were
run and while a number of sands were encountered as prognosed log
interpretation showed them to be water wet and no hydrocarbons were encountered.
This is obviously a very
disappointing result. Seismic attribute work had given the JV confidence in the
Dugas & LeBlanc #1 prospect but it appears that the extremely high porosity
of the sands (over 30%) rather than the presence of gas was the cause of the
particular seismic attributes.
The JV will now incorporate the
results of the logs into the interpretation of the 50 sq miles of 3D seismic
data over the Napoleonville Salt Dome Project where possible before deciding on
the location of the next well.
The Landry #1 (26.4% - paying
29.3%) well will be put on hold pending results of the work outlined above and
a decision to drill it or not will be only be made on receipt of this
information.
Finances
The Company is currently completing
a Reserves Report incorporating oil and gas prices as at 27th
February 2009 pursuant to its Facility Agreement with Macquarie Bank. Pursuant
to the Facility Agreement with Macquarie Bank Grand Gulf must maintain Proven
Developed Producing Reserves equal to or greater than the amount of its
Borrowing Base (currently US$2.5 million which is fully drawn) and Total Proven
Reserves of twice its Borrowing Base in order to comply with the terms of its
facility.
Due to the continued slide in oil
and gas prices in 2009 Grand Gulf is concerned that its Reserves will not be
equal to or greater than the ratios as specified in the Facility Agreement with
Macquarie Bank. If the Reserves do not fulfil the requirements of the Facility
Agreement an Event of Default will have occurred and Macquarie Bank will have
the right to call the repayment of the facility. Grand Gulf would not be in a
position to do this at the current time.
An announcement to the market
regarding the Reserves and the Facility Agreement with Macquarie Bank will be
made in due course. In the meantime the Company is maintaining the
suspension of trading in its shares.
For further information contact:
Mr James Trimble
Tel. +1 (713) 829-7930
Email: jtrimble@grandgulf.net or
Mr Charles Morgan
Tel: +61 412 152534
Email: cmorgan@seaspin.com.au
For more
information visit www.grandgulfenergy.com
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