24 June 2009
Oklahoma asset
sale, Monthly Operations Report & Finances Update
Grand Gulf Energy Limited (Grand
Gulf) announces that it has received, and has accepted, an offer for its
LeFlore County, Oklahoma interests effective 1 May 2009. As previously
announced Grand Gulf has been seeking buyers for its Oklahoma interests for
some time but due to the low US gas prices and the economic climate this has
been a drawn out process.
The sale is expected to close on 7
July 2009 subject to various releases of security needed pursuant to Grand Gulf’s
Facility Agreement with Macquarie Bank.
Pursuant to a waiver of certain
Events of Default from Macquarie Bank, Grand Gulf has continued to seek offers
for its assets. Macquarie Bank has advised Grand Gulf to accept the offer for
the LeFlore County, Oklahoma interests. The proceeds of the sale will go
towards reducing Grand Gulf’s funding Facility with Macquarie Bank.. This
currently stands at US$2.65 million.
The sale of the LeFlore County
interests reduces Grand Gulf’s May production by approximately 6,000 Mcf
(or 200 Mcf/d). Grand Gulf’s May production (excluding LeFlore County)
was 8,762 Mcf (or 290 Mcf/day). Most of Grand Gulf’s remaining production
(about 180 Mcf/day) is from the Ashby wells in Custer County, Oklahoma.
Grand Gulf’s Proved Reserves
will reduce by approximately 5 Bcf as a result of the LeFlore County asset
sale.
Grand Gulf still retains production
in the Ashby wells in Oklahoma, the Patman wells in Texas and the
ConocoPhillips #4 well in Louisiana.
Grand Gulf is continuing to market
its other properties for sale and in particular has been presenting its new
interpretation of the Napoleonville Salt Dome project to a number of parties.
Napoleonville Salt Dome Project,
Assumption Parish, Louisiana
As previously advised Grand Gulf has
carried out its own complete review of the Napoleonville Salt Dome 3D
Project (26.4%) including a regional review, historic well inventory, play
types and prospects and incorporated these into a plan for the project..
Despite the time delays in the
project and the failure of Dugas & LeBlanc #1 the review has only increased
Grand Gulf’s belief in the potential of the project. Grand Gulf’s
geological and geophysical team has identified unrisked potential of over 500
Bcf gross reserves. It has identified a priority list of five prospects with an
average potential of over 50Bcf each. Each of these prospects combines
shallower smaller low risk potential with deeper bigger higher risk potential.
Grand Gulf is currently presenting
the Napoleonville opportunity to a number of companies with objective of either
selling an interest or attracting a merger party in order to ensure the
continued viability of the company.
Finances
As previously advised Macquarie Bank
will provide a further US$300,000 (of which Grand Gulf has drawn down
US$150,000 so far) on the basis that Grand Gulf delivers a report on the
Napoleonville Salt Dome Project to Macquarie Bank’s satisfaction by 30
June 2009 and Grand Gulf has received a binding offer or offers for its
interests in Oklahoma and/or Napoleonville by 31 July 2009 for such amounts as
would repay Macquarie Bank its funds advanced (i.e. US$2,500,000 plus such
other amounts owing up to the extra US$300,000) or at Macquarie Bank’s
discretion such amounts as it would be prepared to remain outstanding on the
basis that Grand Gulf was able to remedy any outstanding Events of Default.
At this point Grand Gulf currently
has enough cash to continue into July but will need further financing within
that time, by a combination of any or all of a sale of its Oklahoma assets, a
partial sale of its Napoleonville interests, a sale or merger of the Company or
finance from Macquarie Bank and/or another, to continue as a going concern.
Grand Gulf is continuing to pursue
all avenues to progress the company and its assets including mergers, farmouts,
sale of part of Napoleonville and capital raisings and will report as and when
any opportunities mature.
Please visit the link below to view
the document:
http://www.grandgulfenergy.com/documents/707.pdf
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