Groundstar abandons Malak-1 exploration well
Groundstar Resources Ltd (C:GSA)
Shares Issued 53,477,361
Last Close 4/15/2008 $0.93
Wednesday April 16 2008 - News Release
Mr. Kam Fard reports
GROUNDSTAR PROVIDES UPDATE ON EGYPT AND GUYANA PROSPECTS
Egypt -- WEEM block
Groundstar Resources Ltd. holds a 20-per-cent working interest in the onshore West Esh El Mallaha (WEEM) block located within the prolific oil-producing Gulf of Suez basin.
Drilling of the Malak-1 exploration well has reached a total depth of 12,116 feet. Encouraging results were obtained from various intervals showing elevated gas readings. These gas readings are very positive, having proven the presence of hydrocarbons. Many of the producing wells in the adjacent areas have depths of seven to eight thousand feet. Groundstar has proven the basin is 4,000 feet deeper with the source rock ideally suited for generating hydrocarbons. Malak-1, the deepest well drilled in the area, confirms the presence of hydrocarbons to about 12,000 feet pointing to the potential for Early Tertiary and Cretaceous source rocks below 10,000 feet that are within the oil kitchen in the vicinity, providing future exploration opportunities on the WEEM block. Well-log analysis over the intervals of Malak-1 show tight reservoir properties that do not justify the expense of running production casing and a testing program at this time. Therefore, the Malak-1 well will be abandoned.
The rig is now being moved to the next exploratory well location on the WEEM block, the Tanan NW prospect that is on a separate structure, approximately 5.3 kilometres northeast of the Malak-1 location. The Tanan NW-1 well will be drilled to approximately 8,600 feet.
Guyana-Takutu basin
Groundstar has operated a 7,800-square-kilometre petroleum prospecting licence over the Takutu basin of Guyana, South America, since July, 2005. Groundstar has three large seismically defined prospects on the petroleum prospecting licence.
Groundstar has now finalized fiscal terms of the farm-in agreement announced in Stockwatch on March 12, 2008. Under the terms of the farm-in agreement, the farmee will pay 100 per cent of all exploration expenses up to $12-million (U.S.) to earn an undivided 55-per-cent working interest in the block. The farmee has the option to increase its working interest by 10 per cent to 65 per cent, exercisable any time before July 22, 2008, by issuing $1-million (Canadian) worth of farmee's securities to Groundstar. This farm-in agreement will lead to the drilling of a minimum of two exploratory wells commencing in the last quarter of 2008 or first quarter of 2009. Groundstar has started community consultation and environmental impact management studies and is procuring drilling and tubular services.
Other
The company continues to evaluate and pursue other major oil and gas opportunities in the Middle East, and expects to provide an update to shareholders in this regard shortly.
While Groundstar recognizes the current interest of the investment community in the drilling of the first wells in the WEEM block of Egypt, management is of the opinion that the largest potential to enhance shareholder value lies within the company's prospects in Guyana, West Kom Ombo of Egypt and its other Middle Eastern opportunities including Syria. These activities encompass very large land positions and resource potentials. |
