SAN FRANCISCO, March 1 /PRNewswire-FirstCall/ -- GeoPetro Resources Company ("GeoPetro", "we", "our" or the "Company") (NYSE Amex: GPR) is pleased to announce detailed information on the sale of its Cook Inlet Project to Linc Energy ( Alaska) Inc.
The Cook Inlet Project
Over the past five years, GeoPetro has acquired a 100% working interest in approximately 123,000 acres onshore in the Cook Inlet region of Alaska (the "Alaska Leases"). The leasehold position consists of two separate target areas, the Point MacKenzie Prospect and the Trading Bay Prospect, which have been selected for oil and gas exploration. The Point MacKenzie Prospect is located twelve miles northwest of Anchorage. The Trading Bay Prospect is located fifty miles west of Anchorage across the Cook Inlet. GeoPetro believes that the acreage may contain significant accumulations of conventional oil and gas.
Transaction TermsGeoPetro has sold its entire working interest in the Alaska Leases to Linc Energy ( Alaska) Inc. ("Linc"), subject to the reservations, terms and conditions set forth in the Linc-GeoPetro Lease Purchase and Sale Agreement. Linc is a wholly-owned subsidiary of Linc Energy Ltd., an Australian-based company publicly traded on the Australian Stock Exchange (ASX: LNC). Linc has a market capitalization of approximately US $650 million. Linc will acquire all of the Alaska Leases for the following consideration:
a. A cash payment of US $1.0 million will be deposited by Linc in an escrow account, to be released to GeoPetro upon approval of the assignments of the Alaska Leases to Linc. b. In addition, GeoPetro will receive a US $4.0 million payment from the proceeds from any oil and gas production from the Alaska Leases. c. After GeoPetro has received the US $4.0 million payment specified in paragraph (b) above, GeoPetro will thereafter receive an overriding royalty interest of 10% of 8/8ths on the Alaska Leases issued by the State of Alaska and the Alaska Mental Health Trust and an overriding royalty interest of 7% of 8/8ths on the Alaska Leases issued by Cook Inlet Region, Inc. d. Linc has agreed to pay all of the costs of maintaining the Alaska Leases at least through the end of the primary terms thereof. e. Following the assignments of the Alaska Leases to Linc, Linc will diligently commence and prosecute the drilling of the Frontier Spirit #1 exploration well to evaluate a conventional natural gas prospect identified and developed by GeoPetro.Frontier Spirit #1 Exploration Well The initial target in the Cook Inlet Project was identified by GeoPetro after the Company reprocessed certain 2-D seismic data which it acquired from AMOCO on the Point MacKenzie Block. GeoPetro has identified a sizeable initial target with an estimated resource potential of up to one trillion cubic feet of natural gas. The prospect covers approximately eighteen sections (11,500 acres) under structural closure, and the Frontier Spirit #1 well will target conventional gas in the Middle and Lower Tyonek Formations. A striking feature of this prospect is the presence of a "direct hydrocarbon indicator" ("DHI") overlying the target formations that is visible on the seismic data. A DHI is a seismic anomaly that is indicative of a natural gas accumulation. The North Cook Inlet and Beluga River Gas Fields, both located approximately 40 miles southwest of the Point MacKenzie Block, are estimated to have had original ultimate recoverable reserves of 2.3 and 1.2 trillion cubic feet of gas, respectively, before substantial production commenced in the 1970s.