SAN FRANCISCO, July 13 /PRNewswire-FirstCall/ -- GeoPetro Resources Company (NYSE Amex: GPR) is pleased to provide the following update on the status of the Alaska Cook Inlet Project owned by its wholly-owned subsidiary, GeoPetro Alaska LLC ("GeoPetro", "we", "our" or the "Company").
Pursuant to the terms of the Lease Purchase and Sale Agreement with Linc Energy ( Alaska) Inc. ("Linc"), GeoPetro has conveyed to Linc its 100% working interest in certain leases comprising approximately 122,000 acres in its Cook Inlet Project, Alaska (the "Alaska Leases"). GeoPetro has received the previously escrowed amount of US$1.0 million which was released to GeoPetro upon approval of the assignments of the Alaska Leases to Linc. The Company will receive an additional US$4.0 million from the proceeds of the first seventy-five percent (75%) of 8/8ths of the oil and gas production produced from or attributable to the Alaska Leases. After GeoPetro has received the US$4.0 million payment, GeoPetro will thereafter receive an overriding royalty interest of ten percent (10%) of 8/8ths of the proceeds of oil and gas production produced from or attributable to the Alaska Leases.
The transfer of GeoPetro's State of Alaska and Alaska Mental Health Trust oil and gas leases was approved by the Commissioner of Alaska Department of Natural Resources and the Trust Land Office in June, 2010. With this pivotal approval, GeoPetro has successfully transferred nearly 122,000 acres of the Alaska Leases to Linc.
Linc intends to drill the first well on a conventional natural gas play originally developed by GeoPetro. Linc plans to spud the first well, the LEA #1, in September, 2010. Project permitting is underway.The LEA #1 will be a vertical well drilled to a depth sufficient to test for dry gas in the sands of the Middle and Lower Tyonek Formations, as well as depths at the stratigraphic equivalent of the Hemlock Formation in the area. The location of the LEA #1 is close to one of the lines of seismic data which were purchased and reprocessed by GeoPetro during the development of the prospect. During the reprocessing of this seismic data, a potential direct hydrocarbon indicator ("DHI") was identified on the line nearest to the LEA #1 location.