SAN FRANCISCO, Oct. 26 /PRNewswire/ -- GeoPetro Resources Company ("GeoPetro", "we", "our" or the "Company") (NYSE Amex: GPR) is pleased to announce that the LEA #1 exploration well located in the Cook Inlet of Alaska was spudded on October 21, 2010. Pursuant to the terms of the lease purchase and sale agreement with Linc Energy ( Alaska) Inc., GeoPetro will receive a US $4.0 million payment from the proceeds of the first seventy-five percent (75%) of 8/8ths of any oil and gas production from the Alaskan 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 prospect was identified by GeoPetro after the Company reprocessed certain 2-D seismic data which it acquired from AMOCO on the Point MacKenzie Block. The LEA #1 well is located less than two miles from the Enstar 20" natural gas pipeline which has abundant spare capacity. This proximity to a major pipeline provides rapid and relatively inexpensive access to the lucrative Anchorage gas market where the 2010 gas price approximates $7.00 per thousand cubic feet (Mcf), significantly higher than the current gas prices in the lower forty-eight states of the United States.
GeoPetro Management Comments
Commenting on the spudding of the LEA #1 Well, GeoPetro's Chairman, President and CEO Stuart J. Doshi said:"We are pleased to report that the drilling operations in the Cook Inlet Project in Alaska has commenced. The spudding of the first well is an important milestone for the company in exploring the large natural gas potential for the Cook Inlet Region where natural gas markets and prices remain robust." About GeoPetro GeoPetro is an independent oil and natural gas company headquartered in San Francisco, California. GeoPetro currently has projects in the United States, Canada and Indonesia. GeoPetro has developed a producing oil and gas property in its Madisonville Field Project in Texas. Elsewhere, GeoPetro has assembled a geographically-diversified portfolio of exploratory and appraisal prospects. Cautionary Statements This news release contains forward-looking information. Statements contained in this news release relating to future results, events and expectations are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements may involve known and unknown risks involving market prices for natural gas and oil, economic and competitive conditions, regulatory changes, resource estimates, estimates of proved and probable reserves, production forecasts, geological and engineering uncertainties, potential failure to achieve production from development drilling projects, capital expenditures and other risks and uncertainties, which may cause the actual results to be materially different from those expressed or implied by such statements. Additional risk factors include, among others, those described in the Company's Annual Report on Form 10-K on file with the U.S. Securities and Exchange Commission. We do not have any intention or obligation to update forward-looking statements included in this press release after the date of this press release, except as required by law.