GeoPetro Resources reported that Linc, the Operator of the Alaska Leases in the Cook Inlet region, has completed the drilling of the LEA #1 exploration well in the Point Mackenzie Block of the Cook Inlet Basin in Alaska.
Linc reported that the well was drilled to a total depth of 6,323 feet into the basement volcanic rocks. LEA #1 encountered a number of gas bearing horizons and 7" casing has been run and cemented. A testing program to evaluate the potential for commercial gas production from the well will now be undertaken. As expected, a number of significant coal seams were encountered. Coal is recognized as the source rock for all the gas discovered and produced from the prolific Tyonek, Beluga and Sterling formations in the Cook Inlet Basin.
In addition to testing the LEA #1, Linc Energy has stated that it will now prepare for phase two of its Alaskan natural gas drilling program in the Trading Bay Block leases which are located on the northwest side of the Cook Inlet approximately 70 miles from the site of LEA #1.
GeoPetro's President and CEO Stuart J. Doshi said "We are encouraged by the progress being made in the Cook Inlet project and are excited about the potential of a commercial gas discovery in Alaska. It will take approximately one month to conduct the testing to properly evaluate the commercial viability of the prospect."
Under the terms of its Purchase and Sale Agreement with Linc, GeoPetro will receive 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.
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