Through this exchange, Granby gains a 9.0% interest in the Monkwell gas field. In return, Granby has provided Dana with an option to acquire a 13.5% interest in Block 42/28c where a well is currently being drilled on the Watling prospect. The option must be exercised by Dana within 20 days of the rig demobilizing from the well location. If the option is exercised by Dana, Granby will retain a 19.83% interest (15.83% net of royalty) in Block 42/28c. Granby's interest in the Monkwell field is not dependent on Dana exercising this option.
As previously announced on 16th November 2006, Granby acquired an additional interest from a co-venturer in return for a royalty over Block 42/28c to increase its carried interest in the Block to 33.33% (29.33% net of the royalty). The net effect of these two transactions is the acquisition of a 9.0% interest in the Monkwell gas field in return for a 6.39% reduction in Granby's economic interest in the Watling exploration prospect.
The assignment of interests will be subject to the approval of the Secretary of State for Trade and Industry and execution of completion documentation.
David Grassick, Managing Director of Granby Oil and Gas, said:
"Granby recently acquired an additional interest in the Watling prospect which has facilitated this opportunity to exchange an interest for discovered gas in Monkwell. Should Watling also prove to be a gas discovery, then it could be developed jointly with the adjacent Monkwell field, with the potential for cost and risk reduction.
"The Board considers that this agreement delivers value to shareholders by favorably rebalancing the Company's portfolio, with Monkwell expected to become our third development project."
Richard Moreton, Director of Granby Oil and Gas, said:
"We see significant potential for reserves upside in Monkwell, and great synergies for joint development with the adjacent Watling prospect in collaboration with Dana, with whom we are delighted to start working together."
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