The Government of India has awarded GeoGlobal a 100% participating interest in two new onshore Exploration Blocks in India under the Seventh round of the New Exploration Licensing Policy (NELP-VII) bidding which closed on June 30, 2008.
These onshore blocks include Exploration Blocks VN-ONN-2005/1 (VN-01) and VN-ONN-2005/2 (VN-02). These adjacent exploration blocks cover an area of approximately 3,776 and 4,908 square kilometers, respectively, onshore in the eastern portion of the Vindhyan Basin which is located in the north eastern portion of the State of Madhya Pradesh in central India. GeoGlobal will be the operator for both of these blocks.
Jean P. Roy, President and CEO of the Company, stated, "The confirmation of the award of these two exploration blocks will result in important increases in our oil and gas exploration interests in India where we continue to maintain our focus. We expect these two large exploration blocks, which combined are in excess of 8,600 kilometers, will bring our Company future long term growth potential. We understand the Vindhyan Basin to be an older sedimentary basin containing Infra-Cambrian age source rocks. Although this is a relatively unexplored basin, I believe the presence of hydrocarbons on an adjacent block coupled with the size of the structures as seen on existing 2D seismic, provides good support for significant resource potential and improved exploration risk."
The Production Sharing Contracts (PSC's) for these two blocks are expected to be signed on or about December 22, 2008, in New Delhi, India. The PSC's expected to be entered into each provide for a specified minimum work program (MWP) to be performed in two phases over eight years, of which the first phase covers a period of 5 years.
The MWP that the Company will commit to for the first phase of exploration for each exploration block will be to conduct a gravity and magnetic ground survey of 2,500 stations, geochemical survey of 500 samples, complete a 50 square kilometer 3-D seismic acquisition program and drill two exploratory wells to a total depth of at least 1,700 meters each. Further, GeoGlobal will reprocess 225 and 340 line kilometers of 2-D seismic for VN-01 and VN-02 blocks, respectively at a total cost of approximately $2.7 million for each block over the next five years.
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