Leed Petroleum has been awarded the Eugene Island 133 and Ship Shoal 197 leases in the Central Gulf of Mexico Minerals Management Services ("MMS") Lease Sale 208.
On May 6, 2009, the MMS confirmed acceptance of Leed's bids of US $350,567 and US $575,456 for the Eugene Island 133 and Ship Shoal 197 blocks respectively. The Eugene Island block is located approximately 110 miles southwest of New Orleans, Louisiana in 60 feet of water and the Ship Shoal block is located approximately 125 miles southwest of New Orleans, Louisiana in 102 feet of water. As soon as is practicable, Leed intends to add the Eugene Island 133 and Ship Shoal 197 drilling opportunities identified by Leed's technical team to the Company’s drilling schedule.
The leases will each be held for an initial five year "primary" term during which the Company will have the right to explore and produce hydrocarbons. Once production is established, normal lease terms will then apply.
The two blocks are adjacent to blocks subject to the Scouting Agreement that exists with Byron Energy Pty. Ltd. ("Byron"), and as such these blocks are now subject to an area of mutual interest agreement between the companies which grants Byron the right to acquire up to 25% of the Company's working interest in both blocks. Byron has elected to acquire a 25% share in each of the blocks, and will pay the final instalment of its pro rata share of the acquisition costs shortly.
The Company's leases covering Ship Shoal block 205 and South Marsh Island blocks 5 and 6 will all expire by July 30, 2009. Leed has no plans to undertake any operations to hold the Ship Shoal 205 and the South Marsh Island 5 blocks for which the Company has no attributable reserves. Leed is investigating drilling options that would hold the South Marsh Island 6 lease, which has 674 MBOE of net Probable reserves (less than 3% of Leed's 24.1 MMBOE of 2P reserves) attributable to it, and will make a further announcement if drilling is commenced.
Howard Wilson, President and Chief Executive of Leed Petroleum PLC, commented, "We are delighted to be awarded the Eugene Island 133 and Ship Shoal 197 blocks. The leases are adjacent to Leed's existing lease holdings in the Ship Shoal 201 and South Marsh Island 8 fields and complement the Company's development plans for these fields adding to the depth of our inventory and providing operational synergies."
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