GP Energy Signs Letter of Intent on North Sea Gas Project

Gold Point Energy Corp. (GP) said that it has signed a letter of intent (LOI) with Deltaic Systems Limited of Surrey, U.K. regarding a farm-in of UK North Sea Petroleum Production License P.1244, Blocks 48/2b, and 48/3b. GP can earn a 27.5% interest in the license by paying 37.5% of the exploration costs.

The license is located in shallow waters 75 km east and slightly north of Scarborough, U.K. in the Southern Gas Basin of the North Sea. The bulk of the UK's gas reserves are contained within this basin which includes several giant gas fields: Leman (6 trillion cubic feet of gas), Indefatigable (5 tcf), Hewett (4.2 tcf), West Sole (1.9 tcf), and Ravenspurn (1.4 tcf). One of the primary producing reservoirs, and the main objective in the license, is the Lower Permian Rotliegendes Leman Sand. The giant Ravenspurn Field, which has had cumulative production of 1,435 billion cubic feet of gas from the Leman, is located on the same geologic trend 10 km to the northwest of the license.

Based upon an interpretation performed by Deltaic of available 2D and 3D seismic, two fields currently in development extend onto the license: the Babbage Field and the Johnson Field. At Babbage a discovery well drilled directly west and adjacent to the license tested at a rate of 3.9 million cubic feet of gas per day and a second confirmation well is currently being drilled 4.5 km to the west. The Johnson Field has been in production since 1994 and had cumulative production of 180 billion cubic feet of gas at the end of 2005. A recent Johnson Field development well, located adjacent to the northern edge of the license, tested at a rate of up to 55 million cubic feet of gas per day from a 2,850 foot horizontal leg.

According to BP, the average Heren NBP Index price for gas sold in the U.K. during 2005 was US$6.69 per million Btu; this would translate into a gross value of approximately $6,700 per million cubic feet and $6.7 million per billion cubic feet of gas.

“This project represents a unique opportunity for GP Energy to explore large scale gas reserves in an region where big fields have previously been developed,” said Jack Steinhauser, GP’s president and CEO. “Prior exploration drilling on the license was conducted back in the 1980s and early 1990s. Today we have the benefit of state-of-the-art 3D seismic, horizontal drilling and fracture stimulation technologies to find and efficiently produce gas reserves from the license. A key advantage to the License is that it is located in an area where there is a great deal of existing infrastructure and available take-away capacity including multiple pipelines and production platform facilities. This will facilitate the rapid onset of production from any reserves developed using portable jack-up drilling rigs and seabed completions. Produced gas could be sold to markets in the U.K. or the European Continent.”

Deltaic is currently completing the interpretation of 3D and 2D seismic located over and around the license to identify prospective drilling locations. Results of this interpretation will be reviewed by GP Energy's technical staff in August 2006.

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