Granby Increases Stake in Monkwell Gas Field

Granby Oil and Gas increased its interest in the Monkwell gas field in the Southern North Sea, by 11% to a total of 20%, together with completion of a farm in partner group aiming to drill an appraisal well in 2008.

The Farm-in Agreement has been executed with Dana Petroleum (E&P), a wholly owned subsidiary of Dana Petroleum, by which Granby has secured an increased interest in the Monkwell gas field which is located in UKCS License P.001, Block 42/29a (Monkwell Sub Area) in the Southern North Sea. Granby already has an agreement with Dana to acquire a 9.0% interest in Monkwell and is increasing its interest by 11% to a total of 20%. Dana will remain as operator with a 50.00% interest.

Gas Plus E&P Limited and Dyas UK Limited are farming in on a similar basis, each acquiring a 15.00% participating interest. This will result in the following interests in the License and Block after completion of Farm-in Interest assignments:

Dana Petroleum (E&P) Limited 50.00% (operator); Granby Enterprises Limited: 20.00%; Gas Plus E&P UK Limited: 15.00%; Dyas UK Limited: 15.00% The field was discovered in 1989 by well 42/29-6, which produced gas at a rate of 26.8mmcfd (million cubic feet per day) from the Lower Leman Sandstone. The field was appraised by two further wells, which also tested gas. It is intended that a new well will be drilled in 2008 to further appraise the field.

Under the agreed terms, Granby will fund its current participating interest and the additional share of costs for the increased interest which will attract a mainly success based promote of the dry hole drilling costs.

The assignment of interests is subject to approval of the Secretary of State for the Department of Business, Enterprise and Regulatory Reform (DBERR) to the assignment of License interests to Granby.

David Grassick, Managing Director of Granby Oil and Gas, said:

"We are very pleased to have increased our share in the Monkwell field and to have helped move it towards appraisal and subsequent development. An appraisal well is expected to be drilled in 2008, which may lead to a development in the near term.

Granby has an active drilling program spanning exploration, appraisal and development with three wells currently drilling, and is preparing for at least three more wells in 2008. Following the sale of Granby's interest in the Galoc field, Granby is well positioned to pursue its strategy to acquire other appraisal and development opportunities in the North Sea, onshore Europe and in other areas of interest."

Bob Moore, Commercial Director of Granby Oil and Gas, said:

"By introducing other companies to the partnership, we have enabled a well to be fully funded to appraise this field where we see significant potential for reserves upside."