Spinnaker High Bidder on 33 Gulf of Mexico Blocks

Spinnaker Exploration Company provided a summary of its activities related to OCS Sale #178, covering tracts offered in the Central Gulf of Mexico by the Minerals Management Service. Preliminary results were announced today by the MMS.

Spinnaker participated in a total of 52 bid submissions, third most by industry for Sale #178. Twenty-two of these blocks are located in water depths of less than 200 meters (shelf) and thirty blocks in water depths greater than 200 meters (deep water). Generally, block size on the shelf is 5,000 acres and 5,760 acres in deep water.

Spinnaker was successful in participating in the Apparent High Bid (AHB) submission on a total of 32 blocks; 11 on the shelf and 21 in the deep water. Spinnaker's net exposure to the AHBs is approximately $14.4 million. Spinnaker's AHBs were submitted on 17 blocks where it would act as operator (11 blocks on the shelf and 6 blocks in deep water). Spinnaker's working interest (WI) averages 91% on those blocks. Spinnaker participated in 15 AHBs as a non-operator; where its WI averages 33%. All non-operated AHBs were submitted in deep water. Additionally, Spinnaker has a right to participate in one additional AHB in deep water, should that block be awarded. If awarded, Spinnaker's WI in that block would be 50% and would represent net cost of approximately $0.1 million.

Spinnaker and its partners Murphy Oil Corporation and Dominion submitted a total of 10 AHBs in the immediate vicinity of its recently announced “Front Runner” discovery, located in Green Canyon blocks #338 and #339. Spinnaker holds a 25% WI in Front Runner, as well as the adjacent AHBs.

If awarded, the AHBs represent approximately 188,000 gross acres and 99,000 acres net to Spinnaker and would increase the Company's current Gulf of Mexico gross and net leasehold positions by 26% and 29%, respectively.