Leed to Spud Ship Shoal Well, Increase GOM Output

On January 22, 2010, Leed Petroleum signed a turnkey contract with Applied Drilling Technology to drill the Ship Shoal 201 A-6 well and anticipates that the well will be spudded shortly. The A-6 well will target one proved undeveloped sand containing audited gross 2P reserves of 2,537 mboe (85% gas) and test two exploratory objectives. The Company will own a 100% working interest and an 80.2% net revenue interest in the well.

The Company has also completed the acquisition of the Ship Shoal 202 'A' Platform, as first announced on June 11, 2009, and regulatory approval to reuse the platform has been granted. The Ship Shoal 201 A-6 well will be drilled from this platform in order to expedite commencement of anticipated production.

The Ship Shoal 201 Lease was acquired in the 2007 Central Gulf of Mexico Mineral Management Service Lease Sale 205 and is located 125 miles offshore, southwest of New Orleans, Louisiana in approximately 102 feet of water.


 The Company estimates that net attributable production to the Company for the quarter ended December 31, 2009 averaged 1,152 boepd. The lower average daily production for the period was primarily attributable to downtime associated with installation of a higher-capacity natural gas compressor at Eugene Island. Enhancement activities remain ongoing and it is expected that the work currently being undertaken will result in improvements to production in subsequent periods.

Eugene Island

Estimated net attributable production to the Company from Eugene Island for the quarter ended December 31, 2009 averaged 1,002 boepd (approximately 1,616 boepd gross). Production volumes from the field were reduced by the construction operations related to the installation of a higher-capacity natural gas compressor on the Eugene Island platform and production vessel clean out operations, which resulted in a total of 21 days of deferred production.

During the quarter, the A-7 well was successfully recompleted in a new sand and restored to production. The well is producing at a stable rate of 771 boepd gross.

After returning to production following the compressor installation, the tubing string in the A-6 well plugged and ceased to flow. The Company is currently running diagnostics to determine the appropriate course of action to return the well to production.

The A-8 well continues to flow 327 boepd (522 boepd gross) from the Mid Tex zone, temporarily delaying work to perform the recompletion to the T-1 zone. The Company anticipates a substantial improvement to production flow rates from the A-8 well following the recompletion work.

Following the installation of a higher-capacity compressor, wireline work to maximise deliverability from the legacy gas lift wells was performed. The legacy gas lift wells are currently being brought up to full rate. It is expected that the increased compression capacity coupled with wireline work on the legacy wells will result in higher production rates from these wells during ensuing periods.