Granby Oil & Gas plc
LSE : GOIL

March 17, 2008 04:35 ET

Granby Oil and Gas plc ('Granby' or 'the Company' or 'the Group'): Tristan NW Gas Development Update

LONDON, UNITED KINGDOM--(Marketwire - March 17, 2008) - Granby Oil and Gas plc (LSE:GOIL), the oil and gas exploration and production company with interests in the UK North Sea and onshore Europe, is pleased to provide an update on the Granby operated Tristan NW development in the UK Southern North Sea.

As previously announced on 28 February 2008, the 49/29b-11 well has been successfully tested, and the Ensco 80 rig was preparing to move off location. The rig move was subsequently delayed by adverse sea and weather conditions but departed the well location and went off contract 17.52 on Friday 14 March 2008.

The Acergy operated Diving Support Vessel 'Osprey' arrived at the Davy platform location and commenced diving operations required for the tie-in of the Tristan NW flowline and control umbilical on 8 March 2008.

First gas is still expected to be in April 2008, although progress remains dependent on the weather and sea conditions for the outstanding diving and tie-in operations.

The extended delays, together with those resulting from equipment failures during the drilling of the well, have resulted in an increase in project costs. As a result, Granby expects to contribute a further GBP 4.0 million towards the project, in addition to the GBP 6.0 million indicated on 28 January 2008 as already contributed or committed. The Board believes that the net present value (NPV10) of Granby's 54% interest in the project following this additional contribution is currently estimated to be approximately GBP 14.2 million, after allowing for the effect of the additional expenditure, the results of the well test and current market gas price projections.

After allowing for these additional costs, Granby expects to end the current financial year on 31 March with approximately GBP 7.3 million of uncommitted cash.

However, the additional costs of the Tristan NW project have exceeded the funding available to the smaller partner in the project and so it is probable that Granby will be required to fund approximately GBP 1.9m of costs on the partner's behalf in return for which Granby would acquire an additional 10.3% interest in the project for no additional consideration. Whilst this would have a positive overall impact on the value of the Tristan NW development to Granby, it would also reduce the amount of cash available to the remainder of the business and therefore impact on Granby's work programme prior to the arrival of significant revenues from Tristan NW from early 2009.

David Grassick, Managing Director of Granby Oil & Gas plc, said:

'We are pleased that the Acergy Osprey has arrived on location on schedule to begin the tie-in work and we look forward to our first production from the Tristan NW field shortly after that work is completed.'

The Directors can confirm that this announcement has been reviewed by David Grassick MA (Cantab) and member of SPE, who has over 27 years of experience as a Petroleum Engineer within the oil industry.

Notes to Editors

Overview of the Business

Granby Oil and Gas plc (LSE:GOIL) is building a significant oil and gas exploration, development and production portfolio in carefully selected areas of the North Sea and elsewhere through technical and commercial innovation.

- Granby operated Tristan NW gas development due on stream April 2008

- Three UKCS wells drilling in 2008, including the Monkwell appraisal well and Globe exploration well

- Exploration portfolio with net unrisked P50 potential of 321 million barrels

Granby's Portfolio and Plans

In additional to the recent Kerloch discovery, Granby's current activity includes a 54% interest in the Granby operated Tristan North West gas development in block 49/29b in the UK Southern North Sea, which is expected to begin production in April 2008.

In 2008 Granby expects to drill at least three further wells, including a fully funded exploration well on UKCS block 9/22 in which Granby has a 25% carried interest and the appraisal of the Monkwell gas field.

Granby has a 20% interest in the Monkwell gas field in UKCS Licence P.001, Block 42/29a. The field was discovered in 1989 by well 42/29-6, which produced gas at a rate of 26.8mmscfd from the Lower Leman Sandstone. The field was appraised by two further wells which also tested gas. A new well is planned for 2008 to further appraise the field and to enable a development decision to be made.

Granby's current exploration acreage comprises interests in a portfolio of offshore licences in the North Sea, containing multiple prospects generated by the Company. Granby also has a 50% working interest in two blocks, one of which contains discovered oil and gas, located in the gas prolific Northern Rotliegendes sub-basin onshore Poland.

Contact Information

  • Granby Oil and Gas plc
    020 7648 4950 or 0845 2577537
    or
    Granby Oil and Gas plc
    David Grassick
    Managing Director
    07785 921080
    or
    Granby Oil and Gas plc
    Nigel Burton
    Finance Director
    077 8523 4447
    Website: www.granbyoil.com
    or
    KBC Peel Hunt
    (Nominated Adviser and Broker)
    Jonathan Marren / Matt Goode
    020 7418 8900
    or
    College Hill
    Nick Elwes / Paddy Blewer
    020 7457 2020