Grand Banks Energy Corporation

Grand Banks Energy Corporation

May 01, 2007 19:39 ET

Grand Banks Announces Sale of Stoughton/Viewfield Oil Property

CALGARY, ALBERTA--(CCNMatthews - May 1, 2007) - Grand Banks Energy Corporation (the "Corporation" or "Grand Banks") (TSX VENTURE:GBE) is pleased to announce that it has closed the sale of its producing oil property in the Stoughton/Viewfield area of south east Saskatchewan. The price received for the property was $8.5 million. The sale process was conducted with the assistance of Rundle Energy Partners, who acted as exclusive agent.

The Stoughton/Viewfield property involved a large farm-in agreement with a major producer. The farm-in deal was operated by Grand Banks with a 50% working interest, and to date 4 horizontal Bakken oil wells (2 net) had been successfully drilled on the lands, earning 10 (5 net) sections from a total potential land base of about 34 (17 net) sections. The 4 oil wells were producing a total of about 80 bopd (40 net to Grand Banks) at the time of the sale.

Edward McFeely, President of Grand Banks, stated, "The sale of the Stoughton/Viewfield property is the successful culmination of a deal that we entered into in late 2005. We were able to add value by successfully exploring the lands with the drilling and completion of 4 Bakken oil wells. We expect our profit on the venture, net of capital expended, to be over $4 million. Although we think that there are many, many more development locations to be drilled, we felt that the development of the area was better suited to a much larger company, and funds from a sale could be used to fund development in areas where we think we can achieve better capital efficiency."

"We plan to drill 6 to 10 wells, mostly at a 100% working interest, by the end on the year on our lands in the Torquay/Three Forks light oil play located at Sinclair Manitoba near the Manitoba Saskatchewan border. Most of these wells are development wells and will be drilled horizontally. We also intend to spud, before the end of June, the second exploration well at Tower Creek, which targets an over-pressured, high deliverability Wabamun gas reservoir, at a depth of about 4,500 meters. We will pay 19.6% of the costs of this well to earn a 17.6% working interest. Our corporate production exit target for the year end 2007 is 1,400 boe/d, and with this sale now completed, we can reach that target using primarily cash flow and bank debt to fund our capital expenditures. Our long term goal is to increase our production to the 4,000 to 5,000 boe/d level in three to four years while prudently balancing debt and equity to optimize the growth in our value per share."

Grand Banks currently has a revolving bank line of $10.5 million and after giving effect to the sale, expects to have net debt (including working capital deficiency) of less than $3 million. In addition, Grand Banks has a term facility of $1.13 million that is being used to fund our share of a dehydration plant that is being built to process gas from the Grand Banks et al Tower Creek 2-21-55-27 W5M Leduc sour gas discovery. The construction of a 12 mile tie-in to the well and the $12 million dehy are now over 90% completed, and we expect to have the well on production by the end of June. With an anticipated gross raw production rate of 20 to 25 MMcf/d, Grand Banks 16.67% share of the well is expected to net us over 400 boe/d sales, bringing total corporate production to about 1,100 boe/d.

Grand Banks is listed on the TSX-Venture Exchange under the Symbol GBE.

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • Grand Banks Energy Corporation
    E.C. (Ted) McFeely
    Chairman, President and Chief Executive Officer
    (403) 262-8666
    (403) 262-8796 (FAX)
    Grand Banks Energy Corporation
    1600, 444 - 5th Avenue S.W.
    Calgary, Alberta T2P 2T8
    (403) 262-8666
    (403) 262-8796 (FAX)