Grand Banks Energy Corporation
TSX VENTURE : GBE

Grand Banks Energy Corporation

September 04, 2007 17:44 ET

Grand Banks Provides Operational Update

CALGARY, ALBERTA--(Marketwire - Sept. 4, 2007) - Grand Banks Energy Corporation (TSX VENTURE:GBE) (the "Company" or "Grand Banks") is pleased to announce that the 2-21-55-27 W5M Leduc gas discovery well produced during the month of August at gross raw rates between 21 and 23 million cubic feet per day (mmcf/d). The Company's net share of sales gas is approximately 3.0 mmcf/d or 500 barrels of oil equivalent per day (boe/d).

The 2-21 well was shut in on Friday, August 31 so that a pressure build-up test could be done on the well. Bottom hole pressure recorders that were run in the hole prior to the start up of the 2-21 will be retrieved and the flow and build up data will be analyzed to assist in the determination of the pool's ultimate recoverable reserves.

The second well at Tower Creek, a 4,500 meter Wabamun test located at 11-26-55-27-W5M, which commenced drilling on June 16, 2007, has been abandoned. This well encountered severe hole problems which, after considerable effort, could not be overcome, and a decision was made by the working interest partners to junk and abandon the well. The bottom hole abandonment has been finished and the drilling rig is currently in the process of rigging out.

The total cost of the 11-26 well, excluding recoverable items, is expected to be approximately $11 million. The total amount that had been budgeted for the drilling of the well was $18 million. Grand Banks' share of the dry hole costs is 22.13%, or approximately $2.4 million. Grand Banks owns an 8.33% working interest in the lands that overlie the Wabamun prospect, subject to a 7.5% GORR. Additional interests in the lands were not earned because the well could not be drilled to the contract depth. Grand Banks and its partners have elected not to drill a substitute earning well.

With the costs incurred to date on the 11-26 well and the costs associated with the two 3D seismic programs recently shot in Saskatchewan and Manitoba, the Company has incurred more than enough qualifying expenditures to meet its outstanding flow through obligations.

Mr. Ted McFeely, President and C.E.O. of Grand Banks stated "While we are disappointed with the outcome of the 11-26 well, we are grateful that the overall Tower Creek project has been an outstanding success due to the successful drilling, completion and tie-in of the 2-21 well. Our exit target of 1,400 boe/d is not impacted by the 11-26 abandonment. The Wabamun gas prospect, which was indicated by 3D seismic to have a high probability of being present at 11-26, is still there, and when gas prices improve I believe that a new well will be drilled targeting that gas."

"Grand Banks has grown its production of light oil and gas, over the past three years, from less than 100 boe/d to current levels of about 1,300 boe/d. We have accomplished that increase almost totally with the drill-bit, and during that time we issued less than $33 million in equity, of which approximately 80% was issued as flow-thorough equity. We used the cash flow from successful exploration wells to acquire land and drill development wells. We now have an inventory of over 20,000 net acres of land in the Williston basin, which is a light oil prone area. Most of our light oil production, which constitutes over 50% of our total production, comes from over 30 high working interest oil wells that we operate in southeast Saskatchewan and Manitoba."

"With the fulfillment of our latest flow-through spending obligations, we have completed the transition from a higher-risk exploration company into a lower-risk exploration and development company. Our Corporate cash flow, which is now projected to be about $1.5 million per month, along with bank lines, will be focused upon the development of our inventory of light oil projects. We also view the current business environment to be favorable for acquisitions and will devote resources to identify and pursue selected opportunities."

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

FORWARD LOOKING STATEMENTS

This press release contains forward-looking statements including expectations of future production. These statements are based on current expectations that involve a number of risks and uncertainties, which could cause actual results to differ from those anticipated.

BOE's may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf: 1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

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 CEO
    (403) 262-8666
    (403) 262-8796 (FAX)
    or
    Grand Banks Energy Corporation
    John Kalman
    Vice President, Finance & CFO
    (403) 262-8666
    (403) 262-8796 (FAX)
    or
    Grand Banks Energy Corporation
    1600, 444 - 5th Avenue S.W.
    Calgary, Alberta T2P 2T8