Grand Petroleum Inc.

Grand Petroleum Inc.

June 17, 2005 08:34 ET

Grand Petroleum Inc. Announces Operational Update and $9.87 Million Financing

CALGARY, ALBERTA--(CCNMatthews - June 17, 2005) -

This press release is not for release or distribution in the United States.

Grand Petroleum Inc. (TSX VENTURE:GPP) ("Grand" or the "Corporation") has in the second quarter drilled 5 (4 net) successful wells in East Central Alberta including 2 gross (1 net) oil wells in Cadogan and 3 gross (3 net) oil wells in Galahad. At Sylvan Lake, in West Central Alberta, Grand has cased its first well (69.25% before payout, 49.25% after payout) in a planned total summer drilling program of 8 to 10 gross (5 to 7 net) wells in West Central Alberta. As well, Grand and its partner plan to spud this weekend the first of an 18 gross (9 net) well southeast Saskatchewan drilling program.

Grand estimates from field reports that current production exceeds 1,500 barrels of oil equivalent per day ("boe/d"), up substantially from an average of 1,092 boe/d in the first quarter of 2005. With additional tie-ins to be completed in the next few weeks, Grand now expects to exceed 1,800 boe/d of production once the previously announced acquisition of production at Hazelwood Saskatchewan closes, scheduled for June 29, 2005. Grand anticipates it will have total capital expenditures in 2005, including the previously referenced $8.5 million acquisition at Hazelwood, of between $36 and $39 million.

Grand has entered into an agreement with a syndicate of underwriters (the "Underwriters") to issue on a "bought deal", private placement basis 1,100,000 common shares on a flow-through basis ("Flow Through Shares") at a price of $3.70 per Flow Through Share and 2,000,000 common shares ("Common Shares") at $2.90 per Common Share. The Corporation has granted the Underwriters an option to purchase an additional 100,000 Flow Through Shares also at a price of $3.70 and an additional 100,000 Common Shares at a price of $2.90 to cover over-allotments. The Underwriters' syndicate is led by Haywood Securities Inc. and includes Canaccord Capital Corp., First Associates Investments Inc., Orion Securities Inc. and Tristone Capital Inc. Subject to regulatory approval, the financing is expected to close on June 30, 2005.

Grand is also pleased to announce it has entered into a costless collar hedge with a floor of US$50.00 per barrel and a ceiling of US$66.55 per barrel for West Texas Intermediate crude on a volume of 200 barrels per day from July 1, 2005 thru to December 31, 2005.

Assuming the Underwriters exercise the full option, following the issue Grand will have 23,672,523 basic and 25,527,523 fully diluted shares outstanding.

Certain information set forth in this press release contains forward-looking statements. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, reliance should not be placed on forward-looking statements. Grand's actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits that Grand will derive therefrom. Grand disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

The Flow-Through Shares and the Common Shares have not been registered under the U.S. Securities Act and are not being offered or sold in the United States.

The TSX Venture Exchange has neither approved nor disapproved the contents of this press release.

Contact Information

  • Grand Petroleum Inc.
    Andrew Hogg
    President and CEO
    (403) 231-8403
    Grand Petroleum Inc.
    Brenda Galonski
    Vice President Finance and CFO
    (403) 231-8402