Groundstar Resources Limited

Groundstar Resources Limited

March 13, 2008 18:38 ET

Groundstar Resources Limited: Takutu Basin, Guyana Farm-In Resource Estimate Clarification

CALGARY, ALBERTA--(Marketwire - March 13, 2008) -


Groundstar Resources Limited ("Groundstar or the "Company") (TSX VENTURE:GSA) announced on March 12, 2008 that the Company has entered into a Preliminary Farm-In and Standstill Agreement (the "Farm-in Agreement") with an industry partner (the "Farmee") on its Petroleum Prospecting License ("PPL") in the Takutu Basin in Guyana.

Under the terms of the Farm-in Agreement, the Farmee will pay 100% of all exploration expenses up to US $12 million to earn an undivided 55% Working Interest in the block. The Farmee has the option to increase its Working Interest by 10% to 65%, exercisable any time before July 22, 2008 by issuing to Groundstar, CND $1 million worth of the Farmee's securities. As a condition of the Farm-In Agreement, Groundstar has agreed to a standstill clause whereby it will refrain from completing any transaction with any other party on the PPL until March 22, 2008 for a break fee of US $500,000.

Groundstar is extremely excited to enter into this Farm-In Agreement as it will lead to the drilling of a minimum of two to three exploratory wells. It is anticipated that the wells will be drilled in Q4 2008 to Q1 2009.

Groundstar has three large seismically defined prospects on the PPL with a combined P90 Resources Estimate of 177 million barrels. The Karanambo #1 well drilled by Home Oil in 1982 tested 411 bopd (42 deg API) during a 5 hour drill stem test proving the Basin has all the essential elements of a petroleum system. The fiscal terms of the PPL are very favorable.

The following tabulates the resource estimates for the three prospects:

Recoverable Resource (MMBO)
Prospect P90 P50 P10
Karanambo 36.2 58.8 90.3
Pirara River 31.2 50.5 77.7
Rewa 109.5 195.2 309.9
Total 176.9 304.5 477.9

These estimates were based on evaluations of 2600 km of seismic data acquired by previous operators of the PPL, namely, Home Oil and Hunt. The petro-physical parameters are based on a study by Servipetrol Ltd., an independent consultant specializing in fractured reservoirs. The resource estimates were developed internally in January 2008 by Frank Crawford and Dr. Eric Sennhauser, geologist and engineer for this project.

The stated resource estimates noted above pertain to an undiscovered resource and there is no certainty that the undiscovered resource will in fact be discovered and that, if discovered, will be economically viable and technically feasible to produce.

Groundstar is a publicly traded Canadian junior oil and gas company actively pursuing exploration opportunities in Guyana, North Africa and the Middle East.

FORWARD LOOKING STATEMENTS: This press release may contain forward-looking statements including expectations of future production, funds flow, earnings and capital spending and estimates, projections, interpretations, prognoses and other information that may relate to current past or future production, development(s), testing, well test results and project start-ups. 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. These risks include, but are not limited to: the risks associated with the oil and natural gas industry (e.g., the impact of general economic conditions, industry conditions, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other industry participants, the lack of availability of qualified personnel or management, stock market volatility, ability to access sufficient capital from internal and external sources, operational risks in development, exploration and production, delays or changes in plans with respect to exploration or development projects or capital expenditures, the uncertainty of estimates and projections relating to production, costs and expenses, and health, safety and environmental risks. 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, undue reliance should not be placed on forward looking statements. The actual results, performance or achievement of the Company 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 the Company will derive therefrom. The Company 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 TSX Venture Exchange has not reviewed and does not accept responsibility for the accuracy or adequacy of this release.

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