Groundstar Resources Limited
TSX VENTURE : GSA

Groundstar Resources Limited

September 21, 2005 18:48 ET

Groundstar-Update on Libya

CALGARY, ALBERTA--(CCNMatthews - Sept. 21, 2005) - Kam Fard, President and Chief Executive Officer of Groundstar Resources Limited (TSX VENTURE:GSA) ("Groundstar"), announces the following events with regard Groundstar's efforts to secure an exploration property in Libya.

On July 1, 2005 Groundstar entered into an agreement with a major European oil company, which was qualified as an Operator by the National Oil Corporation of Libya ("NOC"), to undertake a technical evaluation of three blocks in the Sirte Basin, one of which had been identified by Groundstar, for a possible tender bid in the current EPSA IV Round 2 bid round.

On August 30, 2005 Groundstar presented the results of the technical evaluation to the Operator, whereupon it was decided by the Operator and Groundstar that a bid was warranted on one of the three Blocks identified by Groundstar. The prospect identified and mapped by Groundstar had potential recoverable oil reserves in excess of 280 million barrels.

On September 7, 2005 the Operator requested registration to NOC, of a consortium with Groundstar having a 33 1/3 % interest thereof. Concurrently, Groundstar agreed to issue 245,161 common shares to Quest Capital Corporation as consideration for a required financial support letter in favor of the NOC, representing Groundstar's share of the financial obligation in respect to the bid (subject to TSX Venture Exchange approval).

On September 14, 2005 the Operator was informed by NOC that Groundstar did not financially qualify to participate as a consortium member in this bid round. In the event the Operator submits a bid without Groundstar and wins the Exploration Block, Groundstar will receive a success fee pursuant to an agreement between Groundstar and the Operator.

Groundstar has prospects on several blocks expected to be tendered in future EPSA IV rounds at which time we hope to have the necessary financial resources to participate.

Groundstar Resources Limited is a publicly traded Canadian based junior oil and gas company actively pursuing international exploration and production opportunities, particularly in Guyana, Libya, and Central Asia.


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

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