announcement, page-2

VR Update! She is going well, got through the difficult phase.

HIGHLIGHTS
? Drilling ahead at 15,000ft
? High Impact Project targeting 110 BCFG & 3.3 million barrels condensate, up to 185 BCF and 5.5 MMBC
? The prospect lies between two major fields; Erath (1.2 TCFG + 42 MMBC) and Abbeville (255 BCFG + 17 MMBC)
Managing Director, Mark Freeman, commented that “We are very pleased to have progressed through a difficult transition zone and now have one more casing run at 15,600ft before drilling to the first (secondary) target in a Het sand at around 15,840ft. This will be followed by the primary targets of the Het 1A sand at 16,250 ft and then the lower Het sands from 16,400-17,400ft.”

The Board advises that the R. J. Perrin et al Well No. 1 is presently drilling ahead at 15,000ft MD. The well is due to set an intermediate liner at 15,600ft. The first primary objective (Het 1A) is expected to be intersected at 16,250ft, whilst the lower Het primary objectives are running from 16,400ft – 17,400ft. The well may also encounter a secondary objective around 15,800ft.
The well is likely to be at TD within the next 25 days. The operators insurance is expected to recoup a portion of the costs associated with getting the well back to 14,600ft following the previous uncontrolled flow at that depth.
The Vermilion River Prospect covers an area of 2,925 acres in Vermilion Parish, Louisiana. This well is being drilled to a total depth of 17,500ft straight hole. The project has similar traits and risks, and is close to, the Company’s recent discovery and success at La Posada (8 miles to the SE). Walter Oil and Gas was a partner in the La Posada discovery and is a highly successful and professional private oil and gas company based in Houston with onshore and offshore gulf coast assets.
The potential net reserves to Grand Gulf are 260,000-430,000 bbls of condensate and 8.5 to 14.5 BCF gas representing the largest prospect in the Company’s exploration inventory.