The Eugene Island block is located about 110 miles southwest of New Orleans, Louisiana in 60 feet of water and the Ship Shoal block is located about 125 miles southwest of New Orleans, Louisiana in 102 feet of water. As soon as is practicable, Leed Petroleum intends to add the Eugene Island 133 and Ship Shoal 197 drilling opportunities identified by Leed Petroleum’s technical team to the company’s drilling schedule.
The leases will each be held for an initial five year primary term during which the company will have the right to explore and produce hydrocarbons. Once production is established, normal lease terms will then apply.
The two block’s are adjacent to blocks’ subject to the Scouting Agreement that exists with Byron Energy Pty. Ltd. (Byron), and as such these block’s are now subject to an area of mutual interest agreement between the companies which grants Byron the right to acquire up to 25% of the company’s working interest in both block’s. Byron has elected to acquire a 25% share in each of the block’s, and will pay the final installment of its pro rata share of the acquisition costs shortly.
Interest- Working interests (WI) are shown and are subject to various royalties and, in the case of the ship shoal 197 lease, overriding royalty payments. Net revenue interests (NRI) include any and all such payments.
Leasehold Terminations:
The company’s leases covering Ship Shoal block 205 and South Marsh Island block’s five and six will all expire by July 30, 2009. Leed Petroleum has no plans to undertake any operations to hold the Ship Shoal 205 and the South Marsh Island five blocks for which the Company has no attributable reserves.
Leed Petroleum is investigating drilling options that would hold the South Marsh Island 6 lease, which has 674 MBOE of net Probable reserves (less than 3% of Leed Petroleum’s 24.1 MMBOE of 2P reserves) attributable to it, and will make a further announcement if drilling is commenced.
Howard Wilson, president and chief executive of Leed Petroleum, commented:
”We are delighted to be awarded the Eugene Island 133 and Ship Shoal 197 block’s. The leases are adjacent to Leed Petroleum’s existing lease holdings in the Ship Shoal 201 and South Marsh Island 8 fields and complement the Company’s development plans for these fields adding to the depth of our inventory and providing operational synergies.”
