- 50% of San Marco Concession farmed out to influential Italian gas
marketer, Blugas
- Blugas to fund 72.5% of costs of drilling, testing and well
completions
- Grove to enter into a long term gas sales agreement with Blugas
VANCOUVER, Sept. 29 /CNW/ - Grove Energy Limited ("Company")
(TSX-V & AIM: GRV) the oil and gas exploration company with its primary assets
in Europe and the Mediterranean Margin, advises that it has agreed to farm-out
a 50% working interest in the San Marco Concession to Blugas S.p.A ("Blugas").
Under the terms of the San Marco Joint Venture, Blugas will fund 72.5% of
the costs of drilling, testing and well completions undertaken on the
San Marco Concession. The San Marco Joint Venture, which excludes the
Abbadesse discovery, has been established to explore a number of leads during
2006.
Pursuant to the terms of the San Marco Joint Venture, which exclude that
portion covered by the Abbadesse Joint Venture, Grove and Blugas ("Parties")
have agreed to the following:
- Stage 1 - The Parties funding obligations will be 50% each in respect
of the costs of seismic acquisition, processing and interpretation.
- Stage 2 - Upon a decision to undertake exploration drilling in
relation to any prospect, Blugas' funding obligations will be 72.5%
and Grove's will be 27.5% in respect of the costs of drilling, testing
and completion of each drilling program.
- Stage 3 - Upon completion of each agreed drilling program, the parties
funding obligations will revert to 50% each.
- Grove will enter into a long term gas sales agreement with Blugas,
with a discount of 1% from the prevailing market price for Italian
gas.
The San Marco Concession, containing Grove's Abbadesse discovery, covers
an area of 29,254 hectares and is surrounded by in excess of 1 Tcf of gas in
adjoining concessions held by ENI S.p.A. Abbadesse was flow tested in
January 2005 at aggregate flow rates of 15 million scf/d from three horizons.
The Abbadesse discovery, located in the western portion of the San Marco
Concession, validated an exploration model that is now being pursued via the
San Marco Joint Venture.
Grove is awaiting approval of its application to develop Abbadesse from
the Italian Ministry of Productive Activities. This process has taken longer
than expected because the discovery extends into adjoining acreage held by ENI
S.p.A.
The Abbadesse discovery validated Grove's geological interpretation of
the potential of the San Marco Concession and provided further technical
support to a number of leads identified prior to drilling. To mature these
leads to prospect status, 125 km of seismic data was acquired during the
summer of 2005. Interpretation of this data should be completed in
October 2005. These leads are on trend to the Abbadesse discovery and have
seismic attributes similar to those which identified the Abbadesse reservoir.
The agreement between Grove and Blugas is subject to final joint venture
documentation which is expected to be completed over the next 8 weeks.
Glenn Whiddon, CEO of Grove comments, "this expansion of joint activities
with Blugas is a very positive step for both companies. It cements Grove's
relationship with an influential Italian gas marketer and will accelerate
plans to explore the San Marco Concession."
GROVE ENERGY LIMITED
Per "Glenn Whiddon"
---------------
GLENN R. WHIDDON, CEO
Some of the statements contained in this release are forward-looking
statements. Forward looking statements include but are not limited to,
statements concerning estimates of recoverable hydrocarbons, expected
hydrocarbon prices, expected costs, statements relating to the continued
advancement of the Company's projects and other statements which are not
historical facts. When used in this document, and on other published
information of the Company, the words such as "could," "estimate," "expect,"
"intend," "may," "potential," "should," and similar expressions are forward-
looking statements. Although the Company believes that its expectations
reflected in the forward-looking statements are reasonable, such statements
involve risk and uncertainties and no assurance can be given that actual
results will be consistent with these forward-looking statements. Various
factors could cause actual results to differ from these forward-looking
statements including the potential for the Company's projects to experience
technical or mechanical problems, geological conditions in the reservoir may
not result in a commercial level of oil and gas production, changes in product
prices and other risks not anticipated by the Company or disclosed in the
Company's published material. Since forward-looking statements address future
events and conditions, by their very nature, they involve inherent risks and
uncertainties.
Neither the TSX Venture Exchange nor the AIM Market operated by London
Stock Exchange plc approves nor disapproves of the information contained
herein.
The information contained herein does not constitute an offer of
securities for sale in the United States, United Kingdom, Canada, Japan or
Australia.
