NAUT.L Regulatory News (NAUT)

27 Jun 2007 07:01

Global Energy Development PLC27 June 2007 For Immediate Release 27 June 2007 GLOBAL ENERGY DEVELOPMENT PLC NEW CONTRACT SIGNED IN PANAMA FIRST OPERATIONS CONTRACT SIGNED BY THE PANAMANIAN GOVERNMENT IN RECENT YEARS Global Energy Development PLC (the 'Company'), the Latin America focusedpetroleum exploration and production company (LSE-AIM: 'GED'), is pleased toannounce that on the 26 June 2007 the Company signed a new contract with TheMinistry of Commerce and Industry for the Republic of Panama (the 'Ministry')for the exploration and exploitation of hydrocarbons in the Garachine area ofeastern Panama (the 'Contract'). The Contract is the first operations contract which the Ministry has signedsince 1990 and follows the Panamanian government's announcement in 2005 of itsfirst policy on hydrocarbons and alternate energy sources and its desire topromote hydrocarbons development in the country. The Contract area covers 691,500 acres located wholly offshore in shallow waterwith a maximum depth of only 140 feet and an estimated average water depth ofapproximately 70 feet. The area covered by the Contract was previously held bythe Company under a Technical Evaluation Agreement ('TEA') during which timeextensive studies were conducted including the review and re-interpretation ofall available geologic data. The Contract area has been the site of previous activity by several oilcompanies since the 1920s. More recent exploration activity in the Garachinearea has confirmed Miocene oil source potential and outlined the regional basinstructure with a reconnaissance grid of seismic data. The management of the Company believe that the Contract area has substantialexploration potential in an untested Mid Miocene carbonate play. The play isanalogous to productive Miocene carbonates in Colombia as well as classic reefdiscoveries in Southeast Asia, including the 5.7 trillion of cubic feet ('TCF')of gas Ballena/Chuchupa field in Colombia and the 70 million barrels of oilequivalent ('mmboe') Jene field in Sumatra, Indonesia. Secondary objectives ofthe management would be Miocene and Oligocene clastics within anticlinal foldsof the Las Perlas deformed belt. The Company will own 100% of the Contract which has a duration of up to 35years, divided into a 5 year initial exploration phase, a 25 year exploitationphase and a 5 year automatic extension phase on exploitation. The Company canelect to extend the exploration phase by 2 years and also terminate the Contractat any time during the exploitation phase by giving 120 days notice. Under theterms of the Contract the Company must carry out certain minimum workobligations during the exploration phase, estimated to cost approximately $10million, which include the reprocessing and interpretation of existing seismic,aero-gravity and magnetic studies, the acquisition and interpretation of newseismic and the drilling of two exploration wells. The Contract is subject to an initial royalty from any future hydrocarbonproduction of 20% payable to the Ministry until the earlier of the Company'srecovery of 100% of its initial investments or five years from the date ofinitial production, whichever occurs first. Thereafter, the royalty increasesto 50% on all hydrocarbons produced. Under the Contract the Company is exemptfrom Panamanian income tax for the first five years of the Contract after whichtime the enforced 25% income tax is absorbed by the maximum 50% royalty payableby the Company. Commenting on the new Panamanian Contract, Stephen Voss, the Company's ManagingDirector, said: "The Company is delighted to be the first to sign an operations contract inPanama in recent history, a country that features economics comparable to theother Andean nations where the Company currently operates. The Company hasanalysed the Contract area extensively over recent years and considers there tobe several highly attractive geologic leads and prospects, most significantlythe carbonate play. The Company now looks forward to commencing the workprogramme and to potentially finding a partner in order to escalate activity andrealize the Contract's considerable potential value more quickly." For further information: Global Energy Development PLC +44 (0) 20 7763 7177Catherine Miles, Company Secretary +44 (0) 7909918034www.globalenergyplc.com Notes to Editors: The Company's shares have been traded on AIM, a market operated by the LondonStock Exchange, since March 2002 (LSE-AIM: 'GED'). As of 27 June 2007, theCompany holds nine contracts in the countries of Colombia, Peru and Panama. The Company's balanced portfolio of contracts comprises a base of production,developmental drilling and workover opportunities and several high-potentialexploration projects. Ryder Scott Company, LP ('Ryder Scott'), the independent petroleum consultants,reported that as at 31 December 2006, proved reserves net to the Companytotalled 5.5 mmboe, proved plus probable ('2P') reserves net to the Companytotalled 19.4 mmboe and proved plus probable plus possible ('3P') reserves netto the Company totalled 81.8 mmboe. Proven and probable oil and gas reserves are estimated quantities ofcommercially producible hydrocarbons which the existing geological, geophysicaland engineering data show to be recoverable in future years from knownreservoirs. The proved reserves reported by Ryder Scott conform to thedefinition approved by the Society of Petroleum Engineers ("SPE") and the WorldPetroleum Congress ("WPC"). The probable and possible reserves reported byRyder Scott conform to definitions of probable and possible reserves approved bythe SPE/WPC using the deterministic methodology. The information contained within this announcement has been reviewed by RyderScott. In addition, the information contained within this announcement has beenreviewed by Mr. Stephen Voss, the Company's Managing Director. Mr. Voss hasbeen a Member of SPE-AIME (Society of Petroleum Engineers-American Institute ofMine Engineers) for 36 years and is a Registered Petroleum Engineer in Texas. This information is provided by RNS The company news service from the London Stock Exchange