Granby Oil & Gas

Description

History

Strategy

Granby's strategy is to pursue exploration and development opportunities in the North Sea and in carefully selected areas overseas. This strategy is unchanged, though the company have adapted and adjusted quickly to the industry's changing environment by moving into onshore exploration, by applying for and winning licences in the gas prone area in the Southern North Sea, and by taking the first steps towards developing a new business area in North Africa. Granby's aim in making these moves was to have the flexibility to take advantage of different rig markets to help keep costs down and maintain exploration activity, as well enabling the company to access opportunities overseas where they see less competition for assets and more technical upside than is usual in the North Sea.

Granby's Portfolio and Plans

Granby’s current activity includes:

• 54% interest in the Granby operated Tristan North West gas development in block 49/29b in the UK Southern North Sea, which commenced drilling on 27 November 2007
• 10% interest in the Egdon operated Burton Agnes-1 exploration well onshore in Yorkshire which commenced drilling on 15 November 2007
• 10% interest in the Dana operated well appraising the Kerloch oil discovery on block 211/22a NW, which commenced drilling on 21 November 2007.

Granby has a 9% interest in the Monkwell gas field in UKCS Licence P.001, Block 42/29a.  The field was discovered in 1989 by well 42/29-6, which produced gas at a rate of 26.8mmcfd from the Lower Leman Sandstone.  The field was appraised by two further wells which also tested gas. A new well is planned for mid 2008 to further appraise the field and to enable a development decision to be made.

Granby has executed a Farm-In Agreement to participate with a 10% interest in UK North Sea Licence P.201 Block 211/22a NW, which contains the Kerloch oil discovery. The field was discovered in 1976 by well 211/22-1. The new appraisal well which commenced drilling on 21st November into an adjacent fault block is expected to take 30 days to drill.

Granby's current exploration acreage comprises interests in a portfolio of offshore licences in the North Sea, containing multiple prospects generated by the Company. Granby also has an interest in a single onshore licence in Yorkshire where an exploration well commenced drilling on 15 November 2007. Granby also has a 50% working interest in two blocks, one of which contains discovered oil and gas, located in the gas prolific Northern Rotliegendes sub-basin onshore Poland.

Key data

Assets and current activities

• Granby operated Tristan NW gas development due on stream April 2008
• Strong cash position, with over £8m expected at end March 2008
  
• Three UKCS wells drilling in 2008, including Monkwell appraisal well
  
• Exploration portfolio with net unrisked P50 potential of 321 million barrels

The current asset base of Granby comprises interests in a portfolio of UK licences containing multiple prospects generated by the Company, with a net unrisked P50 potential of 321 million barrels. In 2008 Granby expects to drill at least three further wells, including a fully funded exploration well on 9/22 and the appraisal of Monkwell.

Granby has a 54% participating interest in, and is Production Operator of, the Tristan NW gas development in the UK Southern North Sea. Tristan NW was discovered in 1987 by the 49/29-5 well, which encountered a gas column of approximately 82ft in good quality Rotliegendes sandstones. The DST flowed at 16.7 mmscfd. The first phase of subsea development operations and drilling of the single horizontal subsea development have been completed, and first gas is scheduled for early 2008.

Granby also has a 20.0% interest in the Monkwell gas field located in UKCS Licence P.001, Block 42/29a. The field was discovered in 1989 by well 42/29-6, which produced gas at a rate of 26.8mmcfd from the Lower Leman Sandstone. The field was appraised by two further wells which also tested gas. An appraisal well is expected to be drilled in 2008.

Granby farmed into the Kerloch 211/22a-10 well in November 2007 with a 10% interest. The well subsequently found 32° API oil in a 116 ft Ness sandstone reservoir and has been suspended for potential future use.

Granby has a 50% working interest in two blocks, one of which contains discovered oil and gas, located in the gas prolific Northern Rotliegendes sub-basin onshore Poland.

• booked its first reserves of 1.83 million barrels of oil equivalent, following receipt of development approval for the Galoc oil field in the Philippines
• added contingent resources of 2.7 million barrels of oil equivalent
• significantly improved its North Sea portfolio by adding 15 new North Sea blocks in the 24th Licensing Round
• increased UKCS unrisked prospective resources by 37 million barrels (9%) to 460 million barrels of oil equivalent at 31 March 2007
• participated in two North Sea wells. Both were unsuccessful; the total cost to Granby was only £0.1 million
• farmed in (jointly with Gas Plus) to the Burton Agnes-1 Prospect in Onshore Licence PEDL071, operated by Egdon Resources
• earned a 54% interest in the Tristan North West gas development in block 49/29b in the UK Southern North Sea
• acquired a 9% interest in the Monkwell gas discovery in block 42/29a in the UK Southern North Sea
• raised £9.0 million (before expenses of £0.4 million) in an institutional placing

Since 31 March 2007, Granby has:

• achieved initial drawdown of the £29.7 million loan facility for the Tristan North West development
• achieved initial drawdown of the $65.1 million loan facility for the Galoc development
• commenced acquisition of three seismic surveys in Granby's first operated North Sea seismic programme
• farmed out a 50% interest in UKCS blocks 14/9a and 14/14b

Financial highlights

• Loss after tax £1.8 million (2006: loss £2.9 million)
• Net cash at 31 March 2007 £7.3 million (2006: £7.3 million)

The current asset base of Granby comprises interests in a portfolio of UK offshore licences containing multiple prospects generated by the Company.

In the 24th UK Licensing Round Granby was offered 15 additional blocks and part blocks to be held under 7 licences in the North Sea. As a result, Granby's net unrisked and net risked prospective resources have increased by 78% to 566 million barrels of oil equivalent (‘mmboe') and by 63% to 106 mmboe respectively.

Overview of Operations

UK Exploration
Granby is one of the leading new generation UK North Sea exploration businesses. The Company has interests in a broad portfolio of UK offshore exploration licences that were largely acquired in Licensing Rounds and a few via farm in. The majority of the blocks were acquired on a promote licence basis. In addition, the company has a single onshore licence in Yorkshire.

UK Development & Production Business
Granby is involved in two UK development projects, Tristan North West and Monkwell. Granby has a 42% interest in, and is operator of, the Tristan North West gas development, first production from which is currently anticipated to be in late 2007, subject to availability of suitable tree and other items with long lead times. Granby has a 9.0% interest in the Monkwell gas field in UK Block 42/29a, which will be developed by Dana Petroleum.

Tristan North West, block 49/29b, UKCS
Granby, together with Mosaic Natural Resources Ltd, has completed a Sale and Purchase Agreement with Exxon Mobil to acquire participating interests in block 49/29b which includes the Tristan North West gas field. The field contains proven gas, which was discovered in 1987 by the 49/29b-5 exploration well which encountered a gas column of approximately 80 feet in good quality Rotliegendes sandstones. The well was tested and flowed at 16.7 mmscfd. Tristan North West lies next to the previously produced Tristan field in a water depth of 35 metres, adjacent to ExxonMobil operated producing fields and infrastructure.

Granby has acquired a participating interest of 42%, and Mosaic has acquired a 28% participating interest in the field.

Granby provided technical and commercial assistance to Mosaic, including the introduction of Mitsubishi Corporation as a financial partner. Granby and Mosaic have reached agreement with Mitsubishi Corporation, which has established its wholly owned subsidiary MCX Exploration (UK) Limited, in its first North Sea venture, to acquire a 30% participating interest in the block in association with certain financing arrangements for the development of the field.

Granby believes that the accumulation represents an economically attractive tie-back opportunity, with first gas potentially as early as Autumn 2007 and an economic field life of approximately 5 years.

The field will be developed via a single new subsea well tied back to existing facilities. A rig has already been sourced, and first production is currently anticipated to be in late 2007, subject to availability of other items with long lead times.

Monkwell, block 42/29a, UKCS
Granby has a 9.0% interest in the Monkwell gas field in UK Block 42/29a in the Southern North Sea. The Monkwell field consists of two separate dry gas accumulations located in UKCS Licence P.001, Block 42/29a. The field was discovered by in 1989 by well 42/29-6, which produced gas at a rate of 26.8 mmscfd from the Lower Leman Sandstone. The field was appraised by two further wells which also tested gas.

Dana is actively progressing engineering studies on the Monkwell gas field, targeting near-term gas production as a subsea tie-back to the BP operated Cleeton gas processing and transportation infrastructure.

The initial development is expected to consist of a single production well in Monkwell Central with the potential for a future well to drain Monkwell South West. The nearest producing fields are Whittle 6 km to the west, Ravenspurn South 11 km to the east and Neptune 13 km to the south east.

Capex

Future Plans

Reserves

Who's Who

Offices

3rd Floor
20 Abchurch Lane
London
EC4N 7BB