Ashanti Gold Corp. GULSF

RE: GUL & IAE - Close drill sites, can we hit oil

[snafur]

The Galaxy II rig was drilling for Ithaca earlier this year, that is true. It is owned by Global Santa Fe and ADTI is the drilling contractor (a subsidary of GSF) in the north sea. ADTI usually has short term contracts, they drill wells for a fixed price - they name it turnkey well construction. So in our case, the delays in the rig move do not mean extra costs for Gulf Shores. It is ADTIs problem and costs. Lundin (as the Ridgewood operator) hired ADTI to do the job, including rig, crew and logistics for a fixed price. So did Ithaca earlier this year. Doing so gives the advantage of cost control, but with the disadvantage of missing rig control. Ithaca just purchased the Beatrice field from Talisman (for $21 Million). Beatrice is nearly depleted, it was discovered nearly 30 years ago, it produced 165 million barrels up to date and is currently producing 1,800 barrels of oil per day. It is a strategic aquisition for Ithaca, they have interest around Beatrice. The field alone does not make any commercial sense anymore. Beatrice is about 20 km south of Ridgewood and if Ridgewood is successful, Beatrice is one of the possibilities to deliver the oil to the market. But 20 km distance to Beatrice does not rise the probability for Ridgewood. It is a different play, 20 km is not much for a pipeline to lay but a hell of a distance for oil reservoirs.