GeoPetro Resources Company says that the LEA #1 exploration well located in the Cook Inlet of Alaska was spudded on October 21, 2010. Pursuant to the terms of the lease purchase and sale agreement with Linc Energy (Alaska) Inc., GeoPetro will receive a US $4.0 million payment from the proceeds of the first seventy-five percent (75%) of 8/8ths of any oil and gas production from the Alaskan Leases. After GeoPetro has received the US $4.0 million payment, GeoPetro will thereafter receive an overriding royalty interest of ten percent (10%) of 8/8ths of the proceeds of oil and gas production produced from or attributable to the Alaska Leases.

The prospect was identified by GeoPetro after the Company reprocessed certain 2-D seismic data which it acquired from AMOCO on the Point MacKenzie Block. The LEA #1 well is located less than two miles from the Enstar 20" natural gas pipeline which has abundant spare capacity. This proximity to a major pipeline provides rapid and relatively inexpensive access to the lucrative Anchorage gas market where the 2010 gas price approximates $7.00 per thousand cubic feet (Mcf), significantly higher than the current gas prices in the lower forty-eight states of the United States.

GeoPetro's Chairman, President and CEO Stuart J. Doshi said, "We are pleased to report that the drilling operations in the Cook Inlet Project in Alaska has commenced. The spudding of the first well is an important milestone for the company in exploring the large natural gas potential for the Cook Inlet Region where natural gas markets and prices remain robust."

Tags: GeoPetro Resources Company