Griffin & Griffin Exploration - History

A Long History of Oil & Gas Exploration—and Expertise

At Griffin & Griffin, our management group has been actively engaged in oil & gas exploration and development—primarily in Southern United States—for nearly 50 years.

The Beginning.

Our Company story began with William K. Griffin, Jr. (father of Company President and CEO William K. Griffin, III, and Executive Vice President John Andrew Griffin), an active producer in the Wilcox oil trend in Arkansas, Louisiana and Mississippi since the late-1950s. During these early years Mr. Griffin had several significant discoveries, the most notable of which was the discovery of the Roxie Field in Franklin County, Mississippi.

The Roxie Field discovery extended the Wilcox Trend further east than many experts had predicted. Mr. Griffin worked this area until the late-1960's, when he expanded to the Cumberland Plateau Area of Tennessee and Kentucky.

Family Business. Backyard Focus.

In 1978, William K. Griffin, III, had finished college and begun taking a more active role in the business. He noted that the Griffins had drilled several commercially productive gas wells in the Cumberland Plateau Area, but since these wells were in an area without sufficient petroleum transportation facilities, the ultimate financial results were unattractive. The Griffins decided to focus on locations nearer to their home in Gloster, Mississippi. By this time, John Andrew Griffin had finished college as well and took charge of all field operations.

The Griffins' decision coordinated well with US oil industry developments. In the early 1980s, several major oil companies and many independent companies began acquiring acreage in what became known as the Southwest Mississippi–Florida Parishes of Louisiana Lower Tuscaloosa shelf play. Since the play was basically in the Griffins' "backyard," they were keenly interested in this activity and acquired leases in the area. The Griffins did not drill their own wells at the time, but focused instead on buying and selling leases and acquiring royalties from wells being drilled by others. The strategy proved to be profitable, but did not fully exploit the opportunities available to the Griffins.

Learning the Drill.

In 1986, the Griffins formed a partnership with New Orleans geologist Daniel G. Stephens to identify, drill and operate their own wells. Additional funds were obtained from investors on a well-by-well basis. In the summer of 1987 the partnership drilled the James #1 well in Wilkinson County, Mississippi—the discovery well for the South Centerville Field. After they drilled their third commercial producing well in the area, UNOCAL bought out the Griffins' and their partners' interests in the wells. The sale took place in 1990 and resulted in substantial gains for the Griffins and their investors, and provided liquidity for pursuing other opportunities.

Soon after the sale to UNOCAL, the Griffins drilled the Alice Spillman #1 (the discovery well for the Spillman Field) located in West Feliciana Parish, Louisiana. The Griffins drilled additional productive wells in the Spillman Field (two Lower Tuscaloosa wells, two Wilcox oil wells, one Selma Chalk well and one Miocene gas well), plus the discovery well at East Gloster Field in Amite County, Mississippi. The Griffins again cashed out, profitably selling their interest in the Spillman Field to United Oil and Minerals in 1994.

Focus on Frio.

During the time of this Lower Tuscaloosa shelf play in the Griffins' backyard, Arkla Exploration pioneered the Frio gas play in the area. Arkla started this play by reprocessing their seismic data and looking for direct hydrocarbon indicators known as "bright spots." The Griffins watched with interest as Arkla's Frio gas play unfolded, began reprocessing their own seismic data in the area, and drilled the highly successful McGraw Thompson #1 well in East Feliciana Parish, Louisiana, in 1991. While this well was successful, the next 6 were not. After much research, Griffin changed its method of reprocessing seismic data to better identify Frio prospects, and the next 9 wells were completed as commercial producers. The Griffins put their Lower Tuscaloosa play on hold and focused on the Frio gas play.

In 1993, the Griffins established a relationship with DDD Energy, Inc., a subsidiary of Seitel, Inc., at that time one of the leaders in 3-D seismic technology. During that time, DDD participated with the Griffins and other investors in 30 Frio wells, 24 of which were commercially productive, and one Lower Tuscaloosa well, which was successful and was the discovery well for the Rocky Branch Field located in Amite County, Mississippi. These successes led the Griffins and DDD to shoot an 18 square mile 3-D seismic survey exploring for Frio and Lower Tuscaloosa sands (the "Serendipity" survey). This was the first 3-D seismic survey shot in Southwest Mississippi. From the Serendipity survey the Griffins identified several Frio prospects, 7 of which were drilled and 4 of which were commercially productive. The Serendipity survey was not initially analyzed for the deeper sands such as the Tuscaloosa and Wilcox trends. The Serendipity survey is proprietary to the Company and has been reprocessed to evaluate the deeper formations. Five new Frio prospects were generated after reprocessing this survey. Griffin has also reprocessed the data from this survey seeking new Lower Tuscaloosa or intermediate depth prospects and continues to evaluate future opportunities .

The Rise of Griffin & Griffin.

In 1995, the Griffins began a business relationship with Associated Natural Gas. This led to the Company's purchase of 32 producing wells located in Amite and Wilkinson Counties, Mississippi, and Avoyelles, Concordia and East Feliciana Parishes, Louisiana from Seagull Energy. Other assets included several thousand acres of leases that were held by production, and approximately 450 miles of seismic data in the area. Associated Natural Gas purchased Seagull's gas gathering system in the same area as these wells, and in 1996, Griffin & Griffin Exploration, LLC was formed to consolidate the Griffins' operations.

Pinnacle Pipeline (formerly Associated Natural Gas/Duke Energy) operates approximately 70 miles of four and six inch pipeline in the area. The Griffins secured a locked-in gas transportation rate over this pipeline (the Pinnacle Pipeline) at $0.11 per MMBTU plus compressions costs of $0.08 per MMBTU. The Seagull Energy property acquisition, plus the wells in the area in which the Griffins already owned interests, provided Griffin with further significant technical/seismic data and relationships with additional landowners and oil & gas entities in the area. In January of 1997, the Griffins sold all their producing properties to Energen Resources, once again earning a tidy profit and liquidity for themselves and their investors.

In 1997, the Company identified and drilled the CMR #1-7 Lower Tuscaloosa well, which was the discovery well for the Redbug Field in Wilkinson County, Mississippi. This well was identified from a 20 square mile 3-D seismic survey (the "Red Bug" survey) acquired by the Company from OXY, USA. Three additional prospects have been drilled from the Red Bug survey, each of which is commercially productive. Two of Griffin's current prospects were identified from the Red Bug survey. Griffin expects to further analyze this data for additional prospects. There are additional Frio prospects within the survey. There is also the possibility of expanding this 3D survey upon successful drilling and completion of our North Red Bug well—thus opening up and expanding this proven productive trend.

In 1999, the Company began shooting and evaluating a 57 square mile 3-D survey with DDD and Threshold Development in Wilkinson County, Mississippi (the "Macedonia" survey). Data from the Macedonia survey was processed and several PUD locations were identified. Griffin has to date identified 26 Frio prospects of which 16 have been drilled and 14 completed. Through its subsequent acquisition of the DDD interest, Griffin had a 56.66% working interest in this Macedonia survey. Griffin sold its interest in the Macedonia Survey to Threshold and to Sinclair Oil Company and no longer has an interest in these wells. Griffin does, however, still own the data and has rights to explore/drill within the survey.

Since that time, Griffin has shot two additional 3D seismic surveys. The Buffalo River Survey (which identified over thirty Frio prospects and one Lower Tuscaloosa prospect) and the Palmetto Point Survey (which identified over seventy-five Frio prospects, two Lower Tuscaloosa prospects, and one deeper prospect). The Palmetto Point also has yielded a major Frio oil discovery that estimates a conservative recovery of approximately 750,000 barrels of oil. Participants in these programs are Crow Holdings, Patterson Energy and Canadian companies such as Lexaria.

Throughout its history, Griffin & Griffin has generally sold a majority of the working interests in its wells to its partners and other investors, usually retaining a 12.5% to 33.33% working interest. Despite a significant part of Griffin's seismic survey inventory not being proprietary, Griffin has approximately 7,500 miles of 2D seismic data as well as approximately 226 square miles of 3D seismic data.

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