-not drilling until next year

Groundstar Resources Limited’s interest in the Takutu Basin Petroleum Prospecting Licence (PPL) has been significantly reduced after the company entered into an agreement with Canacol Energy Limited.

The Agreement is subject to the approval of Guyana Government and the TSX exchange but once approved will see Canacol acquiring an additional 35% working interest in the PPL in exchange for a cash payment to Groundstar of US$3.45M. A portion of the money has already been paid.

Chief Executive Officer and Chairman of the Board of Directors of Groundstar, Kim Fard made the announcement and a press release yesterday afternoon said that Canacol’s net working interest in the PPL will increase to 90% while Groundstar’s net interest will reduce to 10% “which will be carried by Canacol to first commercial production”.

The release stated that Groundstar will remain operator of the block through to completion of the first exploratory well which is expected to be drilled in the first half of 2010. Groundstar has received an initial payment of US$1.2M from Canacol as the first installment under the Agreement Terms. Under an existing Farm-in agreement, entered on March 11 last year Canacol would earn a 55% working interest by spending 100% of the first US$12M spent on drilling the first 2 wells in the concession.

“Groundstar views this Agreement in the best long-term interest of the Company in the Takutu Basin PPL. Due to their extensive experience in the countries of Colombia and Brazil, Canacol will contribute valuable expertise to the upcoming drilling campaign and future operation of the Takutu Basin” the release stated.

Groundstar is a publicly traded Canadian junior oil and gas company actively pursuing exploration opportunities in South America, North Africa and the Middle East.

The announcement came on the heels of another Canadian company, CGX, disclosing that it would not be drilling offshore until next year.