• Paradox Basin # 2 has intersected a significant gas interval and traces of oil show associated with a drilling break in the Pennsylvanian Barker Creek Formation. • Gas levels increased from a background of 12 to 25 units to a peak of 1042 Units and 103,690 ppm Methane. • Shows are present in heavily fractured sandstones and siltstones over the interval 11,602’ to 11,621’. Abundant crystalline calcite, which is believed to represent fracture cement was observed. • Traces of oil fluorescence with a yellow/green cut were associated with the gas show. Paradox Basin #1 Paradox Basin #2 Formation Geological Age Depth (feet) Result Depth (feet) Result Paradox U.Pennsylvanian 9040 No shows 9740 Gas shows Upper Ismay U.Pennsylvanian 9744 Gas shows* 10270 Gas shows Lower Ismay U.Pennsylvanian 10006 Minor gas show 10560 Gas shows Chimney Rock U.Pennsylvanian 10279 Minor gas shows 10986 Gas shows Akah U.Pennsylvanian 10528 Gas shows 11500*** Gas shows Barker Creek L.Pennsylvanian 11016 Gas shows* 11600 Gas and oil shows Alkali Gulch L.Pennsylvanian 12960 Major gas interval** 13220 Not reached Pinkerton L.Pennsylvanian 15280 Major gas interval** 14840 Leadville Limestone Mississippian 15573 Gas Shows** 15133 * Gas recovered on test. ** No valid production tests due to well problems in PB#1. *** Subject to stratigraphic review. Italics indicate predrill predicted depths. Drilling Breaks associate with softer formations and are usually an indicator of porosity. The directors of Golden State Resources are very pleased with the new gas and oil shows within the Barker Creek Formation. The gas show in PB#2 (1042 units) is almost triple the 390 unit show in PB#1 which produced gas. The directors are optimistic that the show represents a potential zone of natural gas production. The gas show occurred within fractured sandstones and siltstones. The show is associated with traces of oil. The gas bearing zones will be further evaluated when electric logs are run prior to the next scheduled casing and will be production tested on completion of the well. As several of the gas zones encountered in Paradox Basin #2 have associated with better quality 2 reservoirs than previously seen in the Golden Eagle Field, Golden State Resources consider these zones may represent a significant commercial zone. As previously mentioned it appears Paradox Basin #2 is located along a long acting basin hinge line and hence the lithology has tended to have higher levels of sandstone with good visible porosity. Paradox Basin #2 is currently in the Pennsylvanian Barker Creek Formation at 11,630’. Operations have continued to plan with the well currently approximately 19 days ahead of schedule. Remaining operations should take approximately 34 days. Drilling operations have taken 62 days since commencing. Golden Eagle gas field Upper Pennsylvanian gas shows Richard Sciano Executive Director 17 April 2009
GDN Price at posting:
14.0¢ Sentiment: ST Buy Disclosure: Held
