announcement out

30 November 2011
Market Release (via electronic lodgement)
PERMIAN BASIN PROJECT UPDATE
UNLOADING FRAC FLUID AT # 6H WELL. OIL CUT INCREASING
PREPARING TO FRAC # 8A WELL. SPUD 3RD WELL NEXT WEEK IMMEDIATELY FOLLOWED BY
4th WELL.
Golden Gate Petroleum Ltd (ASX: GGP) is pleased to provide an update of operational activities in our
Permian Basin Project located in Reagan County, Texas.
The first oil and gas discovery at the SRH-C # 6H well has undergone a successful
fracture stimulation. The well is currently unloading the 12,750 bbls of frac fluid used for the
stimulation program. Approximately 1,800 bbls have been recovered under the well’s own pressure.
An electric submersible pump is being installed to complete the removal of the frac fluid. Oil and gas
have been flowing to surface with the frac fluid, well in advance of any expected hydrocarbon
returns. An initial production test on flow rates will be conducted next week along with initiation of oil
sales.
The second oil and gas discovery at the SRH-A # 8A well is being prepared for hydraulic
fracturing with frac tanks moved on site, water collection and well bore preparations underway.
Halliburton has advised that the frac program should start within the next ten days.
The third and fourth wells in the planned 10 well drilling program are to be drilled in
December. The UDI rig #261 is expected to move on site early next week and drill both wells back
to back. These wells will be vertical and will be similar to the first two wells. We expect to complete
both wells before year end and currently organising frac programs for January 2012.
The fifth well in the planned 10 well drilling program will be our first horizontal well into
the Wolfcamp interval. It is expected to take approximately three weeks to drill and will be
commence drilling operations in January 2012. Production rates from horizontal wells in our area
appear to achieve three times the initial production rates of vertical wells, yet costs approximately
twice the amount for vertical wells.
The SRH-A # 8A well to be stimulated next is estimated from log interpretations to contain 202,000
of recoverable oil from the sand and shales. This well was completed to a total depth of 9,500 feet
with seven pay intervals identified from 5,474 to 9,321 feet. Log analysis counted 60 feet of
conventional oil sand along with more than 1,250 feet of rich oil shales which is the primary target in
this shale play. The Kerogen rich shales are showing a large percentage of brittle shales that are
excellent frac candidates. Along with the high rich gas shows, the recovery rates per acre foot are
expected to be higher than the first well.
Oil attributable to the conventional sand intervals ranges up to 97,000 barrels of oil with 1 to 2%
recovery factors on 40 acre drainage area and assuming 40.4 barrels of oil per acre foot. Oil
attributable to the shales average 105,000 barrels using only a 1% to 1.5% oil in place recovery in
the shales. The estimated shale recovery factor ranges from 1.3 to 2.9 barrels of oil per acre foot.
The SRH-A # 8A well has twice as much Kerogen rich shale in the lower intervals than the first well
along with extremely high gas shows and mud cuts while drilling. The lower intervals account for over
75% of the reserve tally. The gas shows were more numerous than the first well and reached in
excess of 3,200 units while drilling or circulating. This well also had a very high oil recovery rate being
collected at the surface while circulating, which is unusual for formations requiring stimulation to
establish production.
For further information contact:
Chris Ritchie
Financial Controller
Phone +61 3 9349 1488
[email protected]
About Golden Gate: Golden Gate is an independent oil and gas exploration and production company
listed on the Australian Securities Exchange. Its focus of operations is onshore Texas and Louisiana Gulf
Coast region and the Permian Basin region of the USA.
COMPETENT PERSONS STATEMENT: The information in this report has been reviewed and signed off
by Mr Mickey McGhee, Geologist, with over 30 years of experience within the oil and gas sector and an
extended background in the Permian Basin.
This report contains forward looking statements that are subject to risk factors associated with resources
businesses. It is believed that the expectations reflected in these statements are reasonable but they may
be affected by a variety of variables and changes in underlying assumptions which could cause actual
results or trends to differ materially, including but not limited to: price fluctuations, actual demand, currency
fluctuations, drilling and production results, reserve estimates, loss of market, industry competition,
environmental risks, physical risks, legislative, fiscal and regulatory developments, economic and financial
market conditions in various countries and regions, political risks, project delay or advancement, approvals
and cost estimates.