acreage good to hear your valued input again and I hope your...

acreage good to hear your valued input again and I hope your home front is becoming a little brighter

SPIN, SPIN, AND MORE SPIN
Remember these doozies? -

"...Graves now says that the days of raising capital are at an end, forecasting that in the next nine months Golden Gate (ASX code GGP) will produce close to 1000 barrels of oil a day."

and

"...it's not hard to get payback in less than nine months..."


Tell me to stop laughing, it's hurting my sides


Date January 30, 2012

Golden Gate Petroleum's big-talking American chief Steve Graves isn't surprised that his company's stock has doubled in the past six months.

Trading at 2.3 cents before today, the oil and gas minnow has a market cap of just $44 million. And yet it has captivated many investors' interest after drilling four wells in less than two months in the giant Permian Basin in southern Texas.

These four wells sit in the middle of about 400 to 500 similar wells, which all use the hydraulic fracturing or "fracking" process to extract oil and gas from shale rock.

The company has been burning through the cash - last year it made a loss of almost $10 million. It has been raising equity by the bucket load to pay for it, and has a whopping 1.8 billion shares on issue as a result. It's currently raising $7 million at 1.7 cents a share.

Possibly prematurely, Graves now says that the days of raising capital are at an end, forecasting that in the next nine months Golden Gate (ASX code GGP) will produce close to 1000 barrels of oil a day.

Before you extrapolate, you have to remember that these wells typically decline at 75 per cent in the first year, so the well life is extremely short.

Investors like the whole fracking business because it can take a lot of the exploration uncertainty out of mining. Graves taps into this, when he talks to Radar about the group's prospects:

"This area has a success rate of 99 per cent, and with the oil price at $US100 a barrel, it's not hard to get payback in less than nine months. You have to remember, this is not exploration, this is development."

One analyst in the sector begged to differ, saying that payback on these types of wells typically takes between 12 and 18 months.

Graves was previously an executive with Mobil Corp for 23 years. These days he's been converted to the world of fracking and talks of the big improvements in the technology, led by the likes of Halliburton, as well as the regulatory change.

Both these factors lead to dramatically increased flow rates over the past three years, he says.

Improvements or not, this story seems almost too good to be true.

http://www.smh.com.au/business/under-the-radar/golden-gates-permian-promise-20120130-1qop2.html#ixzz2EypZAKKu
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8 September 2011
Market Release (via electronic lodgement)

PERMIAN BASIN PROJECT UPDATE
TWO WELL DRILLING PROGRAM TO COMMENCE IN SEPTEMBER

Golden Gate Petroleum Ltd (ASX: GGP) is pleased to provide a market update on activities involving the Permian Basin Project and the commencement of a two well drilling program to start late- September which is on plan with our earlier market updates.

Since purchasing the four leaseholds totalling 8,806 gross acres in Reagan and Irion County, Texas; GGP through its wholly owned US subsidiary, Cathie Energy Texas LLC, has been focusing on a development program covering the leasehold where GGP holds all rights to all intervals from the surface thru the Wolfcamp and Strawn. Progress to date includes:

* A rig contract has been executed with Union Drilling Inc. (UDI) to drill two wells starting in September. Rig # 205 has been contracted to drill both wells back to back. UDI is a public company with over 50 rigs in operation, many of which operate in the Permian Basin. UDI has drilled numerous wells on the adjacent acreage surrounding the GGP leasehold with tremendous success, both from a commercial and financial standpoint.

* The lessor, the Texas Scottish Rite Hospital, has given their consent to drill on the leasehold and approval has been given for the two wells to be drilled at the identified locations. All permits are in place and the initial surface location has been built with the second currently under construction..

* A new Drilling Manager has been hired with a successful four year history of drilling Permian wells on the adjacent acreage. Recent drilling programs have been able to drill wells to approximately 8,500 feet in less than 10 days at costs under US$ 600,000 which is below our original planning estimates. GGP has contracted the UDI rig at rates which are expected to result in these very competitive drilling cost parameters. Halliburton has advised that the first well drilled will be fracture stimulated in mid-October.

* Plans are being put in place for a 10 well drilling program to begin before the end of 2011. New drilling locations are being considered and UDI is reviewing rig scheduling to support the new program. Approximately half the new well locations should be identified shortly with permiting to start.

* Further investigations into the drilling and completion success in our area have identified horizontal wells into the Wolfcamp intervals proving to be some of the most commercial and financially successful wells. Work has commenced on identifying drilling locations where 4,000 to 6,000 feet laterals can be drilled and completed at competitive rates with significantly higher production levels than straight holes. In the GGP leaseholds where not all intervals are available, horizontal drilling appears to be an excellent option to exploit the hydrocarbon riches. Several experts in drilling horizontal wells in the Wolfcamp have expressed interest in assisting our efforts.

* The Company elected not to enter into a formal agreement with Roswell Capital Partners for a AUD 15m Equity Funding facility due to the change in market conditions since signing the Term Sheet. The Company has received a proposed terms sheet with an alternative source of capital for this project and this is under discussion.

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9 September 2011
Market Release (via electronic lodgement)
OPERATIONS UPDATE

FIVE WELLS TO BE DRILLED OVER THE NEXT THREE MONTHS
ADDITIONAL TEN WELLS IN PLANNING STAGE

The Board of Golden Gate Petroleum Ltd (ASX: GGP) is pleased to provide and operation update on drilling activity and project
activity over the next three months and into 2012.

SUMARRY

1. Two wells to be drilled in September in the Permian Basin
2. 10 wells in planning stages to start before year end in the Permian Basin
3. Two wells potential at Fausse Point with side track and a new shallow oil well
4. New well planned at Bullseye with the Laurel Ridge Prospect—Huth Sand
5. Testing this month the primary oil sand at the Dugas & LeBlanc # 3 producing well

PERMIAN BASIN

In our market release on 8 September, we reconfirmed our drilling schedule to drill two wells back to back starting in late September 2011. The rig has been contracted, lessor approvals obtained, permit and title work completed, and drill sites readied for rig move in.
In addition, we are in the planning stages for drilling up to 10 wells starting before year end. Locations are being selected from a large pool of identified locations. Permit applications will begin this month along with various logistical matters.
Golden Gate Petroleum’s (ASX: GGP) wholly owned subsidiary Cathie Energy Texas LLC has 100% working interest in the Permian Basin project and the wholly owned subsidiary Kindee Oil & Gas Texas LLC is the Operator.

FAUSSE POINT—TGR # 1 SIDE TRACK

Our partner, Verus Investments Limited (ASX: VIL) is working on farming out a portion of their 72.0% working interest in Fausse Point. This has delayed the side track to the TGR # 1 well for a brief period. We remain confident to be able to commence the side track operations before year end.
Both GGP and VIL remain fully committed to the Fausse Point project. The appraisal well planned to be drilled at Fausse Point as a side track to the TGR # 1 well will be targeting a potential 200 acre hydrocarbon accumulation over two primary intervals up dip from the original well. The fault block to be drilled has no previous penetrations of the targeted pay interval and is estimated to contain up to 20 BCF (3.5 mmBOE) of recoverable hydrocarbons on an unrisked basis.

The new well is planned to be drilled as a deviated well from the existing pad to approximately 9,950 ft with the targeted intervals being approximately 920 ft from the TGR # 1 well. The side track will utilise the existing wellbore and will require approximately 2,300 ft of new wellbore to be drilled at a maximum deviation of 37 degrees. The cost of the side track is approximately USD$1.3 million of which USD$235,000 is GGP’s share.
Seismic data suggests the new targeted interval is a sand shale sequence with multiple sands in an upthrown fault block that closes against salt with the up dip part of the trap believed to be below a salt wing where the reservoir sands are “stray” channel sands. At least one of the new targets ties back to a nearby producing well. The pay found in the TGR#1 well proves hydrocarbon charge and sand presence below the unconformity and the salt wing.
A detailed drilling proposal which includes a well drilling cost estimate has been prepared and new drilling permits are being filed. The surface facilities including production equipment and gas pipeline remain in place. Additional leasing to cover the new targeted structure has been arranged.

FAUSSE POINT—NEW SHALLOW OIL TARGET

By utilizing the reprocessed 3-D seismic covering 50 square miles of the Fausse Point Salt Dome, we have been able to identify a separate shallow oil target within the Area of Mutual Interest (AMI) shared by the working interest partners at Fausse Point.
This new objective is an oil sand at approximately 3,000 feet measured depth and covers approximately 200 acres. The potential recoverable resources estimated at this early stage is approximately 2.4 million barrels of oil in a 100 acre trap assuming 30% recovery factors. The sands are estimated to be 70 feet thick with good porosity. There are analogy wells which have produced from these sands which are located around the Fausse Point Salt Dome.
GGP is in the process of completing the leasing of the targeted area and is examining potential drill sites within the wetland area. Given it is a valued oil prospect and the ease of drilling the shallow depth, we are moving ahead with the development of this prospect. Permitting will take time and is expected to start shortly.

Partners in the Fausse Point Project including the TGR # 1 Sidetrack and the New Shallow Oil Target are:
Golden Gate Petroleum Ltd (ASX code: GGP) 18.00% WI (Operator)
Verus Investments Limited (ASX code: VIL) 72.00% WI*
Other Partners 10.00% WI
*Subject to farm out
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