ABN 39 063 074 635 Level 1 181 Roberts Road Subiaco Western Australia Postal: PO Box 616 West Perth 6872 Australia Ph: +61 8 9486 4633 Fax: +61 8 9486 4634 Email: [email protected] Drilling Status Report – 2 January 2006 • Paradox Basin #1 oil & gas well, Grand County, Utah, is at 15,397 feet (4,692 m) in the Pennsylvanian Molas Formation, at the top of the well’s primary objective • The well has been cased to the bottom, and the rig is continuing to recover drill pipe lost above the casing hanger, prior to drilling into the Leadville Limestone objective Golden State Resources is pleased to announce progress on the Paradox Basin #1 well in Grand County, Utah. Paradox Basin #1 is at 15,397 feet (4,692 m), in the Pennsylvanian Molas Formation, a distinctive terra rossa palaeosol horizon formed on the top of the Leadville Limestone, the primary objective of the well. The well is cased to the hole bottom at 15,397’. The rig is currently recovering a lost section of drill pipe left in the hole attached to the casing hanger above 9,150’. Recovery rates have been varied reduced due to difficulties in cutting cement within the casing and to milling the lost drill pipe section where it was wedged against the external casing. The lost section is currently free of the casing wall and is being recovered by washover pipe, at a greatly accelerated rate of up to 50’ per day. The current method of recovery, although slow, is considered substantially cheaper than the alternative of drilling around the lost pipe and the casing hanger, and re-drilling the well section between 9,150’ and 15,397’. It is expected that the recovery operation will take a further two to three weeks. Once recovery is completed the well will drill on into the major objective Leadville Limestone. Permitting Progress and Production Infrastructure Work is proceeding towards completion of permitting and the establishment of production infrastructure for the gas horizons already discovered in the Pennsylvanian section of the well, currently protected behind casing, and any further hydrocarbon sections that may be located within the Mississippian (including Leadville Limestone) targets yet to be tested. The permitting process for a pipeline right-of-way is proceeding, and discussions have commenced with gas gathering companies on the design, procurement and finance of the connection pipeline and associated gas plant. The Company is exploring a Build-Own-Operate arrangement for the gas gathering infrastructure. The permitting process for a second, step-out, well at the Golden Eagle Prospect is proceeding. Progress on the above aspects will be reported as developments occur. DEFINITIONS Palaeosol: A buried soil horizon of the geologic past. Terra rossa: A reddish-brown soil overlying limestone rock. Washover pipe: A pipe of slightly larger diameter run at the end of drill pipe, which can slide over pipe (“fish”) left in the hole, to wash out the space between the fish and the outside casing of the hole and thus free the fish. In this well this space is occupied by cement, requiring the use of a cutting bit or mill on the end of the washover pipe. 2 PARADOX BASIN #1 WELL Formation or Zone Geological Age Lithology Depth (metres) Depth (feet) Result Upper Ismay Pennsylvanian Limestone 2,991 9,814 * Gas shows Lower Ismay Pennsylvanian Limestone 3,050 10,006 Minor gas show Desert Creek Pennsylvanian Limestone 3,133 10,279 Gas shows Akah Pennsylvanian Limestone 3,209 10,528 * Gas shows Barker Creek Pennsylvanian Limestone 3,358 11,016 * Gas show Alkali Gulch Pennsylvanian Dolomite 3,950 12,960 * Major gas interval Cane Creek Pennsylvanian Dolomite 4,613 15,135 * Gas shows Pinkerton Trail Fm Pennsylvanian Limestone 4,657 15,280 * Major gas interval Leadville Fm Mississippian Limestone 4,709 15,450 McCracken Devonian Sandstone 4,923 16,150 Lynch Dolomite Cambrian Dolomite 4,953 16,250 BOLD: Primary Targets ITALICS: Minor Targets * Potential Production The production potential of the above intervals will be determined upon setting production casing and conducting flow tests at the completion of drilling. Initial 100% Ownership and Operator Golden State holds an initial 100% interest in this well, and operatorship through its 100%-owned US subsidiary, Golden Eagle Exploration LLC. Denver-based joint venture partner Eclipse Exploration Inc has the right to back in with a 16.67% working interest after the drilling of two wells by Golden State. 3 John Hasleby Director - Exploration 2 January 2006
GDN Price at posting:
0.0¢ Sentiment: Buy Disclosure: Not Held
