exercise of options announcement, page-14

Regarding the chance of a commercial well.

Here are the well stats for the Lisbon field as per 2006:

There are currently 22 producing (or shut-in wells), 11 abandoned producers, five
injection wells (four gas injection wells and one water/gas injection well), and four dry holes in
the field. Cumulative production as of July 1, 2005, was 51,129,974 bbls of oil (8,129,666 m3),
779.3 BCFG (22.1 BCMG) (cycled gas), and 49,936,145 bbls of water (7,939,847 m3) (Utah
Division of Oil, Gas and Mining, 2005).

This was taken from the document:

http://geology.utah.gov/emp/pump/pdf/pumprpt13.pdf


Note that of a total of 42 wells drilled ONLY FOUR have not been commercial!

The majority of Lisbon wells were drilled prior to the days of 3D seismics.

I tried to get the individual well summaries for the Lisbon field to see what their four dry holes had in term of gas shows, though came to a dead end - these are on microfiche at "Utah Division of Oil, Gas and Mining" and not available online as far as I can find.

This is obviously not the Lisbon field so the chance of success is clearly less certain, however note that due to the proximity the formation rock will be similar so this is the closest we'll get to a comparable field.

The fact that Golden Eagle has major gas shows below the salt cap suggests there is a good seal present and gives an improved chance of success.

IMO the chance of a productive well/field with possible SP $5-$10 within 12 months (ie approx 10 times that of today) is well over 10% (more likely in the viscinity of 50%) following the completon of a second well which easily justifies the current risk, particularly as the company has other value than just this well.

The current problems are par for the course on deep wells, faced by many drillers, and nothing to panic about.