GDN 0.00% 1.7¢ golden state resources limited

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    ASX ANNOUNCEMENT: 28TH SEPTEMBER 2010
    Golden Eagle Gas Field Reserves Upgrade
    Highlights
    ? Independent resource report completed by RPS Energy
    ? Increased resources of Discovered Gas Initially In Place (GIIP)
    RPS Energy Independent Resource Report
    Golden State Resources has received the awaited independent resource report on the
    Golden Eagle Gas Field which was completed by RPS Energy. The result is well beyond
    expectations and the directors are delighted to announce the substantial increase of over
    85%, in Discovered Gas Initially In Place (GIIP).
    The Golden Eagle Gas Field has already achieved over 40% of the indicated GIIP (90%)
    target of 50 Bcf which was predicted in the original 2006 prospectus. The area
    which provided the bulk of the RPS data collection for GIIP (90%) represents only a very
    small part of the field. In light of the fantastic RPS result, with the large area and lower
    formations still to be discovered, it is reasonable to conclude that the original indicated
    target will be exceeded by a substantial margin.
    The company remains committed to fully discover the gas and liquids contained within
    Golden Eagle Gas Field, including the Leadville Limestone and has immediately embarked
    on preparation work to lodge an application for a series of new well locations.
    Golden Eagle Expenditure Allocation
    In the coming week past activities on the Golden Eagle Gas Field will be reviewed with the
    focus on allocating expenditure in accordance with Acquisition, Infrastructure, Gas
    Discovery and Gas production efforts.
    Evaluation of the RPS Report and Executive Summary
    Mr Rick de Boer has included a brief summary evaluation of the RPS report which
    includes a clarification of technical terms related to various gas measures utilised by RPS
    in reporting the upgrade of the Golden Eagle Gas Field resource.
    On behalf of the directors,
    Richard Sciano
    2
    BRIEF SUMMARY ON THE RPS RESERVES UPGRADE ? R de BOER
    ? Independent resource report completed by RPS
    ? Significant Increases in Discovered Gas resources
    ? Substantial increases in discovered GIIP in the Ismay Fm:
     P90 up 85% from 9.0 Bcf to 16.7 Bcf
     P50 up 91% from 31.5 Bcf to 60.4 Bcf
     P10 up 109% from 101.0 Bcf to 212.0 Bcf
    ? The increase in discovered resources highlights:
     The success of Paradox Basin #3 in providing critical data
     Importance of demonstrating commercial production capability
    ? RPS commissioned to undertake a deliverability and development study
    ? Tenders to provide gas production facilities are currently being finalised
    SUMMARY
    Golden State Resources is very pleased to announce the results of the independent
    resource evaluation compiled by RPS Energy. Overall resources have increased and
    importantly there is a substantial increase in the ?Discovered? GIIP for the Pennsylvanian
    Ismay Formation which is due mainly to the excellent results of Paradox Basin #3. Paradox
    Basin #3 was drilled specifically to target the Ismay Formation and the information
    acquired improved overall certainty of the petrophysical evaluation with the positive
    results from testing have seen a big shift in the estimated resources. No further data was
    acquired on the deeper objectives and resource estimates for the Alkali Gulch and
    Leadville limestone remain unchanged.
    RPS was contracted by Golden State Resources Limited (?Golden State?) to provide an
    update of its Independent Resource Evaluation of the Golden Eagle Gas Field, conducted
    in November 2009. The updated evaluation includes the results of the recently drilled
    Paradox Basin 3 well and RPS?s independent petrophysical analysis.
    Golden State drilled the first well, Paradox Basin-1, in late 2006 and early 2007 and
    discovered gas in the Ismay and Barker Creek members within the Paradox Formation. In
    the first half of 2009 Golden State drilled Paradox Basin-2 down dip of the Paradox Basin-
    1 well. The Paradox Basin-2 well again found gas in the Ismay. Paradox 3 was drilled as
    deviated well with its top hole location at Paradox Basin-1. Paradox Basin-3 also found
    gas in the Ismay, flowing gas to surface post a fracture stimulation treatment.
    Gas Initially-in-Place (?GIIP?) estimates have been prepared in accordance with
    SPE/WPC/AAPG/SPEE Resources Management System (PRMS, 2007).
    The estimates for GIIP (Bscf) for the Golden Eagle Gas Field within the Ismay and Barker
    Creek members are shown in Table 1. The estimates for undiscovered GIIP for the Golden
    Eagle Unit Area within the Alkali Gulch and Leadville Formation are shown in Table 2. All
    volumes were estimated probabilistically by RPS. Golden State?s working interest in the
    permit is 100%
    The estimated discovered Gas Initially In Place (GIIP) in the Ismay Formation increased at
    all confidence levels. The P90 increased from 9.01 Billion Cubic feet (Bcf) to 16.7 Bcf. The
    1 RPS energy Oct 2009 estimate
    3
    P50 increased from 31.5 Bcf to 60.4 Bcf and the P10 increased from 101.0 Bcf to 212.0
    Bcf.
    The current resources fall into the discovered contingent resource category. Contingent
    resources represent discovered gas for which there is no current commercial production
    facilities and convert directly to Proved Reserves once a development plan is approved2.
    Golden State Resources has commissioned a deliverability and development study and is
    currently receiving tenders from gas gatherers to build a pipeline and gas plant. The gas
    plant will process production from Paradox Basin #1 & 3 which will then be connected to
    the Williams distribution network via a ten kilometre gas pipeline.
    The directors are very pleased with the results of Paradox Basin #3 and look forward to
    future developments on the Golden Eagle Gas Field.
    2 Both SEC and SPE guidelines set similar criteria around commerciality to include not only economics but also some evidence of a
    commitment to proceed with development projects within a reasonable time frame. This includes confirmation of market, production
    and transportation facilities, and the required lease extensions. Neither set of definitions specifies the documentation to support these
    claims. Neither definition requires ?absolute certainty? in terms of approvals, contracts, market, etc.
    spe.org/industry/reserves/docs/OGR_Mapping_Final_Report.pdf
    4
    Location of Golden Eagle
    Schematic section through Golden Eagle Gas Field
    Rick De Boer
    Executive Director
 
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