golden gate petroleum in talks ...

Golden Gate Petroleum in talks with potential Permian Basin partners, considers expansion
Monday, March 19, 2012 by Bevis Yeo

Golden Gate Petroleum (ASX:GGP) is both in talks with potential farm in partners for its acreage and looking to acquire new interests to diversify its portfolio in the U.S..

The company said it has been in talks with companies interested in developing its acreage position in the Permian Basin, Texas, that now appears to represent a far larger project than originally estimated.

A partner in this project would provide the added capital to take advantage of the multiple intervals that have the potential for horizontal drilling and accelerate the development program.

Golden Gate has also received several proposals offering it acreage in the Permian Basin and close by that would allow it to diversify and leverage its position based on the knowledge it has acquired.

The company is also negotiating to participate in a 3D seismic program over its Reagan County leasehold that would increase its ability to design an extended horizontal drilling program over the new intervals outside the Wolfcamp.

It said its current leasehold could contain 3 or 4 intervals that could be horizontally drilled and fracture stimulated, increasing the potential of its acreage mover original estimates.

Participating in an ongoing seismic program run by another operator would also in cost of up to two thirds less than initiating its own program.

Meanwhile, Golden Gate said it was suspending its 10 well program to complete testing and completion of the 4 wells it had drilled.

This was due to the discovery of multiple intervals and would allow the company to determine the optimum design for future activity.

At its first well, SRH-1, testing had confirmed the discovery of a new productive lower Wolfcamp interval that shows potential for horizontal drilling.

This potential is currently being evaluated for its own horizontal drilling program to go along with the Upper and Middle Wolfcamp sections that are being horizontally drilled on the surrounding acreage.

Golden Gate is also preparing to test the Wolfcamp and lower intervals at SRH-2 once the fraccing program is completed.

Production from SRH-3 has increased to about 80 barrels of light oil, gas liquids and gas per day as frac fluid continues to be produced while the SRH-4 well is currently testing the new deep Strawn formation not drilled or tested in the other three 3 wells.

The testing data will be important in determining whether the Strawn interval over the leasehold area could be a candidate for horizontal drilling. Once the testing of the Strawn is completed, an 8 stage fracture stimulation program of the Wolfcamp and Sprayberry Dean intervals is planned immediately following the fracture stimulation of the SRH-2 well.

Golden Gate is also continuing planning for its first horizontal well, SRH-5H with the initial location determined and survey completed.