Dear Directors,The shareholders are not pleased that you did not...

Dear Directors,
The shareholders are not pleased that you did not provide us with the following presentation, which was to endeavor to lay the basis of a new era in the relationship between GDN and its Shareholders. We are still waiting for the first of a series of communications which offers some clarification of past activity and future direction.
?h Review of Operations
?h Shareholder Relations and Information
?h Focus on Exploration v Production
?h Specific Functions of PB #3
?h Operational Effect of Financial Policy
?h Current Operations on PB #3
?h Forward Plan
Review of Operations yet to be released
The Shareholders of GDN are currently waiting for an extensive review of the past 5 years of operations. Issues under consideration should be the scope and focus of operations, in particular the individual outcomes of specific projects in relation to company performance, in the context of adding value for shareholders. An examination of Shareholder relations should be given priority, in particular how the Directors can involve shareholders in visionary and forward planning with better information. The review should be well underway with some matters already addressed in this letter. The Directors should intend to provide further reports to Shareholders on a regular basis as individual aspects of the review are concluded.
Shareholder Relations and Information
The Directors??lack of intense focus on operational matters and time constraints have meant that information to Shareholders regarding operations and forward planning has not been what it could have, the Directors need to acknowledge this and should now undertaken to correct this with a degree of determination.
Where possible, Shareholders should be provided with information on individual past and current projects, in terms of acquisition costs and returns or added value outcomes. Directors should endeavor to acquire and provide current market valuations where possible, on all current resources and royalty arrangements; these had better be reported to Shareholders as they come to hand in the next week or two.
2
Focus on Exploration v Production
As an overview, since its inception, GDN has conducted operations in the role as an explorer, where the focus was on prospective resource acquisitions and then creating value with minimal development before on-selling the asset for a fixed sum and/or retaining royalty rights on future mineral extraction. The shareholders are yet to be convinced that the current review will demonstrate that outcomes of the focus on exploration have been very unrewarding in terms of adding value for shareholders.
Directors fail to understand that from a Shareholder perspective this focus may appear to have changed little with regard to the major current project, The Golden Eagle Gas Field. It is trying to be portrayed that this was in large part due to the Farm-in arrangement with the Farmor, where GDN was obligated to move into a semi production mode to complete PB #1 & PB #2, within the terms of the agreement. We now know this is rubbish. At that time both the Shareholders and Directors were enthused at the prospect of producing gas from these two wells. As it turned out, the two wells served the key function of acquisition of 100% of Golden Eagle Gas field and also provided very valuable data and evidence in proving up the in-ground gas resource. The Directors and Shareholders were very disappointed that the two wells did not provide immediate substantial gas production, although PB #1 still is potentially a commercial producer and may supply gas to the workers on site kitchen and PB #2 provides considerable future cost saving in deepening or sidetracking the well into the Leadville Limestone sometime in the next century.
Specific Functions of PB #3
At the start of this year, the third well on the Golden Eagle Gas field development was commenced with four distinct functions in mind.
Paradox Basin #3 Objectives
Results
1
Confirm the lateral extent of the gas(the gas likes to extend laterally but hates heading in a vertical direction)
??
2
Conduct valid tests and collect key data (we now know how much it will cost)
??
3
Produce gas from the Pennsylvanian without water channelling (or any decent flow rates)
??
4
Establish commercial production (may be enough gas to run a small commercial kitchen)
Expected Feb 2011
The functions were, to extend the known lateral extent of the gas, to conduct valid tests and collect essential information to further evaluate the field, to establish a well capable of producing from the Upper Pennsylvanian without water channelling and to become a commercial producer. The first objective was achieved; PB #3 has considerably extended the known accumulation, the Shareholders were enthusiastically looking forward to the outcome of the RPS updated figures determining the in-ground resource(dud). The second objective was also a waste of time and money; the geological information, testing and pressure data is very comprehensive. The completion design is also successful with water channelling as a concern being eliminated. In February 2011 the shareholders consider that the final insult will be achieved as PB#3 is connected to the pipeline to become a commercial gas well with the gas able to heat the community housing our once rich shareholders now live in
3
Operational Effect of Financial Policy
From the outset with discussion of the current operations of PB #3, The Shareholders wish they never believed GDN with regard to financial stability and prudence as it has affected the development of the well in terms of time delays and decisions in relation to stimulation and completion. The development of gas fields inherently include considerable risk, for that reason the shareholders continue to be appalled by the very strict views with regard to retaining debt free status as protection against risking the long term financial stability of the business. In the process of drilling and completing PB #3, the Directors guided by financial prudence, were unwilling to apply expenditure which did not have a prior source of funding, hence the recent placements at a discount to an already low share price. This situation had a direct impact on operational decisions and delays in completing the well
In hindsight the shareholders did not foresee the static market sentiment in response to the non existant gas flow results as the well progressed, which caused some difficulty in securing reasonable capital funding by way of share placements, which was further complicated with some of the additional expenditures generated by the limited success of the stimulation program and other operational matters.
Current Operations on PB #3
The Shareholders are nevertheless dissilusioned at your failure in producing commercial gas from PB #3 & PB #1. We now demand a very clear time line to connect the localized new pipeline into the tap in point on the Williams line be laid out. The earliest time to make the connection to the tap in point has been indicated as early in 2011, the exact date needs be reported to Shareholders and the market immediately. Meanwhile get of your backsides and attend to all the preliminaries so they can be completed in time for the capital works to commence in terms of Gas Plant and Pipeline constructed and connected to the tap in point. Don't give us any more rubbish excuses like due to the dynamic nature of the wells and funding constraints, the Directors have decided on an extended flow into the pipeline prior to making any further decisions to stimulate the wells or to complete other zones. We no longer believe that significant commercial gas flows will be generated from these two wells in due course.
Forward Plan
If the Directors are determined to retain 100% interest and fully discover the extent of Golden Eagle Gas Field, including the Leadville prospect prior to giving any consideration to a joint venture or a farm-out arrangement, ensuring the maximum potential of value for Shareholders they had better pull their fingers out. A robust longer term plan for further discovery of Golden Eagle with a prospective drilling program is a cruel joke for those who have lost all their HARD earned money believing your crap.
4
The Directors had better prepare a preliminary forward plan to present Shareholders with continual updates in regard to previously identified aspects of the review as they come to hand such as performance on past and current projects, including market valuations where possible. It better culminate in a ??Road-show?? Investor Presentation in about 1 week, clearly demonstrating the capital value of GDN assets, resources and prospects to both the current Shareholders and potential investors.
The Shareholders look forward to a new era of Director relations where our shareholding will provide an important sense of ownership in GDN, concerning the participation of visionary direction and a better understanding of past and ongoing operations.
We know you have already promised most of this will happen, NOW IT'S TIME TO DELIVER!!
Yours unfortunately,
The Shareholders of Golden State