paradox basin no 2 update ..., page-10

Golden Eagle spreads its wings…
The last six months has seen considerable progress on the Golden Eagle Project. All aspects of the
project are running ahead of schedule: banks have expressed an interest in debt funding to develop the
field and an independent audit confirms the discovered gas field is potentially one of the most significant
new recent discoveries in the US.
Paradox Basin #2 reached 8000 feet in less than 28 days and will appraise the Ismay Formation gas zone in
mid to late March.
The gas volumes reported independently by RPS Energy in the attached report confirm previous statements
that the Golden Eagle gas field is possibly the most significant gas discovery in Utah in decades, and may be
one of the largest onshore discoveries in the US in recent times. The mid case estimate being 118 billion cubic
feet (Bcf). To put this in context the total amount of new field gas reserves discovered in the US for 2007 was
796 Bcf.
http://www.eia.doe.gov/pub/oil_gas/natural_gas/data_publications/crude_oil_natural_gas_reserves/current/pdf/
ch4.pdf
The next six months should see completion of Paradox Basin #2, approval of the gas right of way and if our
current drilling is successful commercial production should commence by August 2009.
• Paradox Basin #1 took 105 days to reach 8000 ft. By
comparison, Paradox #2 has reached 8000 ft in 25 days
• Paradox Basin #2 will test the extent of the Ismay Formation
gas zone by late March at current drilling rates
• During April and early May the well will be deepened to test the
Akah, Alkali Gulch, Barker Creek and Pinkerton Formations
• The previously discovered gas zones in the Pennsylvanian
section are the main objective of the Paradox Basin #2 Well
• Paradox Basin #1 was retested over Christmas with very
encouraging flow rates. This well will be worked over early this
year with an extended flow test
• RPS Energy independently evaluated the reserves with a high
side estimate of gas in place of over 418 billion cubic feet and a
most likely of 120 billion cubic feet
ASX: GDN MARCH 2009
Paradox #2 Drill Rig
The Golden Eagle is the Official Newsletter of Golden State Resources Limited
ABN 39 063 074 635
The independent results confirm we are dealing
with a large gas resource. To put our resource in
perspective the total reserves for new field
discoveries for the US in 2007 was 796 billion cubic
feet. Golden State has a field with potentially half
that volume of gas in place.
Paradox #2 is progressing much faster than the
first well. What has the company done
differently this time?
One of the very early lessons I learnt in my career is
that there is no such thing as a cheap rig. Selection
of Unit rig 234 plus engaging F.J. Brown and
Associates for the well design and management are
the key factors in the improvement. F.J. Brown
optimised the well design, in particular bit selection
and casing design. They bring with them a wealth
of experience. Unit drilling has also provided us
with a top-notch crew.
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I understand you have had interest from banks
for debt funding of subsequent wells. How is
that proceeding?
Banks have expressed real interest in the Paradox
field potential, and they have indicated they will
provide debt funding for subsequent wells once
production is achieved and proved sustainable over
a short 3 - 6 month period. Golden State is
obviously very encouraged by this debt funding
opportunity.
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MEET OUR NEW GEO DIRECTOR, RICK de BOER
Rick de Boer is the new Technical
Director for Golden State. He has over
20 years experience successfully
discovering oil and gas.
How is the second well, Paradox #2
progressing?
So far drilling operations are proceeding better than
expected. We are achieving much better
penetration rates and longer bit life. Many of the
learning’s from the first well have been
implemented.
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Have you had any encouraging news from
drilling so far?
We are seeing minor hydrocarbon shows which are
increasing with depth. The big encouragement is
that we are demonstrating that Golden State can
drill future wells cost effectively which is essential in
tight gas fields.
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You just released an Independent Resource
Estimate for the potential of the Golden Eagle
gas field. Tell us about that!
Golden State commissioned RPS Energy to
conduct an independent audit of the Golden Eagle
gas field. As is typical with any field during its early
appraisal there is a broad range in the gas in place.
For Further Information Please visit us at www.goldenstate.com.au