The Board of Golden Gate (ASX Code: GGP) is pleased to advise the acquisition of oil and gas prospects in Iberville and Ascension Parish, Louisiana. This project involves the sequential development of a series of shallow and deep objectives in two prospect areas. The deeper wells are optional and scheduled for later in the project development. The Company has acquired 50% participating WI in this project but aims to farm this down to 40% WI (all estimates are based on current WI of 50%).
Participants will carry the seller for a 20% back-in after project payout (which includes all well and entry costs), which effectively delivers the Company a WI of ~40% after payout.
Total composite reserves are estimated (P50) to be 19 million barrels of oil and 34 BCF of gas.
The shallow low risk wells will be drilled first and if successful will provide the Company with early cash flow covering a significant portion of drilling costs associated with testing the larger reserves in the deeper reservoirs.
This is the fourth in a series of new venture initiatives that the Company has announced in order to bring diversity and growth to its asset portfolio in the onshore Gulf Coast region. These initiatives include low-risk exploration ventures, with high production rate potential and a significant oil component in reserves.
Folse #2 Samstown Prospect, Iberville Parish, Louisiana , Operator 45% WI
The Samstown Prospect is a shallow development gas play from a normal pressured gas sand at 4,650ft on a 4-way closure. The Samstown Prospect is set up by subsurface control and 3D seismic.
The Samstown Folse #2 well was spudded on 16 September 2007 ( Texas , USA ) and was the first well drilled on the initial new venture in Louisiana . The Samstown well reached a total depth of 5,170ft TVD/MD on 22 September 2007. Electric logs were run and results indicated 14 feet of net pay at the top of a 240 foot gross sand interval.
On 30 October 2007 the Company announced the successful testing of the Folse #2 well on the shallow Samstown prospect. The multi-point pressure tests used rates of 200, 400 & 700 mcfpd with shut-in bottom hole pressure of 1,875psi. Rates up to 8 barrels of condensate per day (“bcpd”) of 60 degree API gravity, were also observed.
Production commenced in December 2007 at 500 mcf/d. Reserves are estimated at 1-2 Bcf.
A 20% back-in after project payout (which includes all well and entry costs for Samstown, LGS and Noel) to the project sellers effectively delivers the Company a WI of 36% after payout.
The Board is encouraged by this early success.
The LGS Project presents an opportunity with two targets. The first is a shallow appraisal/development oil play from 5 normally pressured sands on a faulted 3-way closure and the second is a deep oil and gas exploration well. The LGS Prospect is set up by subsurface control and 3D seismic acquired in 2005.
Folse #1 LGS Prospect, Iberville Parish, Louisiana , Operator 42.5% WI
The Folse #1 well was spudded on 18 October 2007 ( Texas , USA ) and is the second well drilled on the initial new venture in Louisiana. The well was put on production on 14 December 2007 at 500 mcf/d.
A 20% back-in after project payout (which includes all well and entry costs) to the project sellers effectively delivers the Company a WI of 34% after payout.
LGS DEEP PROSPECT
The deep targets at LGS fall within the same fault trap where the Miogyp and Cib Haz sands are prospective. The upside potential from these zones adds another 9 million barrels of recoverable oil and 18 billion cubic feet of gas. Both of these primary objectives are found to be productive in the area on similar fault bounded structural traps with initial rates of 600-1,000bpd and 5-8mmcfpd from 10-20 feet of sand. The 3D seismic provides excellent definition of the probable trap area.
McCall #1 Noel Prospect, Iberville Parish, Louisiana , Operator 42.5% WI
The McCall #1 was drilled to TD on 29 November 2007, the well did not encounter commerical hydrocarbons and has been suspended to allow re-entry and deepening to the Noel Deep structures.
NOEL DEEP PROSPECT
The Noel Deep is a deep oil and gas exploration well. The Prospect is located on the southeastern corner of Laurel Ridge field.
The Nottoway 3D was acquired in late 2005 and identifies the faulted 4-way closure in the shallow normally pressured sections.
At depth, the fault creates a high-side closure for the Marg Vag, Miogyp and Cib Haz sands between 11,500ft and 13,500ft. The deep target is the geopressured sands where the 3D shows a broad low relief closure present at Marg Vag (11,500ft), Miogyp (12,200ft) and Cib Haz (13,200ft) where there is potential for 6 million barrels of oil and 13 billion cubic feet of gas. As with the deep LGS prospect these reservoirs have the same high rate potential to provide an excellent economic return. The 3D seismic data provides excellent structural control for the deep traps, resulting in a moderate risk for the reserves.
Golden Gate Executive Chairman, Sam Russotti said: “This is the fourth new project acquisition and provides Golden Gate with a further low cost opportunity to add significant production and reserves while increasing the diversification of its portfolio. GGP has recently completed the Wilson well for production and is currently completing the Dunn Deep # 2 for production as well. These two new producing assets are expected to significantly enhance GGP’s net production and cash flow which is enabling GGP to expand its asset base. The Company looks forward to the Samstown appraisal well results expected early next week”.
For further information contact:
This report has been reviewed and signed off by Mr Sam Russotti, CEO, (BSc Geology) and Mr. Jeff Copley, Technical Director (BSc Geology & MSc. Geophysics), both with over 30 years experience in the oil and gas sector.
Forward Looking Statements
This announcement contains forward looking statements that are subject to risk factors associated with oil and gas businesses. It is believed that the expectations reflected in these statements are reasonable but they may be affected by a variety of variables and changes in underlying assumptions which could cause actual results or trends to differ materially, including but not limited to: price fluctuations, actual demand, currency fluctuations, drilling and production results, reserve estimates, loss of market, industry competition, environmental risks, physical risks, legislative, fiscal and regulatory developments, economic and financial market conditions in various countries and regions, political risks, project delay or advancement, approvals and cost estimates.