goldenstate.com.au
June 30, 2006 Annual Report posted only a few days ago
To facilitate this strategy, during the year the Company completed a 3:1 consolidation of its capital and a $16 million capital raising by public subscription under a prospectus.
The first well on the Golden Eagle Oil & Gas Prospect in Grand County, Utah, at this date has entered the first of its primary objectives, on its way to a final depth of 14,500 feet. Drilling success should enable a short exploration to production cycle time. It is of interest that in the time since Golden State’s entry into the Paradox Basin there has been significantly increased interest from other explorers in Paradox Basin acreage, with the recognition that this remains one of the last onshore US areas where new major discoveries are still to be found.
Oil and Gas – Utah, USA
During the year, Golden State finalised execution of agreements to participate in the Golden Eagle gas and oil exploration prospect in Utah’s Paradox Basin, as joint venture operator and 83.33% equity partner. This constituted a proposed change of activities for the company and consequently, required shareholder approval. The company has acquired the rights to earn 100% working interest in 10,457 hectares (25,937 acres) of State and Federal Government oil and gas leases in south-eastern Utah, in the USA, from Eclipse Exploration by drilling two wells. Eclipse Exploration has the right, after the company drills the first two wells and reimburses Eclipse up to A$3.34 million in sunk costs, to back in for a 16.67% working interest. The company will be entitled to 100% of production income until completion of the second well or 12 months after completion of the first well, whichever is sooner. All leases will have a net revenue interest of 78%, after relevant government and third party royalties. During the fourth quarter, Golden State Resources spudded its first well on the Golden Eagle Oil & Gas Prospect in Grand County, Utah. The 14,500 foot (4,420m) well is targeting 11 potential pay zones within the Golden Eagle structure, which has potential gas in place of 3 TCF (3 billion MCF) in Pennsylvanian and Mississippian reservoirs. In addition to the Golden Eagle target, there are several other targets on the leases that will be assessed in due course. The company will continue to assess other gas and oil opportunities as they arise. END
Cash $ 8,677,231 Aus $
Email: gsr@goldenstate.com.au
Website: www.goldenstate.com.au
Drilling Status Report – 31 October 2006
• Paradox Basin #1 well is at 12,985 feet (3,958 m)
• Significant gas discovery in Alkali Gulch zone of Paradox Formation
• Drilling on to primary objective, the Leadville Limestone Golden State Resources is pleased to announce progress on the Paradox Basin #1 well in Grand County, Utah.
Paradox Basin #1 is at 12,985 feet (3,958 m), in the Alkali Gulch Member of the Pennsylvanian Paradox Formation (see table and graphic below). The Alkali Gulch Member comprises a cyclic sequence of sandstone, dolomite, black shale, salt and anhydrite.
The well intersected a major pressured gas interval, from 12,549’ to 12,577’ in dolomitic sandstone at the top of the Alkali Gulch member. Gas (methane and ethane with trace propane) was present at levels of up to 2,300 units.
Connection gas ranges from 2,000 to 3,300 units. Background gas has increased 40-fold to consistent levels of 500-900 units. Trip gas ranges up to 3,520 units. All gas levels are highly significant, however full assessment of the production capacity of reported gas shows will follow testing at the completion of the well.
The well is approximately 350 feet above the primary objective of the well, the Leadville Limestone Formation (estimated depth: 13,350 feet). It is anticipated that the well will reach the top of the Leadville Limestone within 3 days.
Initial 100% Ownership and Operator
Golden State holds an initial 100% interest in this well, and operatorship through its 100%-owned US subsidiary, Golden Eagle Exploration LLC. Denver-based joint venture
partner Eclipse Exploration Inc has the right to back in with a 16.67% working interest after the drilling of two wells by Golden State.
DEFINITIONS
Connection gas: Pressured formation gas introduced into the well during short periods of mud pump shutdown, such as when connecting additional drilling pipe. Trip gas: Gas that infiltrates the well when withdrawing the drill string (i.e. making a trip). Gas units: 10,000 units = 100% gas i.e. 3,000 units = 30% gas. |
