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  • Golden Gate Petroleum Provides Permian Project Update 0 comments
    Aug 30, 2013 12:42 AM

    Golden Gate Petroleum (ASX: GGP) has provided an update on the Permian Project, and said today that as noted in its media release on 14 August 2013, we have filed a motion with the Texas Court seeking summary judgment on several issues alleged by Petro-Raider in its ongoing litigation with the Company.

    Golden Gate stated: The court has scheduled the hearing on our motion for 8 November 2013 in Big Lake, Texas, with a ruling expected sometime thereafter.

    The Company expects this ruling to settle several unresolved questions of law and better define any unresolved issues.

    Either party would have the right to appeal an unfavorable ruling, but the Company anticipates that the aforementioned pre-trial ruling will still provide guidance on assessing any potential exposure, and consequently, will better position us to continue the development of our Permian Basin asset.

    Even in the event of an adverse ruling at the trial, in June 2014, GGP believes that the case can be won on appeal.

    The primary claims by Petro-Raider are its rights to a 5% net profits interest and 20% working interest back-in. These interests do not vest until the Company's capital costs have been recovered, which is expected to take years. Petro-Raider also contends that when the Company recovers 110% of the amount of its capital costs that the back-in increases to 25%.

    Petro-Raider makes no claim to the balance of the working-interest. Petro-Raider also claims fraud, tortious interference and civil conspiracy.

    The Company believes, based upon the law and depositions taken to date, that Petro-Raider's additional claims are without merit. GGP has "earned" to date over 1,000 acres on the 771 and 772 leases by drilling six wells.

    This position gives the Company the right to drill another 15 to 18 wells (assuming mostly vertical wells on 40 acre spacing) on this earned acreage, at any time in the future. We also currently have the right to drill an additional 20+ vertical and 9 horizontal wells on the balance of the 771 lease, under the continuous drilling clause of the existing lease.

    Assessment of the 5H horizontal well continues. So far it has been determined that the gas lift system is not functioning at full capacity and a reconfigured, or replacement compressor is being investigated. A bottom hole pressure test has been conducted and is being evaluated.

    Halliburton is planning to conduct a study of the frac program on the 5H well.

    In the meantime, as reported by Global Hunter Securities, one of the leading securities, brokerage and petroleum industry research firms in the US, the Permian's current oil and gas development in the Midland and Delaware basins remains prime leasehold as delineation efforts are proving very successful in terms of both expanding the boundaries of existing oil plays in the Wolfcamp and Spraberry intervals, and achieving strong rates of return.

    GGP's leasehold position is well located in the main fairway of the Midland basin where successes continue to be reported.

    Once the legal matters are addressed and determinations made, the Company remains optimistic that the acreage earned, and additional acreage that can be drilled, will produce similar results to other Operators in our area.

    The Permian Project is considered a very valuable asset. Over 5 million barrels of P1 and P2 reserves have been independently confirmed in the Spraberry Dean intervals on the 771 lease. In addition, there are significant contingent resources identified in the Wolfcamp.

    GGP's current market capitalization is considered only a small fraction of the present value of the Permian Project. Every effort and avenue is being explored to achieve greater recognition of the true value of this resource which is GGP's primary asset.

    Proactive Investors is a market leader in the investment news space, providing ASX "Small and Mid-cap" company news, research reports, StockTube videos and One2One Investor Forums.

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