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Golden Gate Petroleum Continues Permian Oil And Gas Push, Reducing Overheads

Jul. 24, 2013 2:42 AM ET
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Golden Gate Petroleum (ASX: GGP) continues to develop its Permian oil and gas project in Texas and is continuing its program to reduce overheads.

On its Permian Project wells, the company is continuing to produce oil and gas from just the Wolfcamp interval from both its SRH-1 and SRH-2.

Once it secures enough funding, it will go into each well and fracture stimulate the Spraberry Dean intervals like it has done with the SRH-3 and SRH-4 wells.

The latter two wells have continued to perform on or close to the expected producing decline curve determined by nearby wells.

Golden Gate added that while the SRH-5H horizontal well was drilled correctly and was successfully fracture stimulated, it continues to produce below its expectations.

Production appears constrained by either a blockage in the well bore from formation deposits coming through the perforations, a chemical reaction between frac fluid and the formation restricting flow rates, or the actual formation not permitting the oil in place to flow.

The company is evaluating possible remedial actions to improve production and has in the meantime installed a gas lift system to replace the less efficient submersible pump system.

Reducing overheads

Its consolidation of overheads, mainly from the sale of less economic projects, meant that it has been able to reduce its overheads.

The company has in March sold its 10% stake in the Cutlass Project for US$1.7 million.

Effective 1 April 2013, the Company implemented a 25% reduction in total overheads which included a similar reduction in the executive chairman and other executive's compensation.

Further reductions in executive staff and compensations have also been implemented beginning in July 2013.

Dugas & Leblanc-3

The Dugas & Leblanc-3 well continues to flow oil and gas with little decline in production. This well has produced over 149,000 barrels of oil and over 400,000 million cubic feet of gas from a single interval.

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