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Golden Gate Petroleum pays down convertible note, readies for drilling

US-focussed Golden Gate Petroleum (ASX: GGP) has made a significant reduction in its convertible note position and settled all obligations related to a high interest rate convertible note issued on 11 March 2009, following payment of A$$559,400 on 1 April 2010.

GGP has reduced its outstanding convertible notes from $6.5 million at the beginning of the financial year to around $170,000.

Consequently, the company’s outstanding payable obligations have been significantly lowered, which is timely as GGP has a six well drill and test season over the next six months.

From April, GGP aims to drill or participate in drilling up to a well a month for the next six months – all in Texas and Louisiana.

In addition, two existing wells will be further tested.

Funding for the drilling program will come from a fully-underwritten placement by Novus Capital and an
underwritten Share Purchase Plan offer to shareholders which all up will add $4.5million to GGP’s cash

Steve Graves, managing director of GGP, is targeting production and further testing at the Fausse Point project with cash flows to start in the April/May timeframe.

Disclosure: The author holds no positions in the company