Golden Gate Petroleum Limited (“GGP”) (ASX:GGP) is pleased to provide the market an update on the Cutlass Project in Texas, USA.
After an extensive analysis of both the commercial and technical aspects of the Cutlass Project in the Eagleford, GGP has elected to sell its 10% working interest to an existing partner in the Project. The sale price is US$ 1.7 million less any outstanding expenses. The sales price represents approximately the capital spent to date on the drilling and partial completion of the Project’s two wells and infrastructure.
Under the Joint Operating Agreement, all existing partners in the project have the preferential right to take up their proportionate share of the working interest that is under an agreement for sale. All other existing partners have been provided written notices of the sale terms and have until later this month to respond with their election.
The Cutlass Project has been a good opportunity to participate in an unconventional development program which diversified GGP’s overall position across both the Eagleford and the Permian. From a technical standpoint, the Cutlass Project remains untested due to neither of the two wells drilled to date having been frac’d or put on production. The commercial aspects of the project have also been impacted by the higher relative financial performance that we believe can now be achieved at our Permian Project given the recent results surrounding our leasehold position.
The proceeds from the sale of the Cutlass Project will be used for the further development of the Permian Project.
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