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Golden Gate Petroleum Ltd, Operations Update

Permian Project, Reagan County, Texas, 100% WI, Operator

Producing Wells
The SRH #1 and SRH #2 wells were the original vertical wells used to initially test the Wolfcamp intervals in our area. The Company fracture stimulated the Wolfcamp in these wells and not the Spraberry Dean intervals which had been fully tested from earlier development in our area. These two wells are currently on production from the Wolfcamp interval only until we have sufficient funding resources to go into each well and frac the Spraberry Dean intervals like we have already done in the SRH #3 & #4 wells. Both the SRH #3 & #4 wells which have frac stages across all intervals are performing on or close to the expected producing decline curve determined by nearby wells.

The SRH #5H well has been a challenge and has so far produced oil below our expectations. The well was drilled correctly and was successfully fracture stimulated. However, 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. We are evaluating possible remedial actions we plan to take to improve performance. In the meantime, a gas lift system has replaced the less efficient submersible pump system and is testing various settings to determine best performance rates.

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