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Golden Gate Petroleum Ltd, Update Permian Project

The Permian Project currently has five wells on production and a 6th well drilled and cased, awaiting fracture stimulation. Total oil and gas production is up to 102 barrels of oil equivalent (BOE) per day. The SRH #1 and SRH #2 wells are currently awaiting fracture stimulation across the Spraberry and Dean Intervals. Once the stimulation treatments on the #1, #2 and #6 wells are completed we expect to see initial daily production to double from the project.

A new vertical well is being planned for October and will be our sixth vertical well on the 771 lease. We are also preparing for a new horizontal well on the 772 lease once the current issue with the Texas Railroad Commission (RRC) concerning depth severance in the Lind Wolfcamp Field is resolved. This dispute has an impact on all nearby areas where leases have been granted on a depth severance basis, and could apply to companies other than GGP. Drilling on our 772 lease cannot reasonably proceed until a RRC ruling has been made or we would risk access or rights to production from the well. A ruling is expected in the next few months.

Funding for these projects will continue to come from existing financial programs in place. In addition, we are working on several new funding programs including financing with debt which is designed to accelerate the current drilling program. We are also looking at optioning out an equity piece in the project in order to fund further activities.

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