Golden Chief Acquires Additional Leases Jul 17, 2006 11:47:00 AM LEWISVILLE, TX -- (MARKET WIRE) -- 07/17/06 -- Golden Chief Resources, Inc. (PINKSHEETS: GCHR) announces the acquisition of approximately 1,100 acres of oil and gas leases located in Elk County, Kansas in exchange for 200,000 shares of its common stock. The 80% net revenue leases contain 13 existing oil and gas wells which are currently shut-in. Two of the wells can be brought on production with the installation of only minimal surface equipment which the Company has in inventory. The Company expects to install the equipment and begin producing the wells early in August.
CONTACT: Golden Chief Resources, Inc. Lewisville Mike McIlvain 972-219-8585
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GOLDEN CHIEF RESOURCES, INC. -- THREE YEAR BUSINESS PLAN
Golden Chief Resources, Inc. 896 N. Mill St. #203 Lewisville, Texas 75057 TEL: 972-219-8585 Officers: Mike McIlvain -- Fred Oden -- Hugh Fowler Created by Fred Oden -- June 10, 2006
I. OVERVIEW
A. Description
Golden Chief Resources, Inc. (GCHR) is a fully reporting company with corporate offices in Lewisville, Texas. GCHR is an energy based company whose mission is to establish or increase production from known oil and gas properties through the application of new advanced technology.
GCHR has spent the past eighteen months researching and analyzing oil and gas properties in Eastern Kansas and has acquired over 1,500 acres of Oil & Gas leases in the counties of Montgomery, Chautauqua and Jefferson. There are forty-six shallow oil and/or gas wells on these properties. Analysis of the subsurface data for these properties indicated oil reserves in excess of twenty million barrels with a depletion of less than five percent.
GCHR has initiated the developmental phase of this three year plan which allows for the reworking of the existing oil/gas wells and an aggressive drilling program on these leases. The further development of which should enable a minimal depletion of thirty percent of the known reserves. The total cost of the development is an estimated $6,390,000.00 to be expended over the next eighteen months. Upon completion of this developmental phase, we anticipate minimal production of approximately 400 barrels of oil and 400,000 cubic feet of gas per day. Utilizing a basis of $60.00 per barrel of oil and $6.00 per thousand cubic feet of gas, this equates to gross monthly revenues from oil and gas sales to be approximately $792,000.00 and a net of $594,000.00 per month after the payment of royalties. This equals a return of capital invested of approximately eleven months.
B. Allocation of Funds.
The plan for development of our leases consists of three stages. Each stage is designed to increase production from known reservoirs while accumulating new data from previously identified but unproven horizons.
Stage One consists of reworking ten existing Weiser wells, drilling one new Weiser Well on the Ownbey Lease in Chautauqua County and drilling two wells on the Noll Lease in Jefferson county. This stage will require approximately sixty days to complete and requires a capital investment of $550,000.00 with a production target of 60 barrels of oil per day. If successful, this will establish initial monthly revenues of approximately $108,000.00.
Stage Two involves both development and acquisition. We will acquire two producing gas wells on the Ownbey/Troyer lease in Chautauqua County to provide the necessary gas for initial pressurization of the Weiser Sand. This will require a $250,000.00 capital outlay. Once this gas is acquired, we will clean and test existing lease flow lines and make any repairs necessary to facilitate our pressurization program. The cost projection for testing and clean up is approximately $15,000.00 with a compression cost of approximately $1,500.00 per month. We will rework the four existing gas wells on our Jefferson County lease and return these wells to their productive status. Capital outlay for Jefferson County is approximately $40,000.00 and a compression cost for this project is approximately $2,500.00 per month. We will rework eight oil wells and drill one new well on our Montgomery County lease. Capital outlay for Montgomery County is approximately $180,000.00. Our production target is 25 barrels of oil and 200,000 cubic feet of gas per day. It is estimated this stage will require approximately 120 days for completion. If successful, our monthly revenues will be increased to approximately $189,000.00 per month.
Stage Three is the most extensive and expensive of the stages. It consists of drilling one new Chattanooga Test well and forty developmental wells on the Ownbey/Troyer leases in Chautauqua County. The estimated cost for this stage is $5,100,000.00 and will require approximately twelve months for completion. Our target production for this stage is 320 barrels of oil and 200, 000 cubic feet of gas per day. This will increase our daily production levels to approximately 400 barrels of oil and 400,000 cubic feet of gas. If successful, our monthly gross revenue will be approximately $792,000.00, with a net of approximately $594,000.00 after payment of royalties.
Our plan is to accumulate and interpret new subsurface information obtained during the development of our existing properties. This new information, coupled with our current data, will enable us to make more informed decisions on completion and production procedures and formations previously identified. The drilling of these new wells will enable us to test these formations. If successful, we will be able to establish production from additional formations and greatly enhance the profitability of our lease.
The production figures listed above are conservative and based upon our best estimates via historical data. The definitive benefit of the pressurization project can only be determined once target formation pressures have been reached. The revenue figures listed above do not include the sale of the gas used to pressurize the Weiser formation. The sale of this enriched gas and the construction of the gathering system needed to deliver our gas to market are stages IV and V in next phase of our developmental plans. By using our own system, we will not be subject to commercial pipeline tax rates and third party transportation fees. This information will be discussed further at a later date.
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