05/01/2009 - 12:46

Golden State in $3m share facility deal

05/01/2009 - 12:46

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Subiaco-based Golden State Resources has entered into a $3 million share facility agreement to raise additional funds for its Golden Eagle oil and gas project in Utah.

Subiaco-based Golden State Resources has entered into a $3 million share facility agreement to raise additional funds for its Golden Eagle oil and gas project in Utah.

The oil and gas explorer said today it entered the deal with Manly Investments (WA) Pty Ltd, with a client of Cunningham Securities to subscribe for a total of $3 million of shares with free-attaching options in three tranches.

The issue price for the shares will be 80 per cent of the average market price of Golden State shares during the five consecutive days prior to the issue.

Shares in Golden State last traded at eight cents at 14:45 AEDT.

Options issued with the shares will have an exercise price of 20c each and will expire on June 30 this year.

Golden State said it can cancel the share facility if it does not call for a tranche by the relevant funding notice date, but the subscriber will not be able to terminate the facility.

The facility is subject to shareholder approval.

Meantime, Golden State said it has executed a contract with Unit Drilling Company of Oklahoma City for the provision of a drill rig for a step-out well in the project.

The rig will start operations later this month.

 

 

The announcement is pasted below:

 

Golden State Resources Limited ("Golden State") is pleased to announce it has entered into a Share Facility Agreement ("Share Facility") with Manly Investment (WA) Pty Ltd ("Subscriber") on 3 January 2009 for a $3,000,000 share facility to enable Golden State to draw down funds to progress drilling on the Paradox Basin #2 well in the Golden Eagle Oil & Gas Prospect in Grand County, Utah.

Under the Share Facility, the Subscriber is to subscribe for a total of $3,000,000 of shares and free attaching options, payable in three tranches upon the issue of funding notices by Golden State. The issue price for the shares issued under the Share Facility will be 80% of the average market price of Golden State shares during the five consecutive trading days prior to the issue of the relevant funding notice. Shares issued will be fully paid ordinary shares and rank equally in all respects with Golden State's existing fully paid ordinary shares.

The number of free-attaching options granted on the issue of shares in a tranche under the Share Facility will depend upon the issue price of the shares, but will not exceed one option for every one share issued.


Options granted under the Share Facility will have an exercise price of 20 cents per option and have an expiry date of 30 June 2009. Golden State will apply to have both the shares and options issued under the Share Facility listed for quotation on the ASX.

The Share Facility can be cancelled by Golden State if it does not call for a tranche by the relevant funding notice date. The Subscriber cannot terminate the Share Facility.

The issue of shares and options under the Agreement is subject to the approval of Golden State shareholders, which will be sought at a general meeting of shareholders. A notice of meeting will be circulated to shareholders shortly.

Under the Share Facility, Golden State can issue securities over the course of approximately 3 months. Golden State expects to issue the first funding notice under the Share Facility after the shareholder meeting.
The Subscriber is a client of Cunningham Securities Pty Ltd ("Cunningham") of Perth. Golden State will pay Cunningham a 6% commission once the shareholder approval has been obtained.

PARADOX BASIN #2 DRILLING CONTRACT

Golden State has executed a contact with Unit Drilling Company of Oklahoma City, for the provision of a drilling rig suitable for the completion of the step‐out well Paradox Basin #2. The rig is immediately available and is being mobilised to location ready to commence operations in late January 2009.

PARADOX BASIN #1 WORK-OVER

Golden State Resources has completed the re‐perforation and testing of Paradox Basin #1. The shutin tubing pressure increased to 2200 psig before the well was swabbed and a clean‐up flow commenced. Indications are that additional permeability was encountered. The principle objectives of the operation have been met and operations were suspended at 8pm on 31 December.

The well was flowing at 500 Mcf of gas per day with a 300 psi tubing pressure and was still cleaning up when the operations were suspended. The results of the testing give Golden State Resources further impetus to commence planning for a fracture stimulation that would be undertaken in the northern spring.

Data from the test are being analysed and gas compositional data will be provided to prospective gas gatherers. The work-over also provides sufficient data to enable the permitting of the production connector pipeline to be completed.

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