Gold Oil Makes Headway at South American Fields

Block XXI
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Block Z34
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Gold Oil has provided the following operational updates for its business units in Colombia and Peru.

Nancy Burdine Maxine Fields Colombia

In early July the work over program of three wells, Burdine 1, 4 & 5, was initiated. The first step was to open each of the three wells and check their mechanical status. This phase was completed in the last week of July and the Company is pleased to report that despite some difficulties encountered with having to recover an old pump from the Burdine 5 well, all three wells were found to be in good mechanical condition. Consequently all three wells are ready to be production tested. Burdine 1 was the first well to be tested and a mobile pumping unit was brought onto site. After five days of production testing, the Burdine-1 well flowed at an average rate of 220 barrels per day (bopd) of light, 25.6o API crude oil from N and U sands. Bottom hole pressure at different lifting regimens and rates are being measured and selective testing for each sand will be carried out. Over the next two weeks the Company will test Burdine 4 and 5 with similar testing regimes and it is hopeful of analogous production results on these wells.

Once the production tests are concluded the Company hopes that all three wells can be put on long term production. The Company has already formulated a fast track production scheme to bring the wells on stream via the existing Nancy facilities. This involves the expansion of production facilities at the Nancy field, which is less than 2 kms away from the Burdine wells, to handle the anticipated additional production.

The Nancy, Burdine and Maxine fields were discovered by Texaco and put on stream in 1976. The Nancy-1 well produced initially 1,400 bopd, the well production then declined to approximately 200 bopd by 1995 when the well was abandoned. The fields were returned to Ecopetrol who licensed them to a group of local oil and services companies ('the Union Temporal') in 2003. On March 2006, the Company
farmed into the licence through Union Temporal. Since then the Company has bought out one of the partners (Invepetrol). The partners in this block are Ecopetrol (41%) and Union Temporal (59%). Union Temporal is formed by 5 companies: Gold Oil (58.05%), Termotécnica (18.05%), Ingeniería y Servicios Petroleros Ltda. (18.05%), Bioss (2.84%) and one individual with (3%). The Company's net working interest is 27.4%

The Nancy-1 well was re-entered in 2006 and production from the well re-commenced and peaked at a rate of 699 bopd in November 2006 and has since declined to about 250 bopd.

Block Z34 & Block XXI Peru

On May 22, 2009 the Company announced that SCAN Geophysical SA had completed the acquisition of 2,013kms on Block Z34, offshore northern Peru. Despite some delays in getting the information, the Company is pleased to report that Gold has now started the reprocessing and initial interpretation of the acquired data. The amount of data that the Company has received is substantial and the work is taking longer
than originally anticipated. The initial work of geological & geophysical petroleum interpretation team has been focussed on the near shore area and they have already identified four potential geological structures very similar to the petroleum traps that contain proven and developed reserves of more then 300MMbbl (already produced and still producing) in the adjacent Block Z2B operated by PetroTech Peruana. Those leads are located within the band of 200-500 meters of water depth, and therefore should be relatively easy to develop.

The processing and interpretation team are now working on the area of deeper water (with water depths in excess of 2,000 meters) that cover more than 60% of the Z34 area and where large turbidite structures may be present. Results for this area should be ready in the fourth
quarter of this year.

In May 2009 the Company announced that it had entered into a non-exclusive letter of intent with a Peruvian company concerning a potential farm in on blocks Z34 and XXI. The Company has been in extensive negotiation with this group but has been unable to reach any final agreement and the letter of intent has now lapsed. However, the Company is in discussions with other companies concerning similar deals to farm in to both our onshore and offshore Peruvian assets.

The Chairman of Gold Oil, Mark Pritchard said, "I am pleased to report the increased reserves and production in the Nancy-Burdine wells that should show a significant increase in our cash flow from now on. The first results from the partial interpretation of the 2D seismic on Block Z34 are potentially very exciting and should lead to a major upgrade of the potential of this block."


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