Samson Oil & Gas Acquires Additional Equity in State GC#2

Samson Oil & gas reported that as previously advised, the State GC#2 well spudded on February 16 and was drilled to a depth of 4,700 feet where the well lost circulation, resulting in a stuck bottom hole assembly which required a cement plug to be set and the well deviated. The current operation in the sidetrack is drilling ahead at a depth of 5,521 feet. The well is expected to be drilled ahead to a depth of 5,600 feet at which point an intermediate casing string will be set, and then the well will be drilled to its planned total depth of 11,600 feet.

Due to the increased cost of the well, one of the partners in the well elected to sell part of its equity at no cost, thus Samson's working interest has increased to 37% and its net revenue interest to 28%.

The State GC#2 well is located in the Permian Basin in Lea County in eastern New Mexico. The well is adjacent to the State GC#1 well, which produces oil from the Lower Leonard Formation. This well has produced a gross 543,000 barrels and has a gross Expected Ultimate Recovery of 1.1 million barrels. The State GC#2 well can be expected to have a similar recovery so long as the amplitude response is proven to be accurate.

The State GC#2 well location has been developed through the use of 3D seismic which has been analyzed for amplitude response, and both the State GC#1 well and the State GC#2 well are located in areas of elevated amplitude thought to be caused by the incidence of porosity. The credibility of the amplitude response has been enhanced because of the lack of amplitude associated with two dry holes drilled adjacent to the State GC#1 well by neighboring lease holders. Thus, there is both positive and negative evidence that the porosity associated with the Lower Leonard can be imaged by 3D seismically derived amplitudes.