Golden Gate has accused its partner of breaching a drilling agreement, whereby BNP was obliged to drill a Manzano well to a depth of 10,500 feet (3200m).

If the well recovered no commercial hydrocarbons to that depth, BNP could elect to hand the well over for $6 million cash to allow the well to be deepened to 15,000 feet.

But Golden Gate said that for “a variety of reasons” BNP failed to drill the well before the rig was released on July 31, marking the end of the 2006-07 drilling program.

In response, BNP sought a court injunction to force Golden Gate to continue the arrangement.

“[Golden Gate’s US subsidiary] Kindee believes the lawsuit is without merit and will vigorously contest the claim,” the company said.

“In the unlikely event that BNP is successful, the outcome for Golden Gate is that it will be forced [to drill] the Manzano well. Kindee is preparing its response to the BNP claim.”

Meanwhile, the company is about to start drilling on the Dunn Deep structure to appraise the MT35 reservoir that has been producing at more than 4.5 million cubic feet of gas per day from the LaPlaya deep well.

The appraisal well, to be called Mid Frio Unit-2, is expected to take 35 days to be drilled to 10,465 feet.

“The Dunn Deep structure is stratigraphic in nature and its size cannot be determined from the 3D seismic,” Golden Gate said.

“This well will assist in delineating the field as well as having the potential to accelerate production and cash flow. In addition to the MT35 reservoir there are a number of thinner shallower objectives that may be productive.”

Golden Gate has farmed-out 15% of its working interest in the well to two other parties, which in return will fund 20% of the drilling costs.

As a result, Golden Gate now has a 20% interest in the well and will pay for 15% of the costs.