The company added that water production of about 190 barrels of water per day is believed to be due to a fault in the casing cement at a deeper zone.

Golden Gate said once the rig completes drilling the current development well it will return to Manzano Shallow to cure the water production.

The current development well is aimed at testing the company's interpretation, based on seismic data and correlation with other wells, that the reservoir may be part of a single large accumulation covering an area of more than 1000 acres.

Manzano Shallow brings the number of producing wells in the area up to nine and increases Golden Gate's share of production up to about 5MMcfd.