The company said the La Playa-2 was tied directly into the sales grid along with its other producing wells in the area and flowed gas from a perforated 2ft interval in the prolific production section of Cib Haz.

La Playa-2 was drilled in October 2007 but testing was delayed due to extensive analysis and other well commitments.

"This initial production test is very encouraging as it upgrades the remaining potential reservoirs higher in the borehole, as well as the larger scale trap of the prospect," the company said.

According to Golden Gate, a potentially larger reservoir above the producing interval will be tested once the zone has been fully produced.

The company said the reservoir has low calculated water saturation and direct indication of gas in the cement bond log.

"A successful test in this zone would be expected to lead to significantly higher flow rates," Golden Gate added.

At current gas prices Golden Gate expects the addition of La Playa-2 to significantly improve its cash flow.

Golden Gate has a 20% interest in the well.