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News Releases
 April 04, 2006
Gulfsands Signs Rig Contracts for Block 26, Syria; First Exploration Well Expected to Spud by May 2006

 Gulfsands Petroleum PLC (symbol GPX), the AIM listed oil and gas exploration, development and production company with activities in the USA, Syria and Iraq, announced today that the Company has executed definitive agreements for the drilling of three exploration wells with the option to drill a further two wells within Block 26, Syria.

Gulfsands, the operator and 50% working interest owner in Block 26, has taken assignment under an existing contract from another operator in Syria, for a drilling rig owned and operated by Crosco, a drilling company based in Croatia. Gulfsands will use this rig to drill and evaluate the Souedieh North well commencing in late April or early May 2006 with the option to drill another well within the block under this same agreement. Furthermore, the Company signed a definitive agreement with MB Drilling Overseas Limited for the drilling of two firm wells with a one well option. This rig will be used to drill to the deeper Palaeozoic prospects identified in Block 26, such as the Tigris structure which is scheduled for drilling in August 2006.

The Souedieh North well will be located in the northeast region of Block 26. This vertical well will be drilled to an approximate total depth of 7,216 feet with the primary objective being Cretaceous aged reservoirs similar to those producing in the adjacent Souedieh and Karachok oil fields. This prospect has the potential to contain in excess of 100 million barrels of recoverable oil (Gulfsands' internal estimate of potential). Gulfsands has commenced site preparations for the well, and expects a spud date on or about 1 May 2006. The net cost to Gulfsands for drilling and evaluating this well is approximately $800,000.

The Tigris well will also be located in the northeast region of the Block and is expected to spud in August 2006. The net cost to Gulfsands for drilling and evaluating this well is approximately $3.25 million. This vertical well will be drilled to a total depth of nearly 15,000 feet with the primary objectives being a series of Palaeozoic (Carboniferous and Devonian) sandstone reservoirs. The Tigris structure is directly underlying the Souedieh oil field (the largest known oil field in Syria), where oil is produced from the shallower Cretaceous reservoirs. Wireline log evaluation of an existing well on the structure drilled some years ago has identified pay zones within the objective reservoirs, and the Tigris-1 well is designed to evaluate these reservoirs and appraise this probable hydrocarbon accumulation. Gulfsands announced on 30 January 2006 the results of a reserves study by Ryder Scott Company, L.P. (Ryder Scott), an independent petroleum engineering firm, on the Tigris structure. Ryder Scott developed two cases for this evaluation, an oil case and a gas case, as there was not sufficient data available at the time to determine the expected hydrocarbon fluid contained within the Tigris structure. This reserves study as of 1 January 2006 classified recoverable Probable and Possible Reserves and Prospective Resource as follows:
  • For primarily a natural gas accumulation, Ryder Scott has classified 442 BCFG as Probable Reserves, 442 BCFG as Possible Reserves, and a further 3447 BCFG as a Prospective Resource. In summary total reserves potential among Probable, Possible and Prospective Resource is 4330 BCFG (722 MMBOE).

  • For primarily an oil accumulation, Ryder Scott has classified 104 million barrels of oil and 64 BCFG as Possible Reserves and a further 408 MMBO and 245 BCFG as a Prospective Resource. In summary total reserves potential among Possible and Prospective Resource is 512 MMBO and 308 BCFG (combined 563 MMBOE).
Gulfsands' CEO, John Dorrier, said:

"Gulfsands is constantly seeking ways of accelerating its schedules and controlling the costs of exploration drilling. These drilling arrangements represent an important achievement in the current market. The relatively low-cost and high potential of these two drilling projects remains a very attractive exploitation of the Company's significant inventory of drilling opportunities."


Enquiries:
Gulfsands Petroleum (Houston) 001-713-626-9564

David DeCort, Chief Financial Officer

College Hill (London) 020-7457-2020
Ben Brewerton / Nick Elwes

Seymour Pierce (London) 020-7107-8000
Richard Redmayne
Jonathan Wright

Note to Editors
  • Gulf of Mexico, USA
    The Group owns interests in 64 offshore blocks comprising approximately 216,000 gross acres which includes 39 producing oil and gas fields offshore Texas and Louisiana with proved and probable recoverable reserves of 32.4 BCFGE, consisting of 19.8 BCFG and 2.1 MMBO as of 1 January 2006 with a net present value of $183 million. Additionally, there is a further 2.8 BCFGE of possible recoverable reserves with a net present value of $15.8 million.

  • Syria
    In Syria, Gulfsands owns a 50% working interest in Block 26 and is the operator. The block covers 11,000 square kilometres and surrounds areas which currently produce over 100,000 barrels of oil per day from existing fields. In January 2006 the Group completed the acquisition of 1,155 kilometers of 2D seismic and anticipates drilling two wells during 2006. The first well, known as Souedieh North, is scheduled to spud in late April or early May 2006 which has the potential to contain in excess of 100 MMBO. The second well known as Tigris is scheduled to spud in August of 2006 and has the potential to contain in excess of 500 MMBOE. Gulfsands has identified 31 total exploitation and exploration prospects within Block 26 with mean resources potential exceeding 1 billion barrels of recoverable oil. An independent reserves report was issued in January 2006 on the Tigris structure. The reserves were classified as either oil or gas bearing until such time as the Company drills and tests the Tigris structure. The reserve report concluded that there are 442 BCFG of probable recoverable reserves in the Tigris structure. Additionally, the report classified the possible reserves as either natural gas or oil. The gas case reflected an additional 442 BCFG in possible recoverable reserves and an additional 3447 BCFG as prospective resource. The oil case reflects 104 MMBO and 64 BCFG in possible recoverable reserves and a further 408 MMBO and 245 BCFG as prospective resource. In summary, the natural gas case equates to total recoverable reserves potential among probable reserves, possible reserves and prospective resource as 4330 BCFG (722 MMBOE), while the oil case equates to 512 MMBO and 308 BCFG (combined 563 MMBOE).

  • Iraq
    Gulfsands signed a Memorandum of Understanding in January 2005 with the Ministry of Oil in Iraq for the Misan Gas Project in Southern Iraq and is currently negotiating the definitive contract for the project. The project will gather, process and transmit natural gas that is currently a waste by-product of oil production in the region and will end the environmentally damaging practice of gas flaring. Gulfsands has completed a feasibility study and expects to conduct further technical work and commercial discussions with the Iraq Oil Ministry.

  • Onshore USA
    Gulfsands operates onshore in the USA through its 83% owned subsidiary company Darcy Energy LLC. As of 1 January 2006, Darcy Energy owned interests in two oil and gas fields onshore Texas, USA (Emily Hawes and Barb Mag) with proved and probable recoverable reserves of 1.6 BCFGE, consisting of 1.2 BCFG and 58,000 barrels of oil with a net present value of $9.5 million. Additionally, there is a further 2.2 BCFGE of possible recoverable reserves with a net present value of $7.9 million.
 
 

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