|June 02, 2006|
Gulfsands Completes Drilling Operations on Souedieh North Well
|Gulfsands Petroleum PLC|
("Gulfsands" or "the Company")
Gulfsands Petroleum PLC (symbol GPX), the AIM listed oil and gas exploration, development and production company with activities in the USA, Syria and Iraq, announces that the Company has concluded initial drilling operations and has suspended the Souedieh North well in Block 26, Syria pending further analysis of the well data.
As reported previously, the well encountered a series of live oil and gas shows in both the primary and the secondary reservoir objectives while drilling. Wireline electric logs were run within both the primary and secondary objectives, Tertiary and Cretaceous reservoirs, which indicated oil-bearing pay zones within both objectives. However, wireline fluid tests of these intervals did not recover moveable oil. Preliminary analysis shows that the oil is low API gravity/high viscosity in the Tertiary reservoirs, and that the lower porosity and permeability Cretaceous reservoirs at this location may produce oil after mechanical or chemical stimulation. Gulfsands is the operator and 50% working interest owner in Block 26.
Independent log analysis of the electric wireline logs in both the Tertiary and Cretaceous reservoir sections of the well indicated some 80 feet of potential net oil pay. Although live oil was collected in the samples during drilling, no oil was recovered during wireline tests of these zones. A full review of the drilling, sample, wireline and sidewall core data is being undertaken, in conjunction with a further review of the seismic data over the area. Due to the apparent oil column seen in this well the Company has decided to suspend the well in order to complete these studies and determine if these reservoirs are candidates for fracture stimulation or a similar stimulation testing program, or whether the well should be deepened. No production testing has been performed on the well but will be considered as part of a future testing program after these further analyses have been completed.
Gulfsands' CEO, John Dorrier, said:
"We are disappointed not to recover movable oil in this well after encountering good oil shows while drilling and recording an apparent oil column on the wireline logs. Further work on the information gathered in this well may justify further testing, stimulation or deepening operations in the well, and will certainly be very useful in evaluating the numerous other prospects seen on the block. The geologic and operations data gathered during drilling Souedieh North will certainly help in the drilling of the Tigris-1 well scheduled for August this year."
Gulfsands Petroleum (Houston) 001-713-626-9564
David DeCort, Chief Financial Officer
College Hill (London) 020-7457-2020
Teather & Greenwood (London) 020-7426-9000
James Maxwell (Corporate Finance)
Tanya Clarke (Specialist Sales)
NB: This release has been approved by Jason Oden, Gulfsands Exploration Manager who has a Bachelor of Science degree in Geophysics with 22 years of experience in petroleum exploration and management and is registered as a Professional Geophysicist. Mr. Oden of Gulfsands and also Peter Hitchens on behalf of Teather & Greenwood Limited, the Company's Nominated Advisor, have consented to the inclusion of the material in the form and context in which it appears.
Note to Editors
• Gulf of Mexico, USA
The Company 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.
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 Company completed the acquisition of 1,155 kilometers of 2D seismic and anticipates drilling two wells during 2006. The first well, known as Souedieh North, commenced drilling in late April 2006 and was temporarily suspended in June for further analysis. 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).
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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