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 July 24, 2006
Reserves Update

 NPV of Gulfsands Worldwide Proved and Probable Reserves at $426 million

NPV of Gulfsands Probable Reserves in Block 26, Syria at $233 million



Gulfsands Petroleum plc (symbol GPX), the AIM listed oil and gas exploration, development and production company with activities in the USA, Syria and Iraq, is pleased to announce that Ryder Scott Company, L.P. ("Ryder Scott") has completed an economic evaluation of the probable and possible reserves (unrisked) on the Tigris structure in Block 26, Syria as of 1 July 2006. The net present value discounted at 10% of the Probable Reserves as of 1 July 2006 on the Tigris structure in Block 26, Syria is estimated at $233 million net to Gulfsands' 50% working interest. This Ryder Scott report can be viewed on Gulfsands' website at www.gulfsands.net.

Gulfsands USA proved and probable reserves in the USA as of 1 January 2006 were prepared earlier in the year by Netherland, Sewell & Associates Inc. for the Gulf of Mexico and Collarini Associates for the Gulf Coast onshore. Those reserve reports combined determined that the Company's USA proved and probable reserves had a net present value of $193 million resulting in overall worldwide proved and probable reserves for the Company at $426 million.

Gulfsands Worldwide Proved and Probable Reserves
Syria             USA              Total

102 BCFG *        34 BCFGE         136 BCFGE or 22.67 MMBOE

$233 Million      $193 Million     $426 Million

*  Represents net reserves (not working interest reserves)
   after applying the fiscal terms of the PSC.
Block 26, Syria Reserves

Ryder Scott completed a detailed economic valuation of the Probable and Possible reserves on the Tigris structure in Block 26, Syria as of 1 July 2006 as a follow up to the previous Ryder Scott report which was a reserves volume evaluation only. Additionally, Gulfsands completed an internal study resulting in a detailed economic valuation of the Prospective Resource volumes in the Tigris structure.

On 30 January 2006, Ryder Scott issued a reserves report on the Tigris structure in which there were two cases considered: an oil case and a gas case. Two cases were considered as there was insufficient data available at that time to determine with certainty the hydrocarbon fluid contained within the Tigris structure. This reserves study classified recoverable Probable and Possible Reserves and Prospective Resource as follows:
  • For primarily a natural gas accumulation, Ryder Scott classified 442 BCFG as Probable Reserves, 442 BCFG as Possible Reserves, and a further 3447 BCFG as a Prospective Resource. In summary total estimated reserves potential among Probable, Possible and Prospective Resource is 4330 BCFG (722 MMBOE).

  • For primarily an oil accumulation, Ryder Scott 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 estimated reserves potential among Possible and Prospective Resource is 512 MMBO and 308 BCFG (combined 563 MMBOE).
Based upon this gross Reserve volumes study, Ryder Scott completed an economic evaluation as of 1 July 2006 which indicates the Probable Reserves net to Gulfsands after applying the fiscal terms of the Production Sharing Contract are 102 BCFG with a net present value discounted at 10% of $233 million. For primarily a natural gas accumulation, an additional 75 BCFG of possible reserves net to Gulfsands were estimated to have a 10% discounted net present value of $261 million. Furthermore, the Company completed its own economic evaluation on the Prospective Gas Resource and has estimated that Prospective Gas Resource net to Gulfsands is 577 BCFG with an estimated net present value discounted at 10% of approximately $1.06 billion. In summary total gas reserves potential net to Gulfsands among Probable and Possible Reserves for the natural gas case is 177 BCFG (30 MMBOE) with a net present value of $494 million and when combined with the Prospective Gas Resource it totals 754 BCFG (126 MMBOE) with a net present value of approximately $1.55 billion.

For primarily an oil accumulation, Ryder Scott determined the Possible Reserves net to Gulfsands after applying the terms of the Production Sharing Contract are 19.4 million barrels of oil having a 10% discounted net present value of $452 million. Furthermore, the Company completed its own economic evaluation on the Prospective Oil Resource and has estimated that Prospective Oil Resource net to Gulfsands is 50.9 MMBO with a net present value of approximately $1.51 billion. In summary total oil reserves potential net to Gulfsands among Possible and Prospective Oil Resource for the oil case is 70.3 MMBO with a net present value of approximately $1.96 billion.

Natural gas pricing used in the evaluation was based upon a June 2006 monthly average price utilizing the natural gas pricing formula within the Block 26 Production Sharing Agreement. Oil pricing was based upon the average price for Syrian light crude oil for the month of June 2006. Natural gas prices were fixed at $7.24 per thousand cubic feet while oil prices were fixed at $66.69 per barrel for the life of the project.

Gulfsands currently plans to commence drilling the Tigris confirmation well in late August or early September of 2006. Additionally, the Company plans to drill a further two wells by August of 2007 on Block 26 utilizing the drilling rig for the Tigris well and another drilling rig which the Company is seeking to secure by year-end. Gulfsands is currently reviewing the recently acquired 2D seismic data which will be used to aid in the selection of the further drilling locations in Block 26.

Gulfsands' CEO, John Dorrier, said:

"The Company has been developing the Block 26 prospect inventory during the past year since it became operator of the Block. This work has resulted in a number of high quality prospects that will be drilled in a multi-well programme during the next 12-15 months, starting with the Tigris well. The Ryder Scott report gives us considerable optimism for the value that could accrue to the Company as a result of the Syrian drilling campaign."



Enquiries:

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

David DeCort, Chief Financial Officer

College Hill (London)
020-7457-2020

Nick Elwes
Paddy Blewer

Teather & Greenwood (London)
020-7426-9000

James Maxwell (Corporate Finance)
Tanya Clarke (Specialist Sales)



NB: This release has been approved by the Company's geological staff who include 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, for the purpose of the Guidance Note for Mining, Oil and Gas Companies issued by the London Stock Exchange in respect of AIM companies, which outlines standards of disclosure for mineral projects.


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.

  • 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 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 late 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.

    Ryder Scott completed a reserves study on the Tigris structure in 2006 and these reserves were classified as either oil or gas bearing until such time as the Company drills and tests the Tigris structure. As of 1 July 2006 Ryder Scott determined that the Probable Reserves net to Gulfsands after applying the terms of the Production Sharing Contract is 102 BCFG with a net present value discounted at 10% of $233 million. For primarily a natural gas accumulation, an additional 75 BCFG of possible reserves net to Gulfsands were estimated to have a 10% discounted net present value of $261 million. Furthermore, the Company completed its own economic evaluation on the Prospective Gas Resource and has estimated that Prospective Gas Resource net to Gulfsands is 577 BCFG with a net present value of approximately $1.06 billion. In summary total gas reserves potential net to Gulfsands among Probable and Possible Reserves for the natural gas case is 177 BCFG (30 MMBOE) with a net present value of $494 million and when combined with the Prospective Gas Resource it totals 754 BCFG (126 MMBOE) with a net present value of approximately $1.55 billion.

    For primarily an oil accumulation, Ryder Scott determined the Possible Reserves net to Gulfsands after applying the terms of the Production Sharing Contract are 19.4 million barrels of oil having a net present value discounted at 10% of $452 million. Furthermore, the Company completed its own economic evaluation on the Prospective Oil Resource and has estimated that Prospective Oil Resource net to Gulfsands is 50.9 MMBO with a net present value of approximately $1.51 billion. In summary total oil reserves potential net to Gulfsands among Possible and Prospective Oil Resource for the oil case is 70.3 MMBO with a net present value of approximately $1.96 billion.

  • 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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