|October 19, 2006|
Drilling Update - Tigris-1 well, Syria
|Appointment of Director of Corporate Development|
Expansion of London presence
London, 19th October, 2006: Gulfsands Petroleum plc (AIM: GPX), the oil and gas production, exploration and development company with activities in the USA, Syria and Iraq, is pleased to provide an update on drilling activity in Syria and announce the appointment of Kenneth Judge to the Board of Directors as Director of Corporate Development in parallel with the establishment of the Company's new London office.
Tigris -1 Well
The Tigris-1 well in Block 26, Syria is drilling at a depth of 2,280 metres and is estimated to take 90 to 120 days to drill and evaluate. Drilling of Tigris-1 commenced on 10 September 2006. The well is targeting a total depth of approximately 4,500 metres. The Company owns the deep rights in Tigris to oil and gas contained in Paleozoic reservoirs, which will not be penetrated until near the end of drilling this well.
Gulfsands has commenced the acquisition of an additional 266 kilometres of 2D seismic in Block 26 for the purpose of finalizing the drilling program for the first half of 2007.
Director of Corporate Development
With immediate effect, Kenneth Peter Judge OAM has been appointed as Director of Corporate Development. Mr. Judge's role will primarily include corporate strategy and liaison with the Company's institutional shareholder base.
Mr. Judge, is well known to the London investment community as a corporate lawyer with extensive business management and corporate development experience having held numerous public company directorships and more recently having been engaged in the establishment or corporate development of oil and gas, mining and technology companies in the United Kingdom, Middle East, USA, Australia, Europe, Canada, Latin America and South East Asia. Mr. Judge has undergraduate and post-graduate degrees in Commerce, Jurisprudence and Laws from the University of Western Australia and was awarded an Order of Australia Medal in 1994.
Expansion of London Presence
In response to an anticipated increase in the Company's activity in the Middle East, Gulfsands is establishing a London office at 33 Cavendish Square, London W1G 0PW. This office will serve as the Company's corporate and technical headquarters in support of activity in the City of London and operations in the Middle East.
Gulfsands' CEO, John Dorrier, said:
"We are pleased to welcome Ken Judge to the Board. Ken has a wide range of relevant corporate development experience and will assist with shaping and executing the Company's strategies and liaison with our largely Europe based, institutional shareholders. The opening of our new London office should also facilitate the Company's presence in the City and provide a home for an expansion of our technical resources to support our operations in Syria and Iraq."
Further information required under AIM rules:-
Mr. Judge, aged 51, is also a director of Hidefield Gold plc, Brazilian Diamonds Ltd., Alto Ventures Ltd., Columbus Gold Corporation, Empire Mining Corporation, Block Shield Corporation plc and Carnarvon Petroleum Ltd. Within the last five years, Mr. Judge was also a director of Latin American Minerals Inc., Piper Capital Inc. and Forum Uranium Corporation.
Following Mr. Judge's appointment to the Board, he has been granted options over 400,000 ordinary shares of 5.714p each at £0.96 per share, exercisable by 18 October 2011. Hamilton Capital Partners Limited, a company in which Mr. Judge is beneficially interested, is the owner of 3,643,750 ordinary shares in Gulfsands, which represents approximately 3.74% of Gulfsands' total issued share capital.
There is no further information required to be disclosed in accordance with Schedule Two (g) of the AIM Rules.
Gulf of Mexico, USA
The Company owns interests in 64 offshore blocks comprising approximately 216,000 gross acres which includes numerous 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 1st January 2006 these were estimated to have a net present value of $183 million. In addition, the Company's 2.8 BCFGE of possible recoverable reserves were estimated to have a net present value of $15.8 million.
Gulfsands owns a 50% working interest and is operator of Block 26 in North East Syria. Block 26 covers 11,000 square kilometres and encompasses existing fields which currently produce over 100,000 barrels of oil per day. These fields are operated by third parties including the Syria Petroleum Company.
In January 2006 the Company completed the acquisition of 1,155 kilometres of 2D seismic over three areas of Block 26 and following evaluation of this data, commenced drilling of the Tigris-1 prospect on 10 September, 2006. The Tigris structure is estimated to have the potential to contain in excess of 500 MMBOE. Gulfsands has identified numerous exploration prospects and leads within Block 26 with mean resources potential exceeding 1 billion barrels of recoverable oil.
Ryder Scott recently completed a reserves study on the Tigris structure (the report is available on the Gulfsands' website at www.gulfsands.net) and pending the Company's drilling and testing of the Tigris structure, classified these reserves as either oil or gas bearing. Ryder Scott assessed Gulfsands' net Probable Reserves were 102 BCFG and had a net present value of $233 million. Assuming a primarily natural gas accumulation, Ryder Scott estimated Gulfsands had an additional net 75 BCFG of possible reserves with a net present value of $261 million. All reserve estimations for Syria were calculated using a discount rate of 10% and after applying the terms of the Production Sharing Contract after Syrian taxes.
The Company has completed its own economic evaluation on the Prospective Gas Resource and has estimated the Company to have a net Prospective Gas Resource of 577 BCFG with a net present value of approximately $1.06 billion.
In summary, Gulfsands' total net gas reserves potential among Probable and Possible Reserves for the natural gas case is estimated at 177 BCFG (30 MMBOE) with a net present value of $494 million. When combined with the Prospective Gas Resource for an aggregate 754 BCFG (126 MMBOE), the net present value of Gulfsands' interest are estimated to be valued at approximately $1.55 billion.
Ryder Scott estimated that for a primarily oil accumulation, the Possible Reserves net to Gulfsands are 19.4 million barrels of oil with a net present value of $452 million. Gulfsands has completed its own economic evaluation on the Prospective Oil Resource and has estimated its net Prospective Oil Resource at 50.9 MMBO with a net present value of approximately $1.51 billion.
In summary Gulfsands total net oil reserves potential among Possible and Prospective Oil Resource for the oil case is estimated at 70.3 MMBO with a net present value of approximately $1.96 billion.
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 following completion of a feasibility study on the project, is currently negotiating details of definitive contracts for this regionally important development. The project will gather, process and transmit natural gas that is currently a waste by-product of oil production and as a result of the present practice of gas flaring, contributes to significant environmental damage in the region.
Gulfsands operates onshore in the USA through its 100% owned subsidiary company Darcy Energy LLC which owns interests in two oil and gas fields onshore Texas, USA (Emily Hawes and Barb Mag) with proved and probable recoverable reserves at 1 January 2006 of 1.6 BCFGE, consisting of 1.2 BCFG and 58,000 barrels of oil with an estimated net present value of $9.5 million. Additionally, these fields contain a further 2.2 BCFGE of possible recoverable reserves with an estimated net present value of $7.9 million.
For further information including the Company's recent investor presentation, please refer to the Company's website www.gulfsands.net or contact:
Gulfsands Petroleum (Houston)
John Dorrier, Chief Executive Officer
David DeCort, Chief Financial Officer
Gulfsands Petroleum (London)
(pending opening of office)
Kenneth Judge, Director of Corporate Development
College Hill (London)
Teather & Greenwood (London)
James Maxwell (Corporate Finance)
Tanya Clarke (Specialist Sales)
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