|November 22, 2006|
|Gulfsands Petroleum plc (AIM: GPX), the oil and gas production, exploration and development company with activities in the USA, Syria and Iraq announces that it has today received notification from John Dorrier (Chief Executive Officer) and David DeCort (Chief Financial Officer) for the exercise of options (the "Options Exercise") over 5,643,750 ordinary shares of 5.714p each in the Company ("Ordinary Shares"). The exercise of these options is part of a plan (as previously announced on 28 July 2006) intended to facilitate the early exercise of all stock options issued to Directors in the years prior to the Initial Public Offering of the Company on AIM in April 2005.|
The Company received $1,963,750 (approximately £1.045 million) in proceeds from the Options Exercise and subsequently Messrs. Dorrier and DeCort sold 4,550,000 of the new Ordinary Shares arising as a result of the Option Exercise ("the Sale Shares") of which 3,550,000 were sold so as to cover certain US tax liabilities and the cost of exercising these and earlier options that were exercised on 28 July 2006. As a consequence Mssrs Dorrier and DeCort purchased a net 1,093,750 Ordinary Shares.
The majority of the Sale Shares were placed with institutional investors, at a price of 90p per share. Following the Options Exercise and subsequent sale of the Sale Shares Mr. Dorrier's shareholding increased to 9,098,750 Ordinary Shares and Mr. DeCort's shareholding increased to 5,164,375 ordinary shares, representing 8.83% and 5.01% respectively of the issued share capital of the Company. Further details of the Options Exercise and sale of the Sale Shares are summarised in Appendix I to this announcement below.
Gulfsands also announces that pursuant to the Options Exercise, it has received notification today that Hamilton Capital Partners Limited ("Hamilton"), an associate company of Kenneth Judge (Director of Corporate Development), has today purchased 323,000 Ordinary Shares of Gulfsands at 90p per share. Following this purchase, Hamilton's interests in the Company increased to 3,966,750 Ordinary Shares, or 3.85% of the issued share capital of the Company.
Following the purchase by Hamilton Capital Partners Limited and the net increase in the shareholdings of Messrs Dorrier and DeCort resulting from the Options Exercise and sale of the Sale Shares, the directors have, collectively, increased their overall ownership in Gulfsands to a total of 26,701,250 Ordinary Shares, representing approximately 26% of the Company's issued share capital.
Following the Options Exercise, there remain a total of 4,733,750 options outstanding with expiry dates between 1 January 2008 and 18 October 2011 (further details of which are set out in the Company's 2005 Report & Accounts which were circulated to shareholders and are available on the Company's website - www.gulfsands.net). The new Ordinary Shares to be issued as a result the Options Exercise rank pari passu with the existing ordinary share capital of the Company and have been allotted and issued credited as fully paid. Application has been made for the 5,643,750 new Ordinary Shares to be admitted to trading on AIM. Dealings are expected to commence on or around 24 November 2006.
Following admission, the total issued share capital of the Company has increased to 103,018,750 Ordinary Shares.
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) + 1-713-626-9564
John Dorrier, Chief Executive Officer
David DeCort, Chief Financial Officer
Gulfsands Petroleum (London) 020-7182-4016
Kenneth Judge, 07733 001 002
Director of Corporate Development
College Hill (London) 020-7457-2020
Teather & Greenwood (London) 020-7426-9000
James Maxwell (Corporate Finance)
Tanya Clarke (Specialist Sales)
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 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 (34.375% working interest in Emily Hawes and 37.5% working interest in Barb Mag) with proved and probable recoverable reserves net to Gulfsands 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 net to Gulfsands with an estimated net present value of $7.9 million.
Summary details of the interests of John Dorrier and David DeCort following the Options Exercise and sale of the Sale Shares are as follows:
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