|June 04, 2007|
Multi-zone Oil and Gas Discovery at Khurbet East - 1 Well, Syria
London, 4th June, 2007: Gulfsands Petroleum plc (AIM: GPX), the oil and gas production, exploration and development company with activities in the U.S.A., Syria and Iraq is pleased to announce that drilling and initial testing operations on the Khurbet East ("KHE-1") discovery well in Syria Block 26, where Gulfsands is operator and owner of 50% interest, have now been completed after a successful drill-stem test of the deepest productive reservoir encountered in the well-bore. KHE-1 will be suspended as a future oil production well. After completion of operations on KHE-1, the rig will move immediately to the KHE-2 appraisal well location.
The KHE-1 well encountered four significant hydrocarbon bearing reservoirs. The deepest of these, the Triassic aged Kurrachine Dolomite Formation, flowed oil to the surface on drill-stem test at a rate of approximately 478 barrels of oil per day ("bopd") with a gas to oil ratio ("GOR") averaging approximately 2000 standard cubic feet per barrel ("scf/bbl"). Preliminary assessment of the oil gravity is 35 degrees API.
A summary of the overall results of the KHE-1 well are as follows:
Net Pay Depth Reservoir (metres) (metres) Comments --------- -------- ------- --------------------- Chilou 26.4 1,319 Core recovered Massive 22.5 1,917 Oil sample recovered (24.3 degrees API) Butmah 16.0 2,850 Core and natural gas recovered Kurrachine Dolomite * 3,098 Core recovered and well flowed oil (35 degree API) at 478 bopd * Logged pay in the Kurrachine Dolomite appears relatively large but is uncertain due to poor well-bore conditions at this depth. The drill-stem test was conducted over a 102 metre interval.In order to preserve the mechanical integrity of the KHE-1 well-bore as a future oil producer, the Company will not undertake testing operations of the shallower pay zones identified in the KHE-1 well-bore using the KHE-1 well-bore.
The Company previously announced that the KHE-2 appraisal well will be drilled immediately after completion of operations on KHE-1. The KHE-2 appraisal well is specifically designed to more completely evaluate the Tertiary and Cretaceous reservoirs (Chilou and Massive respectively) encountered in KHE-1.
The Cretaceous Massive Formation in KHE-1 contains approximately 22 metres of net oil pay over a 25 metre gross interval based on wireline log interpretation, reservoir pressures and fluid sample recovery. The oil in this reservoir has an API gravity of approximately 24 degrees, based on PVT analysis of the recovered oil sampled.
The Tertiary Chilou 'B' Formation contained approximately 26 metres of net oil pay, based on wireline log interpretation. The KHE-2 well will also provide further information on the lateral extent and continuity of these reservoirs. The Company expects the final results from KHE-2 in early August.
An appraisal well for the Triassic aged Kurrachine Dolomite and Butmah reservoirs encountered in KHE-1 will be required in order to provide additional information on reservoir extent and continuity, and the Company is therefore proceeding with plans for the drilling of a second appraisal well as soon as practicable.
The Company is also finalizing plans for acquisition of a 3D seismic survey over the Khurbet East structure and surrounds. These data will aid in the development of the Khurbet East reservoirs and will be used to select additional exploration drilling locations in the vicinity of the Khurbet East structure.
Khurbet East Structure
The Khurbet East discovery is a relatively large fault-bound structural culmination, with closure mapped at multiple reservoir levels. The areal extent of the structure is approximately 15 square kilometres at the Triassic aged Kurrachine Dolomite Formation reservoir level. The KHE-1 discovery well is located approximately 12 kilometres southwest of the Souedieh Oil Field and 12 kilometres south of the Roumelan Oil Field. There is an existing oil pipeline that has available capacity. With the significant existing infrastructure within the confines of Block 26 and the close proximity to an existing pipeline, production from Khurbet East may be accelerated with associated early cash flow from this discovery.
For further information on the KHE-1 discovery, please refer to the Company's website at www.gulfsands.net. A brief presentation on the Khurbet East discovery will be available in the next few days.
Gulfsands' CEO, John Dorrier, said:
"The Company is just concluding its first phase of exploration in Block 26, having drilled 4 wells and acquired some 1400 km of new 2D seismic in the Block in only 2 years as operator. We enter this next phase having made an excellent discovery at Khurbet East in up to 4 reservoirs. We are examining the potential for early commercial development of this discovery as we expect it to have significant impact on the Company's oil and gas reserves as well as longer term cash flows."
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 has consented to the inclusion of the material in the form and context in which it appears.
Gulf of Mexico, USA
The Company owns interests in 54 offshore blocks comprising approximately 193,000 gross acres which includes numerous producing oil and gas fields offshore Texas and Louisiana with proved and probable recoverable reserves net to Gulfsands at 31 December 2006 of 41.5 BCFGE (6.9 MMBOE), consisting of 27.3 BCFG and 2.36 MMBO.
Gulfsands owns interests in two oil and gas fields onshore Texas, USA (98.5% working interest in Emily Hawes Field and 37.5% working interest in Barb Mag Field) with proved and probable recoverable reserves net to Gulfsands at 31 December 2006 of 3.1 BCFGE (0.5 MMBOE), consisting of 2.8 BCFG and 57,000 barrels of oil.
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.
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 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.
Certain statements included herein constitute "forward-looking statements" within the meaning of applicable securities legislation. These forward-looking statements are based on certain assumptions made by Gulfsands and as such are not a guarantee of future performance. Actual results could differ materially from those expressed or implied in such forward-looking statements due to factors such as general economic and market conditions, increased costs of production or a decline in oil and gas prices. Gulfsands is under no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable laws.
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)
Kenneth Judge, Director of Corporate Development
College Hill (London)
Teather & Greenwood (London)
Tom Hulme (Corporate Finance)
Tanya Clarke (Specialist Sales)
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