|September 09, 2010|
Syria Operations Update
London, 9th September 2010: Gulfsands Petroleum plc ("Gulfsands", the "Group" or the "Company") (AIM: GPX), the oil and gas production, exploration and development company with activities in Syria, Tunisia, Iraq, and the U.S.A., is pleased to provide the following update on the Company's operations at Block 26, Syria where Gulfsands holds a 50% interest and acts as operator.
Yousefieh-4H Development Well
The drilling of a third development well on the Yousefieh field, Yousefieh-4H, has recently been completed. Located approximately 500 metres north of the Yousefieh-1 discovery well, this horizontal well encountered the Cretaceous Massive Formation at 2068 metres Measured Depth (1543 metres True Vertical Depth below mean sea level), approximately 3 metres deeper than the pre-drilling prognosis. A gross horizontal reservoir section of 718 metres was drilled in an easterly direction across the Yousefieh structure, with an average net reservoir pay section being assessed from formation logging as 710 metres, average porosity of 17.9% and average oil saturation of 86.5%.
The gross horizontal reservoir section drilled in this well was a record for Gulfsands, exceeding that of 311 metres previously achieved in the Khurbet East-5H well. Assessment of reservoir facies along hole via the running of a formation imaging logging tool suggests that the Yousefieh structure is of increased vertical thickness to the east than previously understood from the evaluation of seismic data, indicating the potential for further upside in Yousefieh field oil-in-place volumes. Flow testing of the well will be conducted in late September, followed by a field wide pressure survey to further assess the extent of the field's resource.
Khurbet East and Yousefieh Production
Aggregate oil production from the Khurbet East and Yousefieh Fields has now exceeded 10,750,000 barrels with daily production continuing to average approximately 20,000 barrels of oil per day and negligible amounts of water being produced.
Block 26 Exploration Licence Extension
Following agreement having been reached with the General Petroleum Corporation of Syria on the planned relinquishment of 25% of the exploration licence for Block 26, the area of Block 26 has been reduced to a contiguous area of 5,414 square kilometres nominated by Gulfsands and the term of the licence extended until August 2012.
Forward Exploration Drilling Programme
The rig used in the drilling of the Yousefieh-4H well has been moved to the south of the producing Yousefieh field area and has spud the Yousefieh South 1 (YSO-1) exploration well, which is located approximately 2 km south of the Yousefieh field and is targeting a similar objective to the producing reservoir at Yousefieh Field with unrisked gross speculative reserves in the range of 9 to 15 million barrels. Drilling and evaluation of the YSO-1 well is expected to take approximately 30 days.
Following this well, the rig will then move back into the Khurbet East field area to drill an additional vertical delineation well, KHE-18, on the north-west flank of the field.
3D Seismic Programme
The 2010 3D seismic acquisition programme has been expanded to approximately 1020 km2 and acquisition of 3D seismic data has now commenced. These data are being acquired over a prospective region of the block that lies immediately to the west of the Greater Khurbet East survey area. These data will be contiguous with Gulfsands existing database of 3D seismic data, and will be used to identify new leads and prospects for drilling in 2011 and 2012. Delivery of the processed data is expected during the first quarter of 2011.
Commenting on this operations update, Ric Malcolm, CEO of Gulfsands, said
"We look forward to the tie-in of Yousefieh-4H which appears to have the capability to significantly increase the daily production from the Yousefieh Field. Gulfsands has commenced a period of unprecedented level of exploration and development drilling activity that includes the recently spud Yousefieh South-1 well and the acquisition of another large 3D seismic survey in preparation for further exploration activity in the remaining two years of the Block 26 licence.".
This release has been approved by Richard Malcolm, Chief Executive of Gulfsands Petroleum Plc who has a Bachelor of Science degree in Geology with 30 years of experience in petroleum exploration and management. Mr. Malcolm has consented to the inclusion of the technical information in this release in the form and context in which it appears.
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Gulfsands is listed on the AIM market of the London Stock Exchange.
Gulfsands owns a 50% working interest and is operator of Block 26 in North East Syria. The Khurbet East oil field was discovered in June 2007 and commenced commercial production within 13 months of the discovery. This field is producing at an average gross production rate of approximately 18,000 barrels of oil per day through an early production facility. A second field discovery, the Yousefieh field, was brought on-stream in April 2010, and is currently producing approximately 2,000 barrels of oil per day. Block 26 covers approximately 5,414 square kilometres and encompasses existing fields which currently produce over 100,000 barrels of oil per day, and are operated mainly by the Syrian Petroleum Company. The exploration licence for Block 26 expires in August 2012. Gulfsands' working interest 2P reserves in Syria at 31 December 2009 were 46.0 mmbbls.
Gulfsands is acquiring working interest positions in two exploration permits in Tunisia (Chorbane and Kerkouane Permits) and one exploration permit in Southern Italy (G.R15.PU) from ADX Energy Ltd the operator of all three permits. The Company's interest in these permits remains subject to the completion of the Company's farm obligations and various approvals from the governments of Tunisia and Italy.
Kerkouane Permit -- Offshore Tunisia
G.R15.PU Permit (Pantelleria Permit) -- Offshore Italy
G.R15.PU is located offshore the island of Pantelleria southwest of Sicily in Italian waters and the Kerkouane Permit is located offshore northeast Tunisia. The two permits are contiguous and comprise a total area of approximately 4,500 square km.
Gulfsands' work commitment for the Kerkouane Permit includes the drilling of the Lambouka-1 exploration well. Gulfsands has earned a 30% working interest in both permits by paying approximately 35% of the cost the Lambouka-1 well and reimbursing the operator for a portion of various pre-drill costs that include a recently completed 3D seismic programme.
Chorbane Permit -- Onshore Tunisia
The Chorbane permit is located in central Tunisia and covers an area of 2,428 square km. The permit is surrounded by several producing oil fields and extensive oil and gas infrastructure. Gulfsands' forward work commitment for the Chorbane permit includes the drilling of one exploration well in the fourth quarter of 2010 for which Gulfsands will pay 80% of the estimated US$6 million cost of the first exploration well so as to earn a 40% interest in the permit.
A number of prospects and leads have been indentified within the permit, the most prospective being a large tilted horst block ("Sidi Daher") where the operator has identified multiple potential targets estimated to hold recoverable un-risked prospective resources of 80 mmboe.
Gulfsands signed a Memorandum of Understanding in January 2005 with the Ministry of Oil in Iraq for the Maysan Gas Project in Southern Iraq, following completion of a feasibility study on the project, and is negotiating details of a definitive contract 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. The Company is actively engaged in discussions with respect to financing and potential equity partners. Gulfsands has no reserves in Iraq.
Gulf of Mexico, USA
The Company owns interests in 37 leases offshore Texas and Louisiana, which include 24 producing oil and gas fields with proved and probable working interest reserves at 31 December 2009 of 4.7 mmboe.
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.
More information can be found on the Company's website www.gulfsands.com
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