|October 25, 2010|
Syria Operations Update
London, 25th October, 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, Iraq, Tunisia, Italy 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.
Khurbet East -18 Delineation Well
The Khurbet East-18 ("KHE-18") vertical delineation well has been drilled by the Crosco 401 rig approximately 800 metres to the north of discovery well Khurbet East -1 ("KHE-1") in order to delineate the north-west flank of the Khurbet East Field. In summary:
A fixed distance seismic offset checkshot survey has been performed in the well to assist in the imaging of the field towards the northwest. The results of this survey will be used in planning for further delineation drilling on the northwest flank of the field early in 2011.
Twaiba-1 Exploration Well
Following the completion of operations on the KHE-18 well, the Crosco 401 rig will move to the Twaiba-1 exploration well location, approximately 7 kilometres north northeast of the KHE-1 discovery well. The prospect to be drilled is a relatively small 4-way dip closure and the primary targets for the well are the Cretaceous aged Shiranish and Massive formations. The drilling location was selected based on interpretation of 3D seismic data acquired during 2009 over the prospect area. The key exploration risk on this prospect relates to the presence of adequate reservoir quality; however this is mitigated somewhat by the presence of an anomalous seismic amplitude observed at the target location. The interpretation of this anomaly is supported by Acoustic Inversion processing of seismic data, which suggests the presence of an effective reservoir at the Twaiba location.
The gross mean unrisked resource for this near-field exploration target is estimated as 5 million barrels of oil recoverable. The Twaiba-1 exploration well will be drilled on a "sole risk" basis (100% Gulfsands working interest) and drilling operations are expected to take approximately 30 days to complete.
Zahraa-1 Exploration Well
The Crosco 501 drilling rig, the second rig contracted to Gulfsands for activities on Block 26, is to undertake drilling operations on the Zahraa-1 ("ZAH-1") exploration well, which was spudded on 21 October. The Zahraa prospect is located in the far northeast portion of the Block, near the intersection of Syria's borders with Iraq and Turkey. The well will evaluate a structure that is similar, on trend and adjacent to the producing Karatchok oil field. The drilling location was selected based on interpretation of 3D seismic data acquired over the prospect area. The primary targets for the well are the Cretaceous aged Shiranish and Massive formations, and the well is planned to drill to a total measured depth of 2600 metres.
The gross mean unrisked resource for this well is estimated as 30 million barrels of oil recoverable. The Zahraa-1 exploration well will be drilled on a "sole risk" basis (100% Gulfsands working interest) and drilling operations are expected to take approximately 60 days days to complete.
3D Seismic Acquisition Programme
The 2010 3D seismic acquisition programme, consisting of approximately 1025 km2 of new 3D seismic data directly west of the Greater Khurbet East area, is approximately 75% complete. The programme remains on track to be completed during the fourth quarter of this year, with delivery of the final processed data during the first quarter of 2011.
Yousefieh South Acid Stimulation
The 10.8 metre net oil-bearing formation encountered in the Yousefieh South well was acidified and flow tested under nitrogen lift conditions on the 19th October 2010. Only minor non-commercial volumes of 16 degree API oil and water were recovered to surface. The well will be plugged and abandoned as a sub-commercial oil discovery.
Commenting on this operations update, Ric Malcolm, CEO of Gulfsands said
"The extension of the crest of the Khurbet East field to the northwest with high quality karst reservoir is very encouraging. The well will now be tied back to the Early Production Facility and become the tenth producer in the field. With two rigs now operational, we have a very active exploration programme that includes three wells to be drilled before year end".
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 3,000 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 current exploration license 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 4500 square km.
The operator has identified multiple leads and targets on these permits. Drilling operations were recently completed at the Lambouka-1 well where gas was encountered in the Abiod Formation. However, as a result of down-hole problems, no fluid samples or gas flow were established. The well was suspended with the intention of re-entering at a later date and drilling and testing the reservoir in a sidetrack hole up-dip of the existing discovery.
Gulfsands has completed its earn commitments with respect to the Kerkouane and Pantelleria Permits with the drilling of the Lambouka-1 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 & 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 estimate 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 60 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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