|January 07, 2011|
Syria Operations Update
London, 7th January, 2011: 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 an update on its operations in Syria.
Twaiba 1 Exploration Well
The Twaiba 1 exploration well, located approximately 7 kilometers to the north of the Khurbet East Field, has been drilled to a total depth of 2016 metres measured depth ("MD") (2016 metres true vertical depth). This well was drilled as a sole risk operation by Gulfsands (Gulfsands 100% working interest).
Preliminary interpretation of drilling data and wire-line logs has identified two net pay intervals within the regionally productive Cretaceous aged reservoir section, the "Shiranish" and "Massive" Formations:
Following completion of the testing programme the well will be suspended as a potential future production well. After completion of operations, the rig will be moved to the Abu Ghazal 1 location. Further operations at Twaiba, including any appraisal drilling, will be considered once the testing and other results have been fully analyzed.
Zahraa 1 Exploration Well
The Zahraa 1 exploration well has been drilled to a total depth of 2450 metres MD (2445 metres true vertical depth). This well was drilled as a sole risk operation by Gulfsands (Gulfsands 100% working interest).
The Zahraa 1 well encountered the top of the Shiranish Formation, the shallowest potentially productive reservoir for the Zahraa prospect, at a depth of 1802 m MD or approximately 121 metres higher than the pre-drill prognosis, and the base of the Cretaceous aged section was encountered at 2394 metres MD, or approximately 105 metres higher than the pre-drill prognosis. Due to very poor hole conditions it was not possible to obtain a suite of wire-line logs over the reservoir objective intervals in order to fully evaluate the drilled section. However, only minor oil and gas shows were observed whilst drilling through the Cretaceous aged section.
The Zahraa 1 well has therefore been suspended, and the data obtained from the well will be fully analysed prior to any further drilling on the Zahraa structure. It is estimated that the net cost to Gulfsands of drilling operations on the Zahraa 1 well will be approximately US$1.3 million after cost recovery.
The rig has now moved to the KHE-101 location on the Khurbet East oil field.
3D Seismic Acquisition Programme Completed
The 2010 3D seismic acquisition programme has been completed with the acquisition of approximately 1060 square kilometers of 3D seismic data. The data acquired have been shipped for the processing in Cairo and a preliminary, or "fast-track", volume is expected to be available for interpretation during the first quarter with the final volume scheduled for delivery during the second quarter.
Khurbet East and Yousefieh Oil Production
As at 31st December 2010, aggregate daily oil production from the Khurbet East and Yousefieh Fields was approximately 20,800 barrels of oil per day ("bopd") representing an approximate 21% increase over the daily oil production rate achieved as of 31st December 2009. Total aggregate oil production from the Khurbet East and Yousefieh oil fields has now exceeded 12.6 million barrels of oil.
Ric Malcolm, Gulfsands CEO, said
"The results from the Twaiba exploration well are very encouraging, as the net pay identified on wire-line logs is in excess of that assumed in our own pre-drill "high case" estimates of speculative reserves of 9 million barrels. The forthcoming production test should provide additional valuable information required to understand the potential commercial significance of the hydrocarbons encountered in this sole risked well. The drilling results at Zahraa are disappointing, but the data will be reviewed to determine if there is any remaining potential on the Zahraa structure. The performance of the two producing fields, Khurbet East and Yousefieh, remains exceptional and we continue to identify opportunities to maximize the value of these assets."
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.
For more information please contact:
Gulfsands Petroleum (London)
+44 (0)20 7434 6060
Richard Malcolm, Chief Executive Officer
Andrew Rose, Chief Financial Officer
Kenneth Judge, Director: Corporate Development & Communications
Buchanan Communications Limited (London)
+44 (0)20 7466 5000
RBC Capital Markets (London)
+44 (0)20 7653 4000
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 km2 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 4,500 km2.
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 km2. 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 first quarter of 2011 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 mean 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 32 leases offshore Texas and Louisiana, which include 20 producing oil and gas fields with proved and probable working interest reserves at 31 December 2009 of 3.4 mmboe (figures adjusted for the disposal of non-core properties in December 2010).
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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