Gulfsands Petroleum plc (“Gulfsands” or the “Company“, the “Group”), the oil and gas company focused on the Middle East region, is pleased to announce the release of its Annual Report and Accounts for the year-ended 31 December 2018.
The Annual Report and Accounts will be available on the Company’s website and paper copies, together with notice of the Annual General Meeting (“AGM”), will be mailed to all shareholders shortly. The AGM is scheduled for 11am on Thursday 27 June at the Company’s registered office at Shakespeare Martineau, 60 Gracechurch St, London EC3V 0HR.
Highlights of the year, and the subsequent period to date, are as follows:
Increased focus on core assets in North East Syria which, according to in-country sources, appear to be in good order, materially undamaged and operationally fit
• Group working interest 2C Contingent Resources in Syrian assets of 77.4 mmboe (reclassified from 2P reserves in 2015 due to EU sanctions).
• Over 20-year resource life.
• Involvement in Syrian operations remains suspended during continuation of EU sanctions, with which Gulfsands remains committed to full compliance.
• Production in Block 26, without the participation of Gulfsands, has reportedly been approximately 20,000 boepd throughout 2018 – no revenues have been recognised or received by Gulfsands.
• While the status of this production under the terms of the PSC is unclear at this time, the production does appear to demonstrate the reservoir quality and that the fields continue to be operable.
• The area surrounding Block 26 remains stable, with no major disruptions during the year.
Re-entry planning stepped up as political situation appears to be improving
• After eight years of devastating war, and as the conflict enters its ninth year, the focus of the international community appears to be moving towards one of normalisation and reconstruction.
• Gulfsands has spent a significant amount of time during 2018 formalising and analysing existing data, to ensure that the assets are fully understood, such that the Group is in a position to initiate re-entry and to recommence operations as soon as it is permitted to do so.
• This work continues to provide strong affirmation of the world class technical nature of Block 26, both in respect of the existing discoveries, and also the significant exploration upside potential that remains within the block.
• The Board believes that Block 26 could contain over a billion barrels of recoverable resource, with the potential for production levels of around 50,000 boepd from existing discoveries and over 100,000 boepd from a full block development.
• In addition, the technical team that has been assembled has begun supporting business development activities in the broader Middle East region, which will remain a focus during 2019.
Rationalisation of non-core assets almost complete
• There are no active operations remaining in Tunisia and Morocco and the administrative closedown continues.
• The Creditors Voluntary Liquidation (“CVL”) of the Cyprus subsidiary, Gulfsands Petroleum Morocco Limited (“GPML”), through the Cypriot courts was approved and concluded at the final creditors meeting on 8 May 2019.
• In Colombia, significant progress has been made:
o The Putumayo-14 licence was successfully divested and transferred in its entirety to the Amerisur Resources plc Group (“Amerisur”), alleviating a minimum work program obligation of $16.1 million.
o The Llanos-50 licence remains in suspension following identification of environmental restrictions on the block. These concerns have been confirmed by Corporinoquia, the local environmental agency, who have declared the planned seismic programme non-viable. The Company is in dialogue with the ANH to mutually terminate the LLA-50 licence.
Increased focus on business development
• With much of the streamlining of the business complete, management has increased its focus on business development in the broader Middle East region.
Capital efficiency and continued financial support from major shareholders
• The Group was funded throughout 2018 by the 2017 Secured Term Financing Facility provided by the Major Shareholders. This 2017 Facility was extended in March 2018, giving a further £4 million of committed capacity which is expected to fund G&A through to early 2020.
• Continued initiatives to reduce the ongoing expenses across the Group with gross office costs after partner recoveries falling a further 10% from $3.2 million to $2.9 million during the year
• Budgeted G&A cost for 2019 is around $2.5 million.
• At the date of this Report, the Group had unaudited free cash available for operations of $1.6 million.
Delisting from AIM
• The Company delisted from the Alternative Investment Market (“AIM”) of the London Stock Exchange on 23 April 2018, following shareholder approval at the General Meeting held on 10 April 2018.
• The Company’s shares continue to trade through the secondary trading auction facility provided by Asset Match (www.assetmatch.com).
John Bell, Managing Director said:
“We are closing in on completion of the consolidation of regional focus that we were asked to undertake by the major shareholders when we took over the executive function of the company in mid-2016. We are now well positioned to focus on our world class assets in Syria. After eight years of devastating war, and as the conflict enters its ninth year, the focus appears to be shifting to a normalisation process and reconstruction. Gulfsands looks forward to participating in that reconstruction process with our Block 26 assets as soon as sanctions allow”.
For further information, please refer to the Company’s website at www.gulfsands.com or contact:
Gulfsands Petroleum Plc +44 (0)20 7841 2727
John Bell, Managing Director
Andrew Morris, Finance Director
James Ede-Golightly, Non-Executive Chairman
Camarco +44 (0)20 3757 4983
Billy Clegg / Owen Roberts
Certain statements included herein constitute “forward-looking statements” concerning the Company 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. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those expressed or implied in such forward-looking statements. Many of these risks and uncertainties relate to factors that are beyond Gulfsands’ ability to control or estimate precisely, such as general economic and market conditions in various countries and regions, political risks, environmental and physical risks, legislative, fiscal and regulatory developments, drilling and production results, reserves estimates, changes in demand for Gulfsands’ products, increased costs of production or price fluctuations in crude oil and natural gas. Gulfsands cannot give any assurance that such forward-looking statements will prove to be correct. Gulfsands does not undertake any obligation to update or revise publicly any forward-looking statements set out herein, whether as a result of new information, future events or otherwise, except as required by applicable laws.