Well KHE-19H Achieves Oil Flow Rate of 5516 bopd Under Production Test
Additional Khurbet East Production Facility Sub-station Commissioned
Gross Oil Production from Khurbet East and Yousefieh Fields Passes 2011 Year End Exit Production Target of 24,000 bopd
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 USA, is pleased to provide this update on operations in Syria.
Flow Testing of Khurbet East 19H (“KHE-19H”)
The Khurbet East 19H (“KHE-19H”) well has achieved a flow rate of 5516 barrels of oil per day (“bopd”) on production test with an oil gravity of approximately 26 degrees API, similar in quality to the oil produced in the central portion of the Khurbet East Field. This production rate was obtained during a 2 hour main flow period under a 48/64th inch choke size and with an average wellhead pressure of 132 psi and with no associated production of formation water. The choke size was subsequently reduced to 32/64th inch, after which the well was flowed for a further 3 hours at an average rate of 3828 bopd, at an average wellhead pressure of 210 psi and with no production of water. The test was then terminated due to all available oil storage tank capacity being filled. The 67 metre horizontal productive section of this well is located in a sidetrack drilled in a south-southeasterly direction from the original KHE-19 vertical hole.
The oil flow rate of 5516 bopd from KHE-19H is the highest yet measured from any well within the Khurbet East field. This well has demonstrated that excellent reservoir quality exists from the central portion of the field all the way to the northern limit of the field.
Commissioning of Khurbet East Sub-station Production Facility
The oil processing capacity for the Khurbet East Field has been increased by approximately 3000 bopd after the construction and commissioning of a new oil processing sub-station (“EFP 2”) with a design capacity of approximately 3000 bopd and located approximately 1.8 kilometres west of the Khurbet East Early Production Facility (“EPF”). At this new facility, gas is separated from the produced oil and the stabilised crude is pumped into storage tanks located within the EPF complex followed by subsequent delivery into the Khurbet East export pipeline. Well KHE-19H has been tied into the new sub-station and is estimated to be producing at a rate of more than 2900 bopd on a restricted choke.
As a result of these operational and construction activities, Block 26 oil production facility capacity is now more than 24,000 bopd. The reconciled production rate achieved at the expanded facilities as of 6th August, 2011 was 24,054 bopd, comfortably achieving and exceeding the Company’s previously announced year-end 2011 production target of 24,000 bopd.
Block 26 Drilling Operations
Gulfsands drilling operations in Syria Block 26, using the Crosco E-401 and E-501 drilling rigs, are continuing as planned on the Yousefieh East and Safa exploration prospects. The results of these exploration drilling operations will be the subject of a future news release.
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.
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 21,500 barrels of oil per day through early production facilities. A second field discovery, the Yousefieh field, was brought on-stream in April 2010, and is currently producing approximately 2,500 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 2010 were 53.6 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 first $5 million in drilling costs, and 40% of the drilling costs in excess of $5 million, 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 175 billion cubic feet of gas (“bcfg”) and 44 million barrels of oil from Tertiary and Cretaceous aged reservoirs.
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 30 leases offshore Texas and Louisiana, which include 20 producing oil and gas fields with proved and probable working interest reserves at 31 December 2010 of 3.2 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.