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 this update on operations in Syria.
Twaiba 1 Exploration Well Testing Operations
Testing operations are ongoing on the Twaiba-1 exploration well. Preliminary interpretation of drilling data and wire-line logs had identified two intervals within the regionally productive Cretaceous aged reservoir section, the “Massive” and “Shiranish” Formations, with potential oil accumulations.
- The Massive Formation was encountered at 1952m metres Measured Depth (“m MD”). Cuttings recovered at this depth indicated the presence of viscous oil, and gas sensors also detected a low-level presence of hydrocarbons. Evaluation of wireline logs indicated a net oil bearing interval of 11 metres from 1952-1988m MD, with average porosity of 15.7%. Following the setting of a cement plug, the interval 1952-1967m MD was isolated and flow tested, but only water containing traces of oil was recovered. Analysis of the produced water from this interval indicates that the salinity is much higher than is typical for reservoirs in this area at this depth.
- The Shiranish Formation was encountered at 1872m MD with encouraging hydrocarbon shows being detected on gas sensors. A total of 26.3 metres of core sections stained with viscous oil were cut and recovered from this interval. Evaluation from wireline logs indicated that the Shiranish Formation contained a net reservoir section of 31 metres from approximately 1872-1906 m MD with average porosity of 21%. Following the running of a cemented liner, the interval 1872-1897m MD was isolated from deeper intervals by the setting of a cement plug, and then perforated for flow testing. However, results were disappointing with only high salinity water recovered to surface. A further cement plug was set and the interval 1872-1882m MD flow tested, but again only water was recovered.
Forward operations are to further plug back the lower portion of the tested interval that appears prone to water flow, and subsequently test the highest 5 metre section where the most significant hydrocarbon shows were detected. Chemical treatments will be applied over this short section in order to enhance the flow potential of the oil within the rock matrix.
The testing of the upper 5 metres of the Shiranish interval will be the subject of a further news release when results are available.
Abu Ghazal Exploration Well
The Abu Ghazal 1 well (AGZ-1) commenced drilling operations on 23rd January 2011 and is currently drilling ahead at a depth of approximately 922 metres. The AGZ-1 well has a planned total depth of 3800 metres and has multiple objectives, with primary reservoir targets in the Cretaceous aged “Massive” and Triassic aged “Butmah” and “Kurrachine Dolomite” Formations. The Abu Ghazal prospect, located approximately 30 kilometres south of the Khurbet East field, is one of the largest remaining un-drilled structures within Block 26. Recent remapping of the structure gives a P50 un-risked resource estimate of approximately 50 million barrels-of-oil-equivalent (“MMboe”) for a combination of the Cretaceous “Massive” Formation and the deeper Triassic objectives.
This relatively deep exploration well is expected to take approximately 90 days to drill and evaluate. The current well cost estimate is approximately US$6.2 million before cost recovery, and Gulfsands has a 50% participating interest in the AGZ-1 well.
KHE-101 Appraisal Well
The KHE-101 appraisal well commenced drilling operations on 19th January 2011 and is currently drilling ahead at a depth of approximately 915 metres.
The KHE-101 well is planned to be drilled to a total depth of 3200 metres in order to provide information on the areal extent and volume of hydrocarbons and quality of the “Butmah” and “Kurrachine Dolomite” Triassic aged reservoirs that were found to be hydrocarbon bearing in the original Khurbet East field discovery well (KHE-1). Our current understanding provides a P50 resource of 44 bcf (“billion cubic feet”) and a P10 resource of 236 bcf. Information gathered from this well, including production testing of both Triassic objectives will therefore be important in determining the potential for a future development of these Triassic reservoirs.
This appraisal well is expected to take approximately 90 days to drill, evaluate and test. The current well cost estimate is approximately US$8.2 million before cost recovery, and Gulfsands has a 50% participating interest in the KHE-101 well.
Ric Malcolm, Gulfsands CEO, said
“The production testing results at Twaiba at least so far, have been disappointing particularly in light of the substantial oil column that appears to be present. Whilst the testing programme is still ongoing, it is unlikely that we will achieve a commercial result from this well.
We look forward to the results of the first two wells in our 2011 drilling programme, both of which have the potential to deliver significant value in a success case”.
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 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 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 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.