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, wish to provide the following update on the Company’s drilling activity in Tunisia.
ADX Energy, the operator of the Chorbane licence onshore Tunisia, has confirmed that drilling operations on the Sidi Dhaher-1 exploration well commenced at at 18:00 hours Friday 26 August 2011.
Sidi Dhaher-1 has a planned total depth of 2,168 meters and is expected to take 33 days to drill. In the success case, additional time will be required for further formation evaluation.
The Sidi Dhaher prospect is located within the 2,428km2 large Chorbane Exploration Permit onshore central Tunisia near the port city of Sfax. The prospect is surrounded by several producing oil fields and extensive oil and gas infrastructure. The Sidi Dhaher-1 well is targeting an Eocene aged reservoir with operator estimated prospective resources of 175 billion cubic feet (5 billion m3) of recoverable gas and a Cretaceous aged reservoir with operator estimated prospective resources of 44 million barrels (5.9 million tons) of oil.
Additional targets have been identified in the deeper Douleb and Bireno reservoirs that produce oil and gas in the Guebiba-El Hajeb field immediately east of the Chorbane permit.
Gulfsands is earning a 40% interest in the Chorbane permit by meeting 80% of the well costs for the Sidi Dhaher-1 well which are capped at US$5 million and thereafter meeting its pro rata (40%) share of any additional costs beyond US$5 million. In the event of a commercial success with the Sidi Dhaher-1 well, Gulfsands will be entitled to become the operator of the Chorbane permit.
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 has acquired or 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 the Chorbane permit remains subject to the completion of the Company’s farm obligations and the Company’s interest in each of these permits remains subject to final 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 in late 2010 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.