Gulfsands Petroleum Regulatory News (GPX)

15 Aug 2006 12:30

Gulfsands Petroleum PLC15 August 2006 15 August 2006 Gulfsands Petroleum plc("Gulfsands" or "the Company") Annual General Meeting Gulfsands Petroleum PLC is an oil and gas exploration, development andproduction company with activities in the USA, Syria and Iraq. The Following comments were made by Andrew West, Chairman of Gulfsands, at theCompany's Annual General Meeting, held at 11.00am today: "Gulfsands has made significant progress in what has been a very active andsuccessful 2005 and 2006 to-date. Despite the impact on production last year,in what can only be described as an extreme hurricane season, it is particularlypleasing to note that the company produced strong operational and financialresults. Our Syrian operations have been particularly active and whilst the recenthostilities in the Middle East were a concern, this did not hinder ouroperations in any way and work on Block 26 has continued. We are also delightedto have increased our ownership of the Block to 50%, becoming operator in 2005.Over 1,000 km of 2D seismic was acquired primarily in 2005 and two contracts forthe drilling of three wells on the block were signed. Whilst the results of theSouedieh North Well were disappointing, where we did not recover movable oilafter initially encountering good shows, the geological and operational datathat we have gained will certainly stand us in good stead for the drilling ofthe Tigris-1 well in September. Furthermore, the Company is in discussions forcontracting another drilling rig for drilling two further wells during the firsthalf of 2007. After the work that we have carried out in this region it is alsoparticularly gratifying that Ryder Scott has recently completed a reservesvaluation whereby they indicated the NPV of Gulfsands net probable reserves inBlock 26 at $233 million. Considerable progress has also been made in the Gulf of Mexico and therestructuring of Northstar Gulfsands LLC has now been completed leavingGulfsands with direct ownership of approximately 52.6% of those propertiespreviously owned by Northstar Gulfsands LLC. The Company participated in sevenwells, five of which were successful discoveries, with two further developmentwells drilled in West Delta 64 since May 2005. It is anticipated that we willhave four wells commencing production by September. After the difficulties ofthe fourth quarter of last year our production is now back to pre- hurricanedisruption levels. As at 1 January 2006 the NPV of the Group's proved andprobable reserves increased to $183 million, primarily resulting from the foursuccessful exploration wells and numerous re-completions that have been carriedout. Work is continuing in Iraq on the Misan Gas Project and we are delighted to haveincreased our ownership to 100%. Discussions have progressed recently with theIraqi Oil Ministry with a view to Gulfsands gaining a definitive contract byearly 2007. The Board believes that the outlook for the Company remains strong and ourcurrent activities in the Gulf of Mexico, Syria and Iraq provide significantpotential for further development and expansion, creating further value forGulfsands and its shareholders. Whilst we remain cautious in the onset of thecurrent hurricane season, the Board remains confident that with the continuinghigh oil prices and with the expiration of our hedges in June that Gulfsands canlook forward to another exciting year ahead." Gulfsands is pleased to report that at the Annual General Meeting all theresolutions outlined in the notice of the meeting dated 9 June 2006 were dulypassed. Enquiries: Gulfsands Petroleum (Houston) 001-713-626-9564David DeCort, Chief Financial Officer College Hill (London) 020-7457-2020Nick ElwesPaddy Blewer Teather & Greenwood (London) 020-7426-9000James Maxwell (Corporate Finance)Tanya Clarke (Specialist Sales) NB: This release has been approved by the Company's geological staff who includeJason Oden, Gulfsands Exploration Manager who has a Bachelor of Science degreein Geophysics with 22 years of experience in petroleum exploration andmanagement and is registered as a Professional Geophysicist, for the purpose ofthe Guidance Note for Mining, Oil and Gas Companies issued by the London StockExchange in respect of AIM companies, which outlines standards of disclosure formineral projects. Note to Editors • Gulf of Mexico, USA The Company owns interests in 64 offshore blocks comprising approximately216,000 gross acres which includes 39 producing oil and gas fields offshoreTexas and Louisiana with proved and probable recoverable reserves of 32.4 BCFGE,consisting of 19.8 BCFG and 2.1 MMBO as of 1 January 2006 with a net presentvalue of $183 million. Additionally, there is a further 2.8 BCFGE of possiblerecoverable reserves with a net present value of $15.8 million. • Syria In Syria, Gulfsands owns a 50% working interest in Block 26 and is the operator.The block covers 11,000 square kilometres and surrounds areas which currentlyproduce over 100,000 barrels of oil per day from existing fields. In January2006 the Company completed the acquisition of 1,155 kilometres of 2D seismic andanticipates drilling two wells during 2006. The first well, known as SouediehNorth, commenced drilling in late April 2006 and was temporarily suspended inJune for further analysis. The second well known as Tigris is scheduled to spudin September 2006 and has the potential to contain in excess of 500 MMBOE.Gulfsands has identified 31 total exploitation and exploration prospects withinBlock 26 with mean resources potential exceeding 1 billion barrels ofrecoverable oil. Ryder Scott completed a reserves study on the Tigris structure in 2006 and thesereserves were classified as either oil or gas bearing until such time as theCompany drills and tests the Tigris structure. As of 1 July 2006 Ryder Scottdetermined that the Probable Reserves net to Gulfsands after applying the termsof the Production Sharing Contract is 102 BCFG with a net present valuediscounted at 10% of $233 million. For primarily a natural gas accumulation, anadditional 75 BCFG of possible reserves net to Gulfsands were estimated to havea 10% discounted net present value of $261 million. Furthermore, the Companycompleted its own economic evaluation on the Prospective Gas Resource and hasestimated that Prospective Gas Resource net to Gulfsands is 577 BCFG with a netpresent value of approximately $1.06 billion. In summary total gas reservespotential net to Gulfsands among Probable and Possible Reserves for the naturalgas case is 177 BCFG (30 MMBOE) with a net present value of $494 million andwhen combined with the Prospective Gas Resource it totals 754 BCFG (126 MMBOE)with a net present value of approximately $1.55 billion. For primarily an oil accumulation, Ryder Scott determined the Possible Reservesnet to Gulfsands after applying the terms of the Production Sharing Contract are19.4 million barrels of oil having a net present value discounted at 10% of $452million. Furthermore, the Company completed its own economic evaluation on theProspective Oil Resource and has estimated that Prospective Oil Resource net toGulfsands is 50.9 MMBO with a net present value of approximately $1.51 billion.In summary total oil reserves potential net to Gulfsands among Possible andProspective Oil Resource for the oil case is 70.3 MMBO with a net present valueof approximately $1.96 billion. • Iraq Gulfsands signed a Memorandum of Understanding in January 2005 with the Ministryof Oil in Iraq for the Misan Gas Project in Southern Iraq and is currentlynegotiating the definitive contract for the project. The project will gather,process and transmit natural gas that is currently a waste by-product of oilproduction in the region and will end the environmentally damaging practice ofgas flaring. Gulfsands has completed a feasibility study and expects to conductfurther technical work and commercial discussions with the Iraq Oil Ministry. • Onshore USA Gulfsands operates onshore in the USA through its 83% owned subsidiary companyDarcy Energy LLC. As of 1 January 2006, Darcy Energy owned interests in two oiland gas fields onshore Texas, USA (Emily Hawes and Barb Mag) with proved andprobable recoverable reserves of 1.6 BCFGE, consisting of 1.2 BCFG and 58,000barrels of oil with a net present value of $9.5 million. Additionally, there isa further 2.2 BCFGE of possible recoverable reserves with a net present value of$7.9 million. This information is provided by RNS The company news service from the London Stock Exchange