Gulfsands Petroleum Regulatory News (GPX)

31 Jan 2006 07:02

Gulfsands Petroleum PLC31 January 2006 31 January 2006 Gulfsands Petroleum PLC("Gulfsands" or "the Group") Gulfsands Announces New Offshore Discovery in the Gulf of Mexico Update on Gulfsands Production in the Gulf of Mexico Gulfsands Petroleum PLC (symbol GPX), the AIM listed oil and gas exploration,development and production company with activities in the USA, Syria and Iraq,is pleased to announce a new discovery in the Gulf of Mexico. Gulf of Mexico Exploration Discovery at Eugene Island 58 Gulfsands has participated at a 25% working interest in another explorationdiscovery within Eugene Island 58 (EI58). Following the exploration success atEI58 announced on 14 December 2005, this new EI58 exploration well has beendrilled to a total measured depth of 13,914 feet (13,380 feet true verticaldepth). Electric logs acquired during drilling operations indicate the presenceof hydrocarbons within multiple zones, with approximately 188 feet of potentialnet pay. Production casing has been set and completion operations havecommenced. A test of the lowermost productive interval in the well producednatural gas at a rate of 4.5 million cubic feet per day and 24 barrels ofcondensate per day. First production from this well is scheduled to commence inApril 2006. The net cost to Gulfsands for the drilling, completion and facilitycosts to hook up this well is estimated to be approximately $2.4 million. Gulfsands will also participate with a 25% working interest in two furtherexploration wells in the immediate area during 2006. Since Gulfsands listed on AIM in April 2005, the Company has participated in thedrilling of seven offshore Gulf of Mexico exploration wells and five of thoseseven have been discoveries. Gulf of Mexico Production Update Gulfsands' oil and gas production continues increasing toward the levelsachieved prior to Hurricane Rita. Production has increased to nearly 70% of thepre-storm levels, or at approximately 2,167 barrels of oil equivalent per daynet to Gulfsands, compared to 40% in mid December 2005. Continued increases indaily production volumes are expected over the next several weeks. John Dorrier, CEO of Gulfsands Petroleum, said: "This new well, with Gulfsands' higher working interest, should make a notablecontribution to the Gulf of Mexico reserves base as well as an importantaddition to 2006 production levels and net cash flow. The timing of the wellcoming on stream should be consistent with improving pipeline transportationconditions following repairs required due to the hurricane damage of late 2005." Enquiries:Gulfsands Petroleum (Houston) 001-713-626-9564David DeCort, Chief Financial Officer College Hill (London) 020-7457-2020Ben Brewerton / Nick Elwes Seymour Pierce (London) 020-7107-8000Richard RedmayneJonathan Wright Note to Editors • Gulf of Mexico, USA The Group owns interests in 64 offshore blocks comprising approximately 216,000gross acres which includes 39 producing oil and gas fields offshore Texas andLouisiana with proved and probable recoverable reserves of approximately 30.3billion cubic feet of natural gas equivalents (BCFGE), consisting of 14.94 BCFGand 2.56 MMBO as of 30 June 2005 with a net present value of approximately $129million. Additionally, there is a further 3.4 BCFGE of possible recoverablereserves with a net present value of approximately $14 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 Group completed the acquisition of 1,155 kilometers of 2D seismic andanticipates drilling two wells during 2006. The first well, known as SouediehNorth is scheduled to be drilled in May of 2006 which has the potential tocontain in excess of 100 MMBO. The second well known as Tigris is scheduled tobe drilled in August of 2006 and has the potential to contain in excess of 500MMBOE. Gulfsands has identified 31 total exploitation and exploration prospectswithin Block 26 with mean resources potential exceeding 1 billion barrels ofrecoverable oil. An independent reserves report was issued in January 2006 on the Tigrisstructure. The reserves were classified as either oil or gas bearing until suchtime as the Company drills and tests the Tigris structure. The reserve reportconcluded that there are 442 BCFG of probable recoverable reserves in the Tigrisstructure. Additionally, the report classified the possible reserves as eithernatural gas or oil. The gas case reflected an additional 442 BCFG in possiblerecoverable reserves and an additional 3447 BCFG as prospective resource. Theoil case reflects 104 MMBO and 64 BCFG in possible recoverable reserves and afurther 408 MMBO and 245 BCFG as prospective resource. In summary, the naturalgas case equates to total recoverable reserves potential among probablereserves, possible reserves and prospective resource as 4330 BCFG (722 MMBOE),while the oil case equates to 512 MMBO and 308 BCFG (combined 563 MMBOE). • 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 80% owned subsidiary companyDarcy Energy LLC. At the Emily Hawes field, initial gas production commenced inthe summer of 2005. The first well in the Barb Mag oil field has been drilledand wireline logged with some 38 feet of potential net pay and production testedat 1.5 million cubic feet of natural gas and 36 barrels of condensate per day.Production from this well should commence during the first quarter of 2006.Darcy Energy has a 34.375% and 37.5% working interest in these fieldsrespectively. This information is provided by RNS The company news service from the London Stock Exchange