Gulfsands Petroleum Regulatory News (GPX)

4 Apr 2006 07:01

Gulfsands Petroleum PLC04 April 2006 4 April 2006 Gulfsands Petroleum PLC("Gulfsands" or "the Group") Gulfsands Signs Rig Contracts for Block 26, Syria First Exploration Well Expected to Spud by May 2006 Gulfsands Petroleum PLC (symbol GPX), the AIM listed oil and gas exploration,development and production company with activities in the USA, Syria and Iraq,announced today that the Company has executed definitive agreements for thedrilling of three exploration wells with the option to drill a further two wellswithin Block 26, Syria. Gulfsands, the operator and 50% working interest owner in Block 26, has takenassignment under an existing contract from another operator in Syria, for adrilling rig owned and operated by Crosco, a drilling company based in Croatia.Gulfsands will use this rig to drill and evaluate the Souedieh North wellcommencing in late April or early May 2006 with the option to drill another wellwithin the block under this same agreement. Furthermore, the Company signed adefinitive agreement with MB Drilling Overseas Limited for the drilling of twofirm wells with a one well option. This rig will be used to drill to the deeperPalaeozoic prospects identified in Block 26, such as the Tigris structure whichis scheduled for drilling in August 2006. The Souedieh North well will be located in the northeast region of Block 26.This vertical well will be drilled to an approximate total depth of 7,216 feetwith the primary objective being Cretaceous aged reservoirs similar to thoseproducing in the adjacent Souedieh and Karachok oil fields. This prospect hasthe potential to contain in excess of 100 million barrels of recoverable oil(Gulfsands' internal estimate of potential). Gulfsands has commenced sitepreparations for the well, and expects a spud date on or about 1 May 2006. Thenet cost to Gulfsands for drilling and evaluating this well is approximately$800,000. The Tigris well will also be located in the northeast region of the Block and isexpected to spud in August 2006. The net cost to Gulfsands for drilling andevaluating this well is approximately $3.25 million. This vertical well will bedrilled to a total depth of nearly 15,000 feet with the primary objectives beinga series of Palaeozoic (Carboniferous and Devonian) sandstone reservoirs. TheTigris structure is directly underlying the Souedieh oil field (the largestknown oil field in Syria), where oil is produced from the shallower Cretaceousreservoirs. Wireline log evaluation of an existing well on the structuredrilled some years ago has identified pay zones within the objective reservoirs,and the Tigris-1 well is designed to evaluate these reservoirs and appraise thisprobable hydrocarbon accumulation. Gulfsands announced on 30 January 2006 theresults of a reserves study by Ryder Scott Company, L.P. (Ryder Scott), anindependent petroleum engineering firm, on the Tigris structure. Ryder Scottdeveloped two cases for this evaluation, an oil case and a gas case, as therewas not sufficient data available at the time to determine the expectedhydrocarbon fluid contained within the Tigris structure. This reserves studyas of 1 January 2006 classified recoverable Probable and Possible Reserves andProspective Resource as follows: • For primarily a natural gas accumulation, Ryder Scott has classified 442 BCFG as Probable Reserves, 442 BCFG as Possible Reserves, and a further 3447 BCFG as a Prospective Resource. In summary total reserves potential among Probable, Possible and Prospective Resource is 4330 BCFG (722 MMBOE). • For primarily an oil accumulation, Ryder Scott has classified 104 million barrels of oil and 64 BCFG as Possible Reserves and a further 408 MMBO and 245 BCFG as a Prospective Resource. In summary total reserves potential among Possible and Prospective Resource is 512 MMBO and 308 BCFG (combined 563 MMBOE). Gulfsands' CEO, John Dorrier, said: "Gulfsands is constantly seeking ways of accelerating its schedules andcontrolling the costs of exploration drilling. These drilling arrangementsrepresent an important achievement in the current market. The relativelylow-cost and high potential of these two drilling projects remains a veryattractive exploitation of the Company's significant inventory of drillingopportunities." Enquiries: Gulfsands Petroleum (Houston) 001-713-626-9564 David DeCort, Chief Financial Officer College Hill (London) 020-7457-2020 Ben Brewerton / Nick Elwes Seymour Pierce (London) 020-7107-8000 Richard Redmayne Jonathan 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 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 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 spud in late April or early May 2006 which has thepotential to contain in excess of 100 MMBO. The second well known as Tigris isscheduled to spud in August of 2006 and has the potential to contain in excessof 500 MMBOE. Gulfsands has identified 31 total exploitation and explorationprospects within Block 26 with mean resources potential exceeding 1 billionbarrels of recoverable 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 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