Gulfsands Petroleum Regulatory News (GPX)

13 Jun 2005 07:00

Gulfsands Petroleum PLC13 June 2005 13 June 2005 Gulfsands Petroleum PLC("Gulfsands" or "the Group") Gulfsands makes gas discovery in the Gulf of Mexico Gulfsands provides operational update on 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,announces a gas-well a discovery within Northstar Gulfsands LLC, a subsidiarycompany owned 52.6% by Gulfsands. Gas Discovery Northstar Gulfsands has participated in two exploration wells in the Gulf ofMexico so far in 2005. The first well was unsuccessful; however the secondwell, on Eugene Island Block 83, discovered natural gas in Upper Miocene-agedsandstone reservoirs below 13,000 feet of depth. It is currently beingcompleted for production. Northstar Gulfsands owns a 10% working interest inboth the exploration wells. The unsuccessful well cost approximately $390,000net to Northstar Gulfsands while the estimated cost for the discovery well onEugene Island Block 83 including drilling, completion and hook-up is estimatedat a total cost of $765,000 net to Northstar Gulfsands. The discovery well tested natural gas at a rate of 5.2 million cubic feet of gasper day on a limited choke size. The potential gross reserves for thisdiscovery are approximately 8-10 billion cubic feet of natural gas. Productionfrom this discovery should commence within the next 60-90 days. Further Exploration Wells Northstar Gulfsands commenced drilling a new exploration well in West DeltaBlock 64 in the Gulf of Mexico in late May and anticipates this well to becompleted by the end of June. Northstar Gulfsands has further committed todrill three additional exploration wells in 2005, is reviewing numerous otheropportunities for exploration drilling and expects to drill a total ofapproximately 8 exploration wells in the Gulf of Mexico during 2005. Increased Reserves Since the beginning of 2005, Northstar Gulfsands has participated in 10recompletions and workovers on wells within existing producing fields in theGulf of Mexico which has resulted in approximately 3.2 billion cubic feet ofnatural gas equivalent reserve additions net to Northstar Gulfsands (determinedby internal engineers) at a cost of approximately $0.50 per million cubic feetof natural gas. Production Rates Since the beginning of 2005 net working interest production for NorthstarGulfsands has been at an average daily volume of between 5,000 - 6,000 barrelsof oil equivalent per day. Gulfsands' CEO, John Dorrier, said: "These exploration and re-development programs are providing reserve replacementand growth for Gulfsands' Gulf of Mexico operation at very reasonable cost.While 2003 and 2004 were years in which Northstar Gulfsands made significantacquisitions of reserves, in 2005 we expect to grow mainly through fieldredevelopment and exploration." Enquiries: Gulfsands Petroleum (Houston) 713-626-9564David DeCort, Chief Financial Officer College Hill (London) 020-7457-2020Ben Brewerton / Jim Joseph Seymour Pierce (London) 020-7107-8000Richard RedmayneJonathan Wright Note to Editors • Gulf of Mexico, USA The Group has a 52.6% interest in Northstar Gulfsands, which owns interests in 39 producing oil and gas fields offshore Texas and Louisiana and operates 8 of those fields. Northstar Gulfsands has proved and probable reserves of 4.7 mmbbls of oil and some 29.2 bcf of gas as of November 1, 2004. • Syria In Syria, Gulfsands owns a 50% working interest in Block 26 and is the operator. The block covers 11,000 sq kms and surrounds areas which currently produce over 100,000 bopd from existing fields. The Group is planning the acquisition of an extensive 2D seismic programme and the drilling of the first well during 2005. Gulfsands has identified 27 exploitation and exploration prospects and leads with mean resources potential of 1 billion barrels of recoverable oil. • Iraq Gulfsands has recently signed a Memorandum of Understanding with the Ministry of Oil in Iraq for the Misan Gas Project in Southern Iraq and is currently negotiating the definitive contract for the project. The project will gather, process and transmit natural gas that is currently a waste by-product of oil production in the region and will end the environmentally damaging practice of gas flaring. Gulfsands has completed a feasibility study and expects to conduct further technical work and commercial discussions with the Iraq Oil Ministry in the first half of 2005. • Onshore USA At the Emily Hawes field, which has previously produced approximately 1.7 bcf of natural gas before being shut-in, gas production is expected to start during the summer of 2005. The first well in the Barb Mag oil field is expected to be drilled in the third quarter of 2005. Darcy Energy has a 25% and 37.5% working interest in these fields respectively. This information is provided by RNS The company news service from the London Stock Exchange