Gulfsands Petroleum Regulatory News (GPX)

4 Jun 2007 07:02

Gulfsands Petroleum PLC04 June 2007 Gulfsands Petroleum PLC Multi-zone Oil and Gas Discovery at Khurbet East - 1 Well, Syria • Triassic aged reservoir flows 478 bopd of 35 degree (API) oil on drill-stem test • Cretaceous and Tertiary aged oil-bearing reservoirs to be further appraised with KHE-2 well 3D seismic survey planned for Khurbet East and surrounding area London, 4th June, 2007: Gulfsands Petroleum plc (AIM: GPX) ("Gulfsands" or "the Company"), the oil and gas production, exploration and development companywith activities in the U.S.A., Syria and Iraq is pleased to announce thatdrilling and initial testing operations on the Khurbet East ("KHE-1") discoverywell in Syria Block 26, where Gulfsands is operator and owner of 50% interest,have now been completed after a successful drill-stem test of the deepestproductive reservoir encountered in the well-bore. KHE-1 will be suspended as afuture oil production well. After completion of operations on KHE-1, the rigwill move immediately to the KHE-2 appraisal well location. The KHE-1 well encountered four significant hydrocarbon bearing reservoirs. Thedeepest of these, the Triassic aged Kurrachine Dolomite Formation, flowed oil tothe surface on drill-stem test at a rate of approximately 478 barrels of oil perday ("bopd") with a gas to oil ratio ("GOR") averaging approximately 2000standard cubic feet per barrel ("scf/bbl"). Preliminary assessment of the oilgravity is 35 degrees API. A summary of the overall results of the KHE-1 well are as follows: Reservoir Net Pay (metres) Depth (metres) CommentsChilou 26.4 1,319 Core recoveredMassive 22.5 1,917 Oil sample recovered (24.3 degrees API)Butmah 16.0 2,850 Core and natural gas recoveredKurrachine Dolomite * 3,098 Core recovered and well flowed oil (35 degree API) at 478 bopd * Logged pay in the Kurrachine Dolomite appears relatively large but isuncertain due to poor well-bore conditions at this depth. The drill-stem testwas conducted over a 102 metre interval. In order to preserve the mechanical integrity of the KHE-1 well-bore as a futureoil producer, the Company will not undertake testing operations of the shallowerpay zones identified in the KHE-1 well-bore using the KHE-1 well-bore. The Company previously announced that the KHE-2 appraisal well will be drilledimmediately after completion of operations on KHE-1. The KHE-2 appraisal well isspecifically designed to more completely evaluate the Tertiary and Cretaceousreservoirs (Chilou and Massive respectively) encountered in KHE-1. The Cretaceous Massive Formation in KHE-1 contains approximately 22 metres ofnet oil pay over a 25 metre gross interval based on wireline log interpretation,reservoir pressures and fluid sample recovery. The oil in this reservoir has anAPI gravity of approximately 24 degrees, based on PVT analysis of the recoveredoil sampled. The Tertiary Chilou 'B' Formation contained approximately 26 metres of net oilpay, based on wireline log interpretation. The KHE-2 well will also providefurther information on the lateral extent and continuity of these reservoirs.The Company expects the final results from KHE-2 in early August. An appraisal well for the Triassic aged Kurrachine Dolomite and Butmahreservoirs encountered in KHE-1 will be required in order to provide additionalinformation on reservoir extent and continuity, and the Company is thereforeproceeding with plans for the drilling of a second appraisal well as soon aspracticable. The Company is also finalizing plans for acquisition of a 3D seismic survey overthe Khurbet East structure and surrounds. These data will aid in thedevelopment of the Khurbet East reservoirs and will be used to select additionalexploration drilling locations in the vicinity of the Khurbet East structure. Khurbet East Structure The Khurbet East discovery is a relatively large fault-bound structuralculmination, with closure mapped at multiple reservoir levels. The areal extentof the structure is approximately 15 square kilometres at the Triassic agedKurrachine Dolomite Formation reservoir level. The KHE-1 discovery well islocated approximately 12 kilometres southwest of the Souedieh Oil Field and 12kilometres south of the Roumelan Oil Field. There is an existing oil pipelinethat has available capacity. With the significant existing infrastructurewithin the confines of Block 26 and the close proximity to an existing pipeline,production from Khurbet East may be accelerated with associated early cash flowfrom this discovery. For further information on the KHE-1 discovery, please refer to the Company'swebsite at www.gulfsands.net. A brief presentation on the Khurbet Eastdiscovery will be available in the next few days. Gulfsands' CEO, John Dorrier, said: "The Company is just concluding its first phase of exploration in Block 26,having drilled 4 wells and acquired some 1400 km of new 2D seismic in the Blockin only 2 years as operator. We enter this next phase having made an excellentdiscovery at Khurbet East in up to 4 reservoirs. We are examining the potentialfor early commercial development of this discovery as we expect it to havesignificant impact on the Company's oil and gas reserves as well as longer termcash flows. " NB: This release has been approved by Jason Oden, Gulfsands Exploration Manager,who has a Bachelor of Science degree in Geophysics with 22 years of experiencein petroleum exploration and management and is registered as a ProfessionalGeophysicist. Mr. Oden has consented to the inclusion of the material in theform and context in which it appears. ABOUT GULFSANDS: Gulf of Mexico, USA The Company owns interests in 54 offshore blocks comprising approximately193,000 gross acres which includes numerous producing oil and gas fieldsoffshore Texas and Louisiana with proved and probable recoverable reserves netto Gulfsands at 31 December 2006 of 41.5 BCFGE (6.9 MMBOE), consisting of 27.3BCFG and 2.36 MMBO. Onshore USA Gulfsands owns interests in two oil and gas fields onshore Texas, USA (98.5%working interest in Emily Hawes Field and 37.5% working interest in Barb MagField) with proved and probable recoverable reserves net to Gulfsands at 31December 2006 of 3.1 BCFGE (0.5 MMBOE), consisting of 2.8 BCFG and 57,000barrels of oil. Syria Gulfsands owns a 50% working interest and is operator of Block 26 in North EastSyria. Block 26 covers 11,000 square kilometres and encompasses existing fieldswhich currently produce over 100,000 barrels of oil per day. These fields areoperated by third parties including the Syria Petroleum Company. 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 followingcompletion of a feasibility study on the project is negotiating details ofdefinitive contracts for this regionally important development. The project willgather process and transmit natural gas that is currently a waste by-product ofoil production and as a result of the present practice of gas flaring,contributes to significant environmental damage in the region. Certain statements included herein constitute "forward-looking statements"within the meaning of applicable securities legislation. These forward-lookingstatements are based on certain assumptions made by Gulfsands and as such arenot a guarantee of future performance. Actual results could differ materiallyfrom those expressed or implied in such forward-looking statements due tofactors such as general economic and market conditions, increased costs ofproduction or a decline in oil and gas prices. Gulfsands is under no obligationto update or revise any forward-looking statements, whether as a result of newinformation, future events or otherwise, except as required by applicable laws. For further information including the Company's recent investor presentation,please refer to the Company's website www.gulfsands.net or contact: Gulfsands Petroleum (Houston) + 1-713-626-9564John Dorrier, Chief Executive OfficerDavid DeCort, Chief Financial Officer Gulfsands Petroleum (London) 020-7182-4016Kenneth Judge, Director of Corporate Development 07733-001-002 College Hill (London) 020-7457-2020Nick ElwesPaddy Blewer Teather & Greenwood (London) 020-7426-9000Tom Hulme (Corporate Finance)Tanya Clarke (Specialist Sales) This information is provided by RNS The company news service from the London Stock Exchange