Gulfsands Petroleum Regulatory News (GPX)

24 Sep 2007 07:01

Gulfsands Petroleum PLC24 September 2007 Second appraisal well to commence at Khurbet East Plans initiated for early commercial development at Khurbet East 3D seismic acquisition to begin over Khurbet East New drill rig contract executed for further drilling London, 24th September, 2007: Gulfsands Petroleum plc ("Gulfsands", the "Group"or the "Company" - AIM: GPX), the oil and gas production, exploration anddevelopment company with activities in the U.S.A., Syria and Iraq is pleased toannounce that a second appraisal well at Khurbet East ("KHE-3"), Syria, isscheduled to commence drilling in November of 2007. Additionally, a 3D seismicsurvey is scheduled to commence in late October that will cover both KhurbetEast and adjacent exploration leads to the south of the Khurbet East discovery. KHE-3 Well The KHE-3 well will further appraise the Cretaceous Massive reservoirsencountered in both the Khurbet East 1 ("KHE-1") discovery well and the KhurbetEast 2 ("KHE-2") appraisal well and is scheduled to commence drilling inNovember. The drilling of this well will assist in the planning for early development andproduction of the Massive reservoir in Khurbet East. The total drilling depthof the KHE-3 well is expected to be approximately 2,150 metres and will requireapproximately 45 days to drill and evaluate at a gross cost, including rigmobilization and demobilization costs, of approximately $2.4 million, or $1.2million net to Gulfsands. Utilizing its shared drilling contract withPetro-Canada in Syria, the Company plans to drill this well with the MB3drilling rig owned by MB Drilling Overseas Limited. Recent additional analysis of both the KHE-1 and KHE-2 wells suggests that thenet oil pay within both wells is larger than previously indicated, withpotentially additional pay deeper in the Massive reservoirs. Independentwireline log analysis and production test data from KHE-2 now indicate a totalof approximately 29 metres of net oil pay in both the KHE-2 and KHE-1 wells,thereby increasing the reserve potential of the Khurbet East discovery. To date, there has been no clear oil-water contact seen in either well and noformation water was recovered during the recent KHE-2 production test. Thereserve potential of the Massive reservoir in Khurbet East now exceeds theCompany's original estimates of the reserve potential of both the CretaceousMassive and Tertiary Chilou combined. Early Development Plans The Company is currently developing plans for an early production programme andfull field commercial development of the Khurbet East discovery, with initialproduction targeted for the second half of 2008. The Company expects to presentthese plans, along with the initial development plan, to the Syrian Governmentand the Syrian Petroleum Company in the fourth quarter of 2007 for considerationand approval. As part of the Contract for the Exploration, Development and Production ofPetroleum for Block 26 with the Syrian Government and the Syrian PetroleumCompany, the Company has been granted rights to utilize the local pipelines andother infrastructure which includes an export oil pipeline located within thepresently mapped boundaries of the Khurbet East structure. The Company maylocate the Khurbet East Field oil processing facility adjacent to this exportpipeline, thus minimizing the tie-in distance, costs and time. The Company is also preparing its 2008 work programme for Block 26 with plans todrill an appraisal well of both the Triassic Butmah and Kurrachine DolomiteFormations in Khurbet East following the earlier successful production test ofthe Triassic formation carried out in the KHE 1 well. The 3D seismic surveyover the Khurbet East Field area which will commence in October will assist inthe selection of the location for this well. 3D Seismic The Company is scheduled to commence a 3D seismic acquisition programme in Block26 late next month. The seismic survey is designed to acquire approximately 150square kilometres of seismic data over the Khurbet East structure and a further240 square kilometres over an area south of Khurbet East. The 150 square kilometres of 3D seismic data to be acquired over the KhurbetEast structure will assist in locating development and near-field offset wellsand provide support for reserves reporting. Work on the first reserves reportfor Khurbet East has commenced with the engagement of an independent engineeringfirm, RPS Group plc based in London, and this should be completed before the endof 2007. The additional 240 square kilometres of 3D seismic data to the south of KhurbetEast will be used to evaluate exploration leads and to develop "drill ready"targets for the Massive and Kurrachine Dolomite formations south of Khurbet Eastand within the Khurbet East "play fairway". The seismic acquisition programme should be completed in January with processingand interpretation completed in the first quarter of 2008. Drilling Rig In anticipation of this significant increase in activity on Block 26, theCompany has signed an amended contract with Crosco, Integrated Drilling & WellServices, Company Ltd. for the drilling of two wells by May 2008. Additionally,the Company has agreed in principle with Crosco for another drilling rig tocommence work in mid 2008 for a period of one year plus an option for anadditional one year. With these rigs the Company can fully appraise and developthe Khurbet East Field expeditiously for the benefit of both the Company and theSyrian Government. Gulfsands' CEO, John Dorrier, said: "Following the success of KHE-2, the Company is moving forward aggressively toappraise the Khurbet East Field further, secure an approved Field DevelopmentPlan and initiate early production as quickly as possible. Having secured adrilling rig for use in 2008, we will sustain considerable momentum in thedrilling campaign for both development and exploration within Block 26. Withaccess rights to the nearby export pipeline granted in the PSC, we areoptimistic about the prospects for bringing the Khurbet East discovery intoproduction during the second half of 2008." 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 approximately 8,250 square kilometres and encompassesexisting fields which currently produce over 100,000 barrels of oil per day.These fields are operated by third parties including the Syria PetroleumCompany. In the first half of 2007 Gulfsands announced an oil and gas discoveryon Block 26 called Khurbet East. This discovery is currently under appraisal.The Company initiated the first extension period of exploration on Block 26 fora further period of three years commencing on 23 August 2007. Iraq Gulfsands signed a Memorandum of Understanding in January 2005 with the Ministryof Oil in Iraq for the Maysan Gas Project in Southern Iraq and followingcompletion of a feasibility study on the project is negotiating details ofdefinitive contract 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, please refer to the Company's website www.gulfsands.netor 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 Landsbanki Securities (UK) Limited (London) 020-7426-9000Andrew Matharu / Tom Hulme (Corporate Finance) This information is provided by RNS The company news service from the London Stock Exchange