Gulfsands Petroleum Regulatory News (GPX)

18 Dec 2006 07:02

Gulfsands Petroleum PLC18 December 2006 Gulfsands Petroleum plc("Gulfsands" or "the Company") and its Subsidiaries (together "the Group") Third Quarter USA Production Update USA Daily Production at 2974 BOE Increases in Daily Production Expected in H1 2007 London, 18th December, 2006: Gulfsands Petroleum plc (AIM: GPX), the oil andgas production, exploration and development company with activities in theU.S.A., Syria and Iraq is pleased to announce that current USA daily productionis approximately 2974 barrels of oil equivalent (boe) per day. Production in the U.S.A. Gulf of Mexico and onshore Gulf Coast for the threemonths ended 30 September 2006 totaled 225,995 boe (2,511 boepd) and for thefirst nine months of 2006 was 599,695 boe (2,221 boepd). Net revenue interestboe (working interest barrels less royalties) totaled 170,013 and 436,511respectively for the three and nine month periods ended 30 September.Approximately 60% of the daily production was in natural gas and for the ninemonth period was priced at an average price of $6.28 per mcf, while 40% of thedaily production was oil which was priced at an average price of $63.19 perbarrel. Gulfsands' current U.S.A. daily oil and gas production is approximately 2974working interest boe per day. The Company is anticipating further increases indaily production in the Gulf of Mexico over the coming months as new wellwork-overs and recompletions are completed and those wells brought on stream. The Company recently completed a work-over of a gas well in the East Cameronarea of the Gulf and this well is now on stream but currently rate restricted ata gross production rate of approximately 0.5 million cubic feet of gas per daydue to limitations with third party infrastructure. However, it is anticipatedthat this well will be capable of producing at rates far in excess of thecurrent producing rate once third party infrastructure under repair is back tofull capacity which is scheduled to occur within the next six months. Gulfsandsowns a 48% working interest in this well. Capital expenditures in the U.S.A. for the first nine months totaled $9.5million. Gulfsands' CEO, John Dorrier, said: "We are very pleased with progress made in the Gulf of Mexico so far this year.Operations previously affected by post hurricane maintenance are now back ontrack, allowing significant production increases. With our field development work stimulating additional production growth, welook forward to ending the year on record production levels and incomegeneration in the Gulf of Mexico. " ABOUT GULFSANDS: Gulf of Mexico, USA The Company owns interests in 64 offshore blocks comprising approximately216,000 gross acres which includes numerous producing oil and gas fieldsoffshore Texas and Louisiana with proved and probable recoverable reserves of32.4 BCFGE, consisting of 19.8 BCFG and 2.1 MMBO. As of 1st January 2006 thesewere estimated to have a net present value of $183 million. In addition, theCompany's 2.8 BCFGE of possible recoverable reserves were estimated to have anet present value of $15.8 million. 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. In January 2006 the Company completed the acquisition of 1,155 kilometres of 2Dseismic over Block 26 and following evaluation of this data, commenced drillingof the Tigris-1 prospect on 10 September, 2006. The Tigris structure isestimated to have the potential to contain in excess of 500 MMBOE. Gulfsandshas identified numerous exploration prospects and leads within Block 26 withmean resources potential exceeding 1 billion barrels of recoverable oil. Ryder Scott recently completed a reserves study on the Tigris structure (thereport is available on the Gulfsands' website at www.gulfsands.net) and pendingthe Company's drilling and testing of the Tigris structure, classified thesereserves as either oil or gas bearing. Ryder Scott assessed Gulfsands' netProbable Reserves were 102 BCFG and had a net present value of $233 million.Assuming a primarily natural gas accumulation, Ryder Scott estimated Gulfsandshad an additional net 75 BCFG of possible reserves with a net present value of$261 million. All reserve estimations for Syria were calculated using a discountrate of 10% and after applying the terms of the Production Sharing Contractafter Syrian taxes. The Company has completed its own economic evaluation on the Prospective GasResource and has estimated the Company to have a net Prospective Gas Resource of577 BCFG with a net present value of approximately $1.06 billion. In summary, Gulfsands' total net gas reserves potential among Probable andPossible Reserves for the natural gas case is estimated at 177 BCFG (30 MMBOE)with a net present value of $494 million. When combined with the Prospective GasResource for an aggregate 754 BCFG (126 MMBOE), the net present value ofGulfsands' interest are estimated to be valued at approximately $1.55 billion. Ryder Scott estimated that for a primarily oil accumulation, the PossibleReserves net to Gulfsands are 19.4 million barrels of oil with a net presentvalue of $452 million. Gulfsands has completed its own economic evaluation onthe Prospective Oil Resource and has estimated its net Prospective Oil Resourceat 50.9 MMBO with a net present value of approximately $1.51 billion. In summary Gulfsands total net oil reserves potential among Possible andProspective Oil Resource for the oil case is estimated at 70.3 MMBO with a netpresent value of approximately $1.96 billion. 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 currently negotiatingdetails of definitive contracts for this regionally important development. Theproject will gather, process and transmit natural gas that is currently a wasteby-product of oil production and as a result of the present practice of gasflaring, contributes to significant environmental damage in the region. Onshore USA Gulfsands operates onshore in the USA through its 100% owned subsidiary companyDarcy Energy LLC which owns interests in two oil and gas fields onshore Texas,USA (34.375% working interest in Emily Hawes and 37.5% working interest in BarbMag) with proved and probable recoverable reserves net to Gulfsands at 1 January2006 of 1.6 BCFGE, consisting of 1.2 BCFG and 58,000 barrels of oil with anestimated net present value of $9.5 million. Additionally, these fields containa further 2.2 BCFGE of possible recoverable reserves net to Gulfsands with anestimated net present value of $7.9 million. Certain statements included herein constitute "forward-looking statements"within the meaning of applicable securities legislation. These forward-lookingstatements are based on certain assumptions by Gulfsands and as such are not aguarantee of future performance. Actual results could differ materially fromthose expressed or implied in such forward-looking statements due to factorssuch as general economic and market conditions, increased costs of production ora decline in oil and gas prices. Gulfsands is under no obligation to update orrevise any forward-looking statements, whether as a result of new information,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) 020-7426-9000James Maxwell (Corporate Finance)Tanya Clarke (Specialist Sales) This information is provided by RNS The company news service from the London Stock Exchange