Gulfsands Petroleum Regulatory News (GPX)

2 Mar 2006 07:03

Gulfsands Petroleum PLC02 March 2006 2 March 2006 Gulfsands Petroleum PLC ("Gulfsands" or "the Group") Gulfsands Announces Reserves Update O NPV of USA Proved and Probable Reserves at $193 Million O NPV of USA Possible Reserves at $24 Million O USA Exploration and Re-development Success Replaced 269% of 2005 Oil and Gas Production 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 Group's independent oil and gas engineering reservesfirms have performed an updated reserves study as of 1 January 2006 forGulfsands' Gulf of Mexico and onshore USA oil and gas properties. The provedand probable reserves for both the Gulf of Mexico and onshore USA properties arevalued at $193 million. The offshore Gulf of Mexico properties represent $183million of this total. Gulf of Mexico Reserves Gulfsands commissioned Netherland, Sewell & Associates Inc. to provide areserves report for the offshore Gulf of Mexico properties owned by Gulfsands.The net present value of the Gulfsands proved and probable reserves in theseproperties as of 1 January 2006, discounted at an annual rate of 10%, is $183million (87% of value is in proven reserves) This report shows a 42% increasein net present value from the reserves report issued on 30th June 2005. Theincrease in value is due to growth in proved and probable reserves throughexploration and field re-development activities, as well as increased productprices. The reserves report states that Gulfsands offshore Gulf of Mexico propertiescontain proved and probable reserves of 32.4 billion cubic feet of natural gasequivalents (BCFGE), consisting of 19.8 billion cubic feet of natural gas (BCFG)and 2.1 million barrels of oil (MMBO). The reserves report further classifiedan additional 2.8 BCFGE of possible recoverable reserves, with a net presentvalue of $15.8 million. Through ongoing exploration and field re-development activities, Gulfsands'reserves additions replaced 269% of its 2005 produced oil and gas volumes. Thisrepresents a year on year increase of 20% in Gulfsands' Gulf of Mexico reservesbase. Onshore USA Reserves 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). CollariniAssociates has completed a reserves report on these fields. As of 1 January2006, the net present value for the proved and probable reserves in thesefields, net to Darcy Energy and discounted at an annual rate of 10%, is $9.5million. The report states that the fields contain net proved and probablereserves of 1.6 BCFGE, consisting of 1.2 BCFG and 58,000 barrels of oil. Thereserves report further classified an additional 2.2 BCFGE of possiblerecoverable reserves with a net present value of $7.9 million. Block 26, Syria Reserves Gulfsands announced on 30 January 2006 the results of a reserves study by RyderScott Company, L.P. (Ryder Scott), an independent petroleum engineering firm, onthe Tigris structure. Ryder Scott developed two cases for this evaluation, anoil case and a gas case, as there was not sufficient data available at the timeto determine the expected hydrocarbon fluid contained within the Tigrisstructure. This reserves study as of 1 January 2006 classified recoverableProbable and Possible Reserves and Prospective 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). Since the issuance of this reserves report the Company has commenced furtherwork on the Tigris structure so that Ryder Scott can be engaged for a furtherreview of the field development plan and costs, to quantify the economic valueof the Probable and Possible Reserves and Prospective Resource. Gulfsands plansto commence drilling its first well on the Tigris structure in August 2006. Gulfsands' CEO, John Dorrier, said: "This is an outstanding result for Gulfsands' Gulf of Mexico and US onshorebusiness operations. By adding significantly more reserves than our producedvolumes in 2005 we are achieving our goal of steadily increasing the value ofour US offshore and onshore assets. These volume and value increases providesolid asset backing for the Company while upside is provided by both thesignificant reserves and resource potential in our operated Block 26 in Syriaand also the Misan Gas Project in Iraq." Enquiries:Gulfsands Petroleum (Houston) 001-713-626-9564David DeCort, Chief Financial Officer College Hill (London) 020-7457-2020Ben Brewerton / Nick Elwes Seymour Pierce (London) 020-7107-8000Richard RedmayneJonathan 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 be drilled in May of 2006 which has the potential tocontain in excess of 100 MMBO. The second well known as Tigris is scheduled tobe drilled in August of 2006 and has the potential to contain in excess of 500MMBOE. Gulfsands has identified 31 total exploitation and exploration prospectswithin Block 26 with mean resources potential exceeding 1 billion barrels ofrecoverable 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