Gulfsands Petroleum Regulatory News (GPX)

24 Jul 2006 07:02

Gulfsands Petroleum PLC24 July 2006 24 July 2006 Gulfsands Petroleum plc("Gulfsands" or "the Company") Reserves Update NPV of Gulfsands Worldwide Proved and Probable Reserves at $426 million NPV of Gulfsands Probable Reserves in Block 26, Syria at $233 million Gulfsands Petroleum plc (symbol GPX), the AIM listed oil and gas exploration,development and production company with activities in the USA, Syria and Iraq,is pleased to announce that Ryder Scott Company, L.P. ("Ryder Scott") hascompleted an economic evaluation of the probable and possible reserves(unrisked) on the Tigris structure in Block 26, Syria as of 1 July 2006. Thenet present value discounted at 10% of the Probable Reserves as of 1 July 2006on the Tigris structure in Block 26, Syria is estimated at $233 million net toGulfsands' 50% working interest. This Ryder Scott report can be viewed onGulfsands' website at www.gulfsands.net. Gulfsands USA proved and probable reserves in the USA as of 1 January 2006 wereprepared earlier in the year by Netherland, Sewell & Associates Inc. for theGulf of Mexico and Collarini Associates for the Gulf Coast onshore. Thosereserve reports combined determined that the Company's USA proved and probablereserves had a net present value of $193 million resulting in overall worldwideproved and probable reserves for the Company at $426 million. Gulfsands Worldwide Proved and Probable Reserves Syria USA Total 102 BCFG * 34 BCFGE 136 BCFGE or 22.67 MMBOE $233 Million $193 Million $426 Million * Represents net reserves (not working interest reserves) after applying thefiscal terms of the PSC. Block 26, Syria Reserves Ryder Scott completed a detailed economic valuation of the Probable and Possiblereserves on the Tigris structure in Block 26, Syria as of 1 July 2006 as afollow up to the previous Ryder Scott report which was a reserves volumeevaluation only. Additionally, Gulfsands completed an internal study resultingin a detailed economic valuation of the Prospective Resource volumes in theTigris structure. On 30 January 2006, Ryder Scott issued a reserves report on the Tigris structurein which there were two cases considered: an oil case and a gas case. Two caseswere considered as there was insufficient data available at that time todetermine with certainty the hydrocarbon fluid contained within the Tigrisstructure. This reserves study classified recoverable Probable and PossibleReserves and Prospective Resource as follows: • For primarily a natural gas accumulation, Ryder Scott classified 442 BCFG as Probable Reserves, 442 BCFG as Possible Reserves, and a further 3447 BCFG as a Prospective Resource. In summary total estimated reserves potential among Probable, Possible and Prospective Resource is 4330 BCFG (722 MMBOE). • For primarily an oil accumulation, Ryder Scott 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 estimated reserves potential among Possible and Prospective Resource is 512 MMBO and 308 BCFG (combined 563 MMBOE). Based upon this gross Reserve volumes study, Ryder Scott completed an economicevaluation as of 1 July 2006 which indicates the Probable Reserves net toGulfsands after applying the fiscal terms of the Production Sharing Contract are102 BCFG with a net present value discounted at 10% of $233 million. Forprimarily a natural gas accumulation, an additional 75 BCFG of possible reservesnet to Gulfsands were estimated to have a 10% discounted net present value of$261 million. Furthermore, the Company completed its own economic evaluation onthe Prospective Gas Resource and has estimated that Prospective Gas Resource netto Gulfsands is 577 BCFG with an estimated net present value discounted at 10%of approximately $1.06 billion. In summary total gas reserves potential net toGulfsands among Probable and Possible Reserves for the natural gas case is 177BCFG (30 MMBOE) with a net present value of $494 million and when combined withthe Prospective Gas Resource it totals 754 BCFG (126 MMBOE) with a net presentvalue of approximately $1.55 billion. For primarily an oil accumulation, Ryder Scott determined the Possible Reservesnet to Gulfsands after applying the terms of the Production Sharing Contract are19.4 million barrels of oil having a 10% discounted net present value of $452million. Furthermore, the Company completed its own economic evaluation on theProspective Oil Resource and has estimated that Prospective Oil Resource net toGulfsands is 50.9 MMBO with a net present value of approximately $1.51 billion.In summary total oil reserves potential net to Gulfsands among Possible andProspective Oil Resource for the oil case is 70.3 MMBO with a net present valueof approximately $1.96 billion. Natural gas pricing used in the evaluation was based upon a June 2006 monthlyaverage price utilizing the natural gas pricing formula within the Block 26Production Sharing Agreement. Oil pricing was based upon the average price forSyrian light crude oil for the month of June 2006. Natural gas prices werefixed at $7.24 per million cubic feet while oil prices were fixed at $66.69 perbarrel for the life of the project. Gulfsands currently plans to commence drilling the Tigris confirmation well inlate August or early September of 2006. Additionally, the Company plans todrill a further two wells by August of 2007 on Block 26 utilizing the drillingrig for the Tigris well and another drilling rig which the Company is seeking tosecure by year-end. Gulfsands is currently reviewing the recently acquired 2Dseismic data which will be used to aid in the selection of the further drillinglocations in Block 26. Gulfsands' CEO, John Dorrier, said: "The Company has been developing the Block 26 prospect inventory during the pastyear since it became operator of the Block. This work has resulted in a numberof high quality prospects that will be drilled in a multi-well programme duringthe next 12-15 months, starting with the Tigris well. The Ryder Scott reportgives us considerable optimism for the value that could accrue to the Company asa result of the Syrian drilling campaign." Enquiries:Gulfsands Petroleum (Houston) 001-713-626-9564David DeCort, Chief Financial Officer College Hill (London) 020-7457-2020Nick ElwesPaddy Blewer Teather & Greenwood (London) 020-7426-9000James Maxwell (Corporate Finance)Tanya Clarke (Specialist Sales) NB: This release has been approved by the Company's geological staff who includeJason Oden, Gulfsands Exploration Manager who has a Bachelor of Science degreein Geophysics with 22 years of experience in petroleum exploration andmanagement and is registered as a Professional Geophysicist, for the purpose ofthe Guidance Note for Mining, Oil and Gas Companies issued by the London StockExchange in respect of AIM companies, which outlines standards of disclosure formineral projects. Note to Editors • Gulf of Mexico, USA The Company owns interests in 64 offshore blocks comprising approximately216,000 gross acres which includes 39 producing oil and gas fields offshoreTexas and Louisiana 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 Company completed the acquisition of 1,155 kilometers of 2D seismic andanticipates drilling two wells during 2006. The first well, known as SouediehNorth, commenced drilling in late April 2006 and was temporarily suspended inJune for further analysis. The second well known as Tigris is scheduled to spudin late August of 2006 and has the potential to contain in excess of 500 MMBOE.Gulfsands has identified 31 total exploitation and exploration prospects withinBlock 26 with mean resources potential exceeding 1 billion barrels ofrecoverable oil. Ryder Scott completed a reserves study on the Tigris structure in 2006 and thesereserves were classified as either oil or gas bearing until such time as theCompany drills and tests the Tigris structure. As of 1 July 2006 Ryder Scottdetermined that the Probable Reserves net to Gulfsands after applying the termsof the Production Sharing Contract is 102 BCFG with a net present valuediscounted at 10% of $233 million. For primarily a natural gas accumulation, anadditional 75 BCFG of possible reserves net to Gulfsands were estimated to havea 10% discounted net present value of $261 million. Furthermore, the Companycompleted its own economic evaluation on the Prospective Gas Resource and hasestimated that Prospective Gas Resource net to Gulfsands is 577 BCFG with a netpresent value of approximately $1.06 billion. In summary total gas reservespotential net to Gulfsands among Probable and Possible Reserves for the naturalgas case is 177 BCFG (30 MMBOE) with a net present value of $494 million andwhen combined with the Prospective Gas Resource it totals 754 BCFG (126 MMBOE)with a net present value of approximately $1.55 billion. For primarily an oil accumulation, Ryder Scott determined the Possible Reservesnet to Gulfsands after applying the terms of the Production Sharing Contract are19.4 million barrels of oil having a net present value discounted at 10% of $452million. Furthermore, the Company completed its own economic evaluation on theProspective Oil Resource and has estimated that Prospective Oil Resource net toGulfsands is 50.9 MMBO with a net present value of approximately $1.51 billion.In summary total oil reserves potential net to Gulfsands among Possible andProspective Oil Resource for the oil case is 70.3 MMBO with a net present valueof 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 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