Gulfsands Petroleum Regulatory News (GPX)

2 Jun 2006 07:01

Gulfsands Petroleum PLC02 June 2006 2 June 2006 Gulfsands Petroleum PLC("Gulfsands" or "the Company") Gulfsands Completes Drilling Operations on Souedieh North Well Gulfsands Petroleum PLC (symbol GPX), the AIM listed oil and gas exploration,development and production company with activities in the USA, Syria and Iraq,announces that the Company has concluded initial drilling operations and hassuspended the Souedieh North well in Block 26, Syria pending further analysis ofthe well data. As reported previously, the well encountered a series of live oil and gas showsin both the primary and the secondary reservoir objectives while drilling.Wireline electric logs were run within both the primary and secondaryobjectives, Tertiary and Cretaceous reservoirs, which indicated oil-bearing payzones within both objectives. However, wireline fluid tests of these intervalsdid not recover moveable oil. Preliminary analysis shows that the oil is lowAPI gravity/high viscosity in the Tertiary reservoirs, and that the lowerporosity and permeability Cretaceous reservoirs at this location may produce oilafter mechanical or chemical stimulation. Gulfsands is the operator and 50%working interest owner in Block 26. Independent log analysis of the electric wireline logs in both the Tertiary andCretaceous reservoir sections of the well indicated some 80 feet of potentialnet oil pay. Although live oil was collected in the samples during drilling, nooil was recovered during wireline tests of these zones. A full review of thedrilling, sample, wireline and sidewall core data is being undertaken, inconjunction with a further review of the seismic data over the area. Due to theapparent oil column seen in this well the Company has decided to suspend thewell in order to complete these studies and determine if these reservoirs arecandidates for fracture stimulation or a similar stimulation testing program, orwhether the well should be deepened. No production testing has been performedon the well but will be considered as part of a future testing program afterthese further analyses have been completed. Gulfsands' CEO, John Dorrier, said: "We are disappointed not to recover movable oil in this well after encounteringgood oil shows while drilling and recording an apparent oil column on thewireline logs. Further work on the information gathered in this well mayjustify further testing, stimulation or deepening operations in the well, andwill certainly be very useful in evaluating the numerous other prospects seen onthe block. The geologic and operations data gathered during drilling SouediehNorth will certainly help in the drilling of the Tigris-1 well scheduled forAugust this year." Enquiries:Gulfsands Petroleum (Houston) 001-713-626-9564David DeCort, Chief Financial Officer College Hill (London) 020-7457-2020Ben BrewertonNick Elwes Teather & Greenwood (London) 020-7426-9000James Maxwell (Corporate Finance)Tanya Clarke (Specialist Sales) NB: This release has been approved by Jason Oden, Gulfsands Exploration Managerwho 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 of Gulfsands and also Peter Hitchens on behalf ofTeather & Greenwood Limited, the Company's Nominated Advisor, have consented tothe inclusion of the material in the form and context in which it appears. 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 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. 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