Gulfsands Petroleum Regulatory News (GPX)

8 Oct 2007 07:00

Gulfsands Petroleum PLC08 October 2007 Formation of Strategic Partnership in Middle East Middle East Strategy Outlined London, 8th October, 2007: The Directors of Gulfsands Petroleum plc("Gulfsands", the "Group" or the "Company" - AIM: GPX), the oil and gasproduction, exploration and development company with activities in the U.S.A.,Syria and Iraq are pleased to announce the establishment of an importantstrategic partnership with Cham Holding, which is well recognized as one ofSyria's most important business groups. The strategic partnership is to be established in the form of a venture companyowned 65% by Cham Holding and 35% by Gulfsands (the "Strategic Partnership")with each party responsible for only their proportionate share of funding. Theintention of the Strategic Partnership will be to pursue the acquisition ofseveral high-value energy projects in Syria and potentially Iraq (the"Projects"). The directors of Gulfsands and Cham Holding have been workingtogether for some time in pursuing the acquisition of interests in the Projectsand matters have now reached a stage where it was considered appropriate toformally establish the Strategic Partnership in order to be in a position toparticipate in any potential Project through the Strategic Partnership. In addition to its minority position in the Strategic Partnership, it is theintention of the partners that Gulfsands should act as the Operator under anyGovernment Contract acquired by the Strategic Partnership. Gulfsands will alsobe entitled to acquire additional direct interests in the Projects alongside anyparticipating interests acquired by the Strategic Partnership. Cham Holding, a private joint stock company, was established in 2006 and thencompleted a US$360 million equity raising for investment in a range of sectorsincluding the energy sector, power generation, real estate (including hotels andleisure), finance, health and education. Cham's significant shareholders includethe Al Mashreq Investment Fund, which recently became a substantial shareholderin Gulfsands, and a number of prominent Syrian businessmen and corporations. Cham Holding, currently the largest private Syrian consortium, is chaired by Mr.Nabil Kuzbari and vice chaired by Mr. Rami Makhlouf. Cham Holding is currentlydeveloping projects that exceed in value more than one billion U.S. Dollars,including a wide variety of real estate and hospitality projects, some of whichare being developed within joint ventures with well known internationalcompanies. Maturing Middle East Strategy In light of the Company's recent exploration success at Khurbet East in Syriaand the establishment of the Strategic Partnership, the Company will seek tobuild upon these important milestones with an expansion of its activities in theMiddle East. Gulfsands' focus in the region will be on acquiring development orre-development projects with existing production infrastructure and proven oiland gas reserves, and on further exploitation and exploration projects with highpotential upside, but lower technical risk. Gulfsands will concentrate onforming further strong working relationships with host governments and withlocal business interests in a similar manner to the Strategic Partnership formedwith Cham Holding. The Company's identified opportunities in the Middle East for the short and longterm includes: 1. Securing early development and production of the Khurbet East discovery; 2. Expanding the Company's exploration efforts in Syria Block 26 during the period of the recently announced first extension of the Production Sharing Contract during the next 3 years; 3. Acquiring development projects in Syria, several of which have already been identified by the Strategic Partnership; 4. Finalizing formal contracts for the development of the Maysan gas gathering and processing project in southern Iraq; 5. Acquiring exploration and development rights in Kurdistan and upstream field development rights elsewhere in Iraq; and 6. Acquiring Syrian and Iraqi cross-border oil and gas development opportunities which are expected to become available in the near-term following formal Parliamentary approval of the new Oil and Gas Law in Iraq. Gulfsands' Chairman, Andrew West, said: "We are delighted to have reached agreement with Cham Holding for establishmentof the Strategic Partnership which we view as important to our ambitions in theMiddle East. We are optimistic that, in partnership with Cham Holding, Gulfsands will be ableto acquire direct and indirect interests in several potentially high-valueenergy projects which have already been identified in Syria and Iraq and whichwe have been considering in collaboration with certain shareholders of ChamHolding for some time." Cham Holding's Chairman, Nabil Kuzbari, said: "Gulfsands is well known and respected in Syria as a highly professionaloperator and for its recent and significant exploration success at Khurbet Eastin the north east of Syria. Gulfsands is also widely recognized for its abilityto work with local companies and its competence in efficiently meeting technicalchallenges and executing commercial projects. For some time now, we have enjoyed a close working relationship with Gulfsands'management and directors and are therefore pleased to be working with Gulfsandsin pursuing several high value energy projects where we believe our combinedskill sets will help us secure one or more significant projects and provide uswith the opportunity to create a great deal of value for our respectiveshareholders." 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. The Company hasalso formed a strategic partnership with Cham Holding for acquiring oil and gasprojects in Syria and Iraq. 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