Gulfsands Petroleum Regulatory News (GPX)

31 Jan 2007 07:01

Gulfsands Petroleum PLC31 January 2007 Rig Contract Signed for Block 26, Syria New Exploration Well on Block 26, Syria Drilling Update - Tigris-1 well, Syria London, 31st January, 2007: Gulfsands Petroleum plc (AIM: GPX), the oil and gasproduction, exploration and development company with activities in the U.S.A.,Syria and Iraq is pleased to announce that the Company has executed a formalcontract for a drilling rig to be used for drilling the next exploration well onBlock 26, Syria in February 2007. Rig Contract Executed - Khurbet East Exploration Well Gulfsands, the operator and 50% working interest owner in Block 26, Syria, hasexecuted a formal contract with Crosco, a drilling company based in Croatia, forthe Crosco 602 rig, a 2,000 horsepower drilling rig to be used for drilling oneexploration well scheduled to commence by mid February of this year. The Crosco602 rig will be utilized to drill the Khurbet East exploration prospect ("KHE 1") and has now been mobilized to the drill site. KHE 1 is a fault-bound structural culmination, with closure mapped at multiplepotential reservoir levels. These include reservoirs of Cretaceous, Triassicand Palaeozoic age. The well is located approximately 12 kilometers southwest ofthe Souedieh Oil Field and 12 kilometers south of the Rumailan Oil Field, in thenortheastern portion of Block 26. The total drilling depth of the KHE 1 well isexpected to be approximately 3,700 meters and require approximately 90 - 100days to drill and evaluate. Tigris-1 Update The Tigris-1 exploration well is currently drilling ahead at a depth of 4,391metres to a planned total depth as previously announced of approximately 4,500metres. Following the drilling of the KHE 1 well the Company is planning to drill itsfourth commitment well on Block 26 once the rig currently drilling the Tigris-1well is returned to Gulfsands around July 2007. Gulfsands' CEO, John Dorrier, said: "We are very pleased to have reached agreement with Crosco for the use of the602 rig in a market which is increasingly tight for equipment of this size andcapability. With the anticipated return of the current rig later in the firsthalf of the year, we can now look forward to being able to undertake a nearlycontinuous drill programme on Block 26 during 2007." 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