Gulfsands Petroleum Regulatory News (GPX)

14 Feb 2007 07:01

Gulfsands Petroleum PLC14 February 2007 Tigris-1 Well in Syria at Total Depth Wireline logging completed Production liner set and further evaluation to be undertaken Rig to be released London, 14 February, 2007: Gulfsands Petroleum plc (AIM: GPX), the oil and gasproduction, exploration and development company with activities in the U.S.A.,Syria and Iraq announces that the Company has reached total depth on theTigris-1 well within Block 26, Syria and is setting a 7 inch production liner tototal depth in the well. Gulfsands, the operator and 50% working interest owner in Block 26, Syria, hascompleted drilling operations on the Tigris-1 well. The well was drilled to atotal depth of 4,500 metres. Wireline logging operations and formation pressuretesting have also been completed and sidewall cores acquired. The results of the operations to date are inconclusive. While the lowerportions of the well (3800 - 4500 metres) evidence hydrocarbon-bearing pay overa substantial interval, the pressure tests indicate lower permeabilityreservoirs. It is not possible at this stage to make a determination as towhether or not these reservoirs will ultimately be capable of producinghydrocarbons at commercial rates. While these results are disappointingly incomplete, Gulfsands considers it istoo early to make a determination as to the ultimate commerciality or otherwiseof the Tigris-1 well. There are numerous possible reasons for the apparent lowpermeability of the reservoirs and there are a variety of techniques (e.g.fracture stimulation) which may be suitable to be employed if required to renderthe reservoirs commercial. It is also possible that, as a result of further analysis, deepening of the wellmay be deemed an attractive option. Irrespective of the ultimate commercialoutcome, there is also a wealth of valuable additional data to be collected fromfurther testing and evaluation of this well. Once a 7 inch liner has been set,the well bore will be preserved in good condition for production testing oradditional drilling. It is worth noting that the additional cost required to set the liner isestimated to be approximately 5% of the amount already outlaid in drilling totarget depth. In the opinion of Gulfsands as operator and particularly in lightof the log results which indicate hydrocarbon potential in the wellbore, itwould be imprudent to do otherwise. It has always been Gulfsand's intention asoperator to set casing to total depth if open-hole evaluation provedinconclusive, and we will now proceed to do so. Once the liner has been set, and in accordance with our original plans, thedrilling rig used on Tigris-1 will be released in order to expedite its returnto Block 26 around July 2007 following drilling operations with this drillingrig for another operator in Syria. Future production testing of the wellborecan be carried out perfectly satisfactorily with a smaller workover rig inaccordance with normal industry practice. Such smaller rigs are both cheaper tooperate and more readily available in Syria. Emerald Energy, our 50 % partner in Block 26, has elected not to participate insetting the liner in the well. This is Emerald's prerogative and indeed Emeraldmay elect to participate in the future operations of Tigris-1 after reimbursingGulfsands for its share of costs and with an additional back-in penalty. Whilewe respect this decision, we as operator remain firmly of the view that there isinadequate evidence to support a definitive conclusion that the well will notprove ultimately commercial, that such a decision is premature and that thebalance of risk and reward is entirely in favour of incurring the modestadditional expenditure required to set the liner. Gulfsands' CEO, John Dorrier, said: "Given the pressures on rig availability, it is frustrating not to have adefinitive result from the well at this point. The reservoirs encountered thusfar in the well have lower indicated permeability than expected and it istherefore uncertain that any hydrocarbons there will yield commercial productionrates. However, given that lower permeability reservoirs are productive inother parts of the world, we consider it prudent to preserve the wellbore forfurther operations." NB: This release has been approved by Jason Oden, Gulfsands Exploration Manager,who 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 has consented to the inclusion of the material in theform and context in which it appears. 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