Operational Update
Immediate release
9 September 2009
GULFSANDS PETROLEUM PLC
Operations Update:
Cumulative Gross Oil Production at Khurbet East Passes 4 Million
Barrels
Drilling Operations Complete at KHE-12
Yousefieh-1 Completed for Future Production
Yousefieh-2 Appraisal Well Flows Oil to Surface
Yousefieh-3 Appraisal Well Preparing to Spud
London, 9th September 2009: Gulfsands Petroleum plc ("Gulfsands",
the "Group" or the "Company" - AIM: GPX), the oil and gas production,
exploration and development company with activities in Syria, Iraq,
and the U.S.A., is pleased to provide the following update on the
Company's operations at Block 26, Syria where Gulfsands holds a 50%
interest and acts as operator.
Khurbet East Oil Production
The Company is pleased to announce that cumulative gross oil
production since the commencement of production at the Khurbet East
Early Production Facility ("EPF") in July 2008 has now passed 4
million barrels of oil, with negligible associated formation water
content.
Khurbet East 12 Drilling Operations Completed
Drilling operations have recently been completed on delineation well
KHE-12, located 3.2 kilometres south of KHE-8, previously the most
southerly well drilled in the field.
The KHE-12 well was drilled to a total measured depth of 2070 metres
and encountered the top of the Cretaceous Massive reservoir at a
measured depth of 1984 metres, or 1592 metres true vertical depth
subsea ("TVD ss"), approximately 22 metres deeper than the pre-drill
prognosis and below 1570 metres TVD ss, the previously interpreted
lowest known level of moveable oil used in determining reserves for
the field.
The presence of viscous oil in KHE-12 observed while drilling has
been confirmed in a 6 metre core section. Analyses of the drilling,
core and petrophysical data indicate that the well encountered a net
reservoir section of approximately 10 metres, extending down to 1605
metres TVD ss, with average porosity of approximately 18 percent. The
reservoir parameters and viscous oil encountered appear similar in
quality to those encountered in KHE-8 and an initial evaluation
suggests that the reservoir section is located in an oil-water
transition zone. However, as with the previous wells drilled in the
southern portion of the field area, a definitive oil-water contact is
not identified in this well.
A wire-line formation pressure and fluid sampler measured formation
pressures at depths of approximately 1600 metres TVD ss that are
consistent with the oil gradient previously observed elsewhere in the
Khurbet East Field. However, three fluid samples recovered by this
wire-line tool from the same depth contained formation water. Flow
testing operations are planned to be conducted on the reservoir
interval following demobilization of the drilling rig in order to
determine the fluids that will be produced under production
conditions.
The implications of the results of this well on field reserves will
need to await a detailed evaluation following testing operations,
analysis of oil quality and remapping of the Field.
Khurbet East 11 Production Testing
The KHE-11 "horizontal" development well penetrated a 60 metre
section of Cretaceous Massive reservoir from approximately 1540 to
1562 metres TVD ss. The well has undergone an extended production
test flowing oil to surface at stabilized rates under natural flow of
1660 barrels of oil per day ("bopd") on a 48/64" choke setting.
Production from the well has an associated water cut of approximately
30% and further production monitoring operations are planned to be
conducted in order to determine the source of the water production.
Following completion of logging and testing operations the well will
be completed as a future production well, although consideration is
presently being given to the use of a remedial water shut-off
operation that would allow early production from this well to be
received at the EPF.
Yousefieh No.1 Remedial Cementing and Flow Testing
The Yousefieh-1 well, drilled in November 2008, was re-entered in
August 2009 to conduct remedial cementing operations on the
production liner and to subsequently flow test the well.
Remedial cementing operations were conducted successfully and the
production liner was then perforated across a 14.5 metre interval
between 1942.5 metres and 1957 metres. During subsequent flow testing
operations the well flowed oil of approximately 25 degrees API to
surface at an average rate of approximately 356 barrels per day over
a 7 hour period, under natural flow and through a 48/64" choke, with
an average water cut of less than 1%. Under artificial lift with
nitrogen and through a 2 inch choke, the well flowed over a 2 hour
period at an average oil rate of approximately 823 barrels per day
with a water cut of less than 1%.
Yousefieh-1 is now being completed for future production.
Yousefieh-2 Appraisal Well Flows Oil to Surface
The Yousefieh-2 appraisal well, located approximately 1.8 km east of
the Yousefieh-1 well, was drilled in February 2009 to target the
eastern limit of the same but thinner Cretaceous reservoir
encountered in the Yousefieh-1 discovery well. The well was
re-entered on 7th August 2009 to further evaluate the potential of an
oil zone that was tested previously with inconclusive results. Using
a work-over rig, a liner was set over the potential reservoir
interval 1558 to 1571 metres TVD ss. Following acid treatment, the
reservoir flowed 17 degrees API oil to surface at an average rate of
139 barrels bopd under artificial lift using nitrogen on a 2" choke
setting over a period of 12 hours with an associated water cut of
49%.
As expected, reservoir and oil properties from this tested zone were
confirmed to be of lower quality compared to those encountered at
shallower depths in the Yousefieh-1 discovery well. However, the
results of this successful oil flow test are expected to have
positive implications for the future commercial development of the
Yousefieh Field and will be evaluated alongside existing geological
information to better understand the nature of the Yousefieh oil
accumulation.
Yousefieh-3 Appraisal Well
The Yousefieh-3 appraisal well, located approximately 500 metres to
the south-east of the Yousefieh-1 discovery well and intended as the
second appraisal well for the Yousefieh discovery, will be spudded
later this week. A successful appraisal of the field at this location
is expected to enable the Company to proceed later this year with an
application for commercial development of the Yousefieh Field.
Drilling and testing operations are anticipated to take approximately
45 days.
Ric Malcolm, Gulfsands CEO, said
"Oil production from the Khurbet East Field continues to perform
extremely well with over 4 million barrels of gross oil produced,
along with minimal water production and minimal pressure depletion.
The results of the KHE-12 delineation well are welcome, indicating
the potential for a further southern extension to the Field. We are
also pleased with achieving a successful oil flow test on the
Yousefieh-2 appraisal well.
We now look forward to the testing results of Khurbet East-12 and the
upcoming Yousefieh-3 appraisal well."
This release has been approved by Richard Malcolm, Chief Executive of
Gulfsands Petroleum Plc who has a Bachelor of Science degree in
Geology with 29 years of experience in petroleum exploration and
management. Mr. Malcolm has consented to the inclusion of the
technical information in this release in the form and context in
which it appears.
For more information please contact:
Gulfsands Petroleum (London) +44 (0)20 7434 6060
Richard Malcolm, Chief Executive Officer
Kenneth Judge, Director of Corporate Development +44 (0)7733 001 002
& Communications
Buchanan Communications Limited (London) +44 (0)20 7466 5000
Bobby Morse
Ben Romney
RBC Capital Markets (London) +44 (0)20 7653 4667
Sarah Wharry
ABOUT GULFSANDS:
Gulfsands is listed on the AIM market of the London Stock Exchange.
Syria
Gulfsands owns a 50% working interest and is operator of Block 26 in
North East Syria. The Khurbet East oil field was discovered in June
2007 and commenced commercial production within 13 months of the
discovery. This field is producing at an average production rate of
approximately 14,800 barrels of oil per day through an early
production facility. Block 26 covers approximately 8,250 square
kilometres and encompasses existing fields which currently produce
over 100,000 barrels of oil per day, and are operated mainly by the
Syrian Petroleum Company. The current exploration license expires in
August 2010 and is extendable for a further two years. Gulfsands'
working interest 2P reserves in Syria at 31 December 2008 were 35.2
mmbbls.
Iraq
Gulfsands signed a Memorandum of Understanding in January 2005 with
the Ministry of Oil in Iraq for the Maysan Gas Project in Southern
Iraq, following completion of a feasibility study on the project, and
is negotiating details of a definitive contract for this regionally
important development. The project will gather, process and transmit
natural gas that is currently a waste by-product of oil production
and as a result of the present practice of gas flaring, contributes
to significant environmental damage in the region. The Company is
actively engaged in discussions with respect to financing and
potential equity partners. Gulfsands has no reserves in Iraq.
Gulf of Mexico, USA
The Company owns interests in 44 blocks comprising approximately
138,000 gross acres offshore Texas and Louisiana, which include 30
producing oil and gas fields with proved and probable working
interest reserves at 31 December 2008 of 5.1 mmboe.
Certain statements included herein constitute "forward-looking
statements" within the meaning of applicable securities legislation.
These forward-looking statements are based on certain assumptions
made by Gulfsands and as such are not a guarantee of future
performance. Actual results could differ materially from those
expressed or implied in such forward-looking statements due to
factors such as general economic and market conditions, increased
costs of production or a decline in oil and gas prices. Gulfsands is
under no obligation to update or revise any forward-looking
statements, whether as a result of new information, future events or
otherwise, except as required by applicable laws.
More information can be found on the Company's website
www.gulfsands.com
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