Operations Update
Immediate Release 6 May 2009
Gulfsands Petroleum plc
OPERATIONS UPDATE
London, 6th May 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 operations
updates.
* Drilling of the KHE-9 development well in the Khurbet East
Field has been completed, and the well flowed oil at an average
stabilized rate of approximately 3040 barrels of oil per day
("bopd") on an open-hole drill stem test ("DST") of the Massive
Formation.
* Expansion of Khurbet East Early Production facility
remains on track for commissioning in June 2009
* Acquisition of the large 3D seismic programme in Block 26
is approximately 90% complete, with acquisition completion expected
on schedule during May 2009. Delivery of the final processed data
is expected during the third quarter of 2009.
* Resumption of gas production at Eugene Island 57 in the
Gulf of Mexico has been deferred until at least August 2009 due to
delays in repairs to third party infrastructure.
KHE-9 Development Well
The KHE-9 well located approximately one kilometre south of KHE-1 was
spudded on 9th April as the first of three development wells planned
to support the expansion of the Khurbet East Early Production
Facility (EPF). The well was drilled to a total depth of 1986 metres
and encountered the top of the Cretaceous Massive reservoir at 1,937
metres. Preliminary analysis of the wire-line logs and drilling data
indicates that the well encountered a 26 metre gross (23 metre net)
oil-bearing interval within the Massive reservoir with average
porosity of approximately 22% over the net oil-bearing section.
The KHE-9 well was tested in an open-hole DST over the gross
reservoir interval. Over the final 12 hours of a 24 hour test period
and under natural flow, the well flowed at an average stabilized oil
rate of approximately 3040 bopd through a 48/64 inch choke, with a
bulk sediment and water content of 3-4% and excellent Flowing Tubing
Head Pressure of approximately 220 psi. Preliminary analysis of the
test and wire-line data indicates very good reservoir permeability,
consistent with the existing wells in the central portion of the
Khurbet East Field. This vertical well will now be completed as a
production well and will then be tied-in to the Khurbet East Early
Production Facility ("EPF"). After completion of operations on
KHE-9, the rig will commence drilling of the KHE-10 development well.
As has been the case with all wells drilled within the Khurbet East
Field, a definitive oil-water contact was not identified in this well
as the primary reservoir section lies directly above a relatively
impermeable and low porosity section.
Expansion of Khurbet East Early Production Facility
The expansion of the capacity of the EPF to 18,000 barrels per day is
proceeding on schedule with commissioning of the new equipment
expected to commence in June with production start-up expected early
in the third quarter.
Exploration 3D Seismic Programme
Acquisition of the 850 square kilometre 3D seismic programme in Block
26 continues on schedule with acquisition of data over approximately
90% of the total programme area now completed. The Company expects
that the current acquisition rate will be maintained and that the
programme will be completed in mid May 2009. Delivery of final
processed data is expected late in the third quarter of 2009, with
interpretation of these data to commence immediately thereafter.
Eugene Island 57 Gas Production
Due to further delays in repairs to the third party owned gas sales
pipeline, resumption of gas production from the Eugene Island 57
Field in the Gulf of Mexico has been deferred until at least August
2009. The Company had previously anticipated that repairs to this
pipeline would be completed during May. Production from the Field
has been shut in since immediately prior to Hurricane Ike in
September 2008 and immediately after tie-in operations on two new
wells which were completed in August 2008.
Ric Malcolm, Gulfsands CEO, said
"We are very pleased with the results of the KHE-9 well as it
indicates a southern extension of the highly productive central
portion of the Khurbet East Field and will shortly provide an
incremental increase in production when the expanded EPF has
commenced operations. We are also pleased with excellent progress
made on the acquisition of the large 3D seismic programme in Block 26
and look forward to receipt of the final processed data later this
year. The further delay to restoration of gas production at Eugene
Island 57 in the Gulf of Mexico is disappointing, but we look forward
to resumption of gas production on this field later this year."
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
Ric 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 4804
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 currently producing approximately 11,000
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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