Syria Sanctions Update

RNS Number : 3091T

Gulfsands Petroleum PLC

05 December 2011

 



Immediate Release	5th December, 2011

GULFSANDS PETROLEUM PLC

Syria Sanctions Update

London, 5^th December, 2011:  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, Tunisia, Italy and the U.S.A., wish to provide the following update on the European Union's ("EU") recent announcement of additional sanctions in relation to Syria.

On 2^nd December 2011, the EU's Official Journal carried the announcement of a decision of the EU Council made on 1 December 2011 in relation to additional sanctions against Syria. Among the new measures included in that decision are the prohibition on the supply of key equipment and technology to the oil and gas industry in Syria and the addition of General Petroleum Corporation ("GPC") of Syria to the list of proscribed organisations. GPC is the Syrian government's principal holding company for investments in the oil and gas sector and coordinates oil and gas production, distribution and sales.

As a result of GPC being added to the list of proscribed organisations, Gulfsands, along with other EU related operators in Syria, is reviewing the manner in which it interacts with GPC and the implications of these new sanctions for the Company's present and planned production activities and its contractual obligations to GPC and the Syrian government.

Once an understanding has been reached on the implications of the new sanctions measures on the Company's business in Syria, the Company will make a further announcement.

Gulfsands has no debt and holds substantial cash balances with which to continue its exploration and other corporate activities and as of 30^th November these cash balances were in excess of US$120 million, providing the Company with the financial resources with which to pursue its business activities for the foreseeable future.

For more information please contact:

Gulfsands Petroleum (London)	[phone]
Richard Malcolm, Chief Executive Officer Andrew Rose, Chief Financial Officer Kenneth Judge, Director: Corporate Development & Communications
Buchanan (London)	[phone]
Bobby Morse Ben Romney
RBC Capital Markets (London)	[phone]
Josh Critchley Tim Chapman Matthew Coakes

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 has been producing at an average gross production rate of approximately 21,500 barrels of oil per day through early production facilities during August 2011. A second field discovery, the Yousefieh field, was brought on-stream in April 2010, and has been producing at approximately 2,600 barrels of oil per day. Current restrictions on Block 26 oil production which came into force during September 2011 are discussed elsewhere in this release. Block 26 covers approximately 5,414 km² 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 2012. Gulfsands' working interest 2P reserves in Syria at 31 December 2010 were 53.6 mmbbls.

Tunisia

Gulfsands is acquiring working interest positions in two exploration permits in Tunisia (Chorbane and Kerkouane Permits) and one exploration permit in Southern Italy (G.R15.PU) from ADX Energy Ltd the operator of all three permits. The Company's interest in these permits remains subject to the completion of the Company's farm obligations and various approvals from the governments of Tunisia and Italy.

Kerkouane Permit - Offshore Tunisia

G.R15.PU Permit (Pantelleria Permit) - Offshore Italy

G.R15.PU, is located offshore the island of Pantelleria southwest of Sicily in Italian waters and the Kerkouane Permit is located offshore northeast Tunisia. The two permits are contiguous and comprise a total area of approximately 4,500 km².

The operator has identified multiple leads and targets on these permits. Drilling operations were recently completed at the Lambouka-1 well where gas was encountered in the Abiod Formation. However, as a result of down-hole problems, no fluid samples or gas flow were established. The well was suspended with the intention of re-entering at a later date and drilling and testing the reservoir in a sidetrack hole up-dip of the existing discovery. 

Gulfsands has completed its earn commitments with respect to the Kerkouane and Pantelleria Permits with the drilling of the Lambouka-1 well. Gulfsands has earned a 30% working interest in both permits by paying approximately 35% of the cost the Lambouka-1 well and reimbursing the operator for a portion of various pre-drill costs that include a recently completed 3D seismic programme.

Chorbane Permit - Onshore Tunisia

The Chorbane permit is located in central Tunisia and covers an area of 2,428 km². The permit is surrounded by several producing oil fields and extensive oil & gas infrastructure. Gulfsands' work commitment for the Chorbane permit included the drilling of one exploration well, the Sidi Dhaher- 1 well, which was concluded recently with the announcement on 3^rd October, 2011 of a potential oil discovery. Gulfsands was responsible for paying 80% of the first $5 million in drilling costs, and 40% of the drilling costs in excess of $5 million, so as to earn a 40% interest in the permit. 

A number of prospects and leads have been indentified within the permit, the most prospective being a large tilted horst block ("Sidi Daher") where the operator has identified multiple potential targets estimated to hold recoverable mean un-risked prospective resources of 175 billion cubic feet of gas ("bcfg") and 44 million barrels of oil from Tertiary and Cretaceous aged reservoirs.

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 14 leases offshore Texas and Louisiana, which include 9 producing oil and gas fields with proved and probable (2P) working interest reserves at 31 December 2010 of 2.1 mmboe (figures adjusted for the disposal of non-core properties in December 2010 and September 2011).

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

 

END

 

 

MSCUSSURARAURUA