Khurbet East Update

KHE-3 appraisal well testing averages 3,420 bopd Report on commercial development of Khurbet East expected mid January Khurbet East Reserves and Resources Report due before end January 3D seismic programme completed over Khurbet East Field London, 7th January, 2008: Gulfsands Petroleum plc ("Gulfsands", the "Group" or the "Company" - AIM: GPX), the oil and gas production, exploration and development company with activities in the U.S.A., Syria and Iraq is pleased to announce that the Company has successfully completed the drilling, logging and testing of the Khurbet East-3 (KHE-3) well, the second appraisal well on the Khurbet East discovery within Block 26, Syria. The well flowed 26 degree API oil on drill-stem test at an average, stabilised production rate of 3,420 barrels per day (bopd). KHE-3 Well Gulfsands, the operator and 50% working interest owner in Block 26 has now completed operations on the KHE-3 well. The objectives of this second appraisal well were to acquire reservoir and structural information on the primary objective Massive Formation southeast of the KHE-1 discovery well, and to undertake a production test of the entire main reservoir section. The top of the Massive Formation reservoir was encountered within 3 metres of the pre-drill prognosis and at a similar depth to the KHE-1 discovery well and the KHE-2 appraisal well. Third party interpretation of the wireline logs obtained from the KHE-3 well indicates a similar reservoir interval in the Massive Formation as seen in the KHE-1 and KHE-2 wells with reservoir properties similar to or slightly better than those encountered in the KHE-1 and KHE-2 wells. A definitive oil-water contact has still not been identified within the main reservoir interval. After completion of logging operations, the Company carried out a drill-stem test over the entire Upper Massive reservoir interval. The oil production rate continued to improve during the course of the test reaching a maximum daily production rate of 3,560 bopd near the end of the main flow test period. The average, stabilised production rate was 3,420 bopd with 206,000 cubic feet of natural gas per day through a ¿ inch choke. Preliminary analysis indicates that the oil gravity is 26 degree API, which is consistent with the oil encountered in KHE-1 and KHE-2. The information obtained from the KHE-3 well has been provided to independent engineering consultants, RPS Group plc, for assessment and inclusion in a report on commercial development of the Khurbet East Field. The Company expects to submit this report to the Syrian Petroleum Company and the Syrian Government for approval in mid January 2008. RPS Group plc has also been requested to provide a report on the reserves and resource estimate for the Khurbet East Field and this is anticipated to be delivered during the second half of January 2008. 3D Seismic The Company has also completed the 3D seismic acquisition programme over the Khurbet East Field. The Company is now proceeding with seismic processing and the interpretation of these data will be used to assist in the selection of additional development well locations in the Khurbet East Field during 2008 and 2009 as well as any "near-field' exploration locations immediately adjacent to the Field. The Company has also completed approximately 60% of the acquisition of a 240 square kilometre "exploration" 3D seismic programme located to the south of Khurbet East. These data are expected to assist in maturing exploration leads within the Khurbet East "play fairway" into "drill ready" prospects. This seismic programme is expected to be completed by the end of January 2008 with seismic processing and interpretation to follow. Forward Programme Following receipt of Syrian Government's and the Syrian Petroleum Company's ("SPC") approval of the submitted report on the prospects for commercial development of the Khurbet East Field and the Company's plans for the installation of an early production system, Gulfsands and its joint venture partner intend to proceed as soon as practicable with development of Khurbet East Field. Subject to the early receipt of the Syrian Government's and SPC's approval to the Company's development plans and completion of logistical and commercial arrangements, the partners will be targeting to achieve first oil production in the fourth quarter of 2008. The joint venture also intends to drill at least one exploration well during 2008 following the completion of interpretation of the 3D seismic data currently being acquired and processed. Gulfsands' CEO, John Dorrier, said: "The excellent production test from the Massive Formation at KHE-3 demonstrates the high oil flow rates attainable from wells in the Khurbet East Field. The Company is now focused on working with its partners to achieve first oil production as early as practicable in 2008. The Khurbet East 3D seismic surveys also cover a series of additional promising subsurface features, several of which the Company expects to drill during the current exploration period of the Contract." This release has been approved by Jason Oden, Gulfsands Exploration Manager, who has a Bachelor of Science degree in Geophysics with 23 years of experience in petroleum exploration and management and is registered as a Professional Geophysicist. Mr. Oden has consented to the inclusion of the technical information in this release in the form and context in which it appears. ABOUT GULFSANDS: Gulf of Mexico, USA The Company owns interests in 54 offshore blocks comprising approximately 193,000 gross acres which includes numerous producing oil and gas fields offshore Texas and Louisiana with proved and probable recoverable reserves net to Gulfsands at 31 December 2006 of 41.5 BCFGE (6.9 MMBOE), consisting of 27.3 BCFG and 2.36 MMBO. Onshore USA Gulfsands owns interests in two oil and gas fields onshore Texas, USA (98.5% working interest in Emily Hawes Field and 37.5% working interest in Barb Mag Field) with proved and probable recoverable reserves net to Gulfsands at 31 December 2006 of 3.1 BCFGE (0.5 MMBOE), consisting of 2.8 BCFG and 57,000 barrels of oil. Syria Gulfsands owns a 50% working interest and is operator of Block 26 in North East Syria. Block 26 covers approximately 8,250 square kilometres and encompasses existing fields which currently produce over 100,000 barrels of oil per day. These fields are operated by third parties including the Syria Petroleum Company. In the first half of 2007 Gulfsands announced an oil and gas discovery on Block 26 called Khurbet East. This discovery is currently under appraisal. The Company initiated the first extension period of exploration on Block 26 for a further period of three years commencing on 23 August 2007. The Company has also formed a strategic partnership with Cham Holding for acquiring oil and gas projects in Syria and Iraq. 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 and following completion of a feasibility study on the project is negotiating details of 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. 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. For further information, please refer to the Company's website www.gulfsands.net or contact: Gulfsands Petroleum (Houston) + 1-713-626-9564 John Dorrier, Chief Executive Officer David DeCort, Chief Financial Officer Gulfsands Petroleum (London) 020-7182-4016 Kenneth Judge, Director of Corporate Development 07733-001-002 Buchanan Communications Limited (London) 020-7466-5000 Bobby Morse Nick Melson Ben Willey Landsbanki Securities (UK) Limited (London) 020-7426-9000 Jeff Keating Sebastian Jones ---END OF MESSAGE---
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