Restructuring and Production

Gulfsands Petroleum PLC
13 December 2005


13 December 2005


Gulfsands Petroleum PLC
('Gulfsands' or 'the Group')


Gulfsands Completes Restructuring of Gulf of Mexico Operation

Gulfsands Provides Update on Gulf of Mexico Production


Gulfsands Petroleum PLC (symbol GPX), the AIM listed oil and gas exploration,
development and production company with activities in the USA, Syria and Iraq,
is pleased to report that the Company has completed the financial and
operational restructuring of its Gulf of Mexico subsidiary, Northstar Gulfsands
LLC.  The Company has taken direct ownership in approximately 52.6% of all the
property interests formerly held by Northstar Gulfsands LLC into Gulfsands
Petroleum USA Inc., a wholly owned subsidiary of Gulfsands Petroleum PLC, and
concurrently has repaid all outstanding debt accruing to its 52.6% interest in
Northstar Gulfsands LLC.

Gulf of Mexico Restructuring

The Company successfully completed a partition of Northstar Gulfsands LLC
effective 1 November 2005 by taking directly into Gulfsands Petroleum USA Inc.
an approximate 52.6% working interest ownership in the properties formerly held
in Northstar Gulfsands LLC.  In conjunction with this partition, the Company
simultaneously acquired 52.6% of the liabilities of Northstar Gulfsands LLC
which primarily consisted of the mezzanine debt and warrants in that entity.  At
closing, Gulfsands retired its entire portion of the mezzanine debt including
warrants that were held by the mezzanine lender for total consideration of
$24.18 million.  The restructuring of the Gulf of Mexico operations should
result in significant savings to the Company of approximately $3 million for the
2006 calendar year due to the elimination of interest expense and associated
lending fees, plus a reduction in overhead.

Additional savings will also be incurred on any new Gulf of Mexico projects
undertaken by the Company as there will no longer be a 4% overriding royalty
payable on new projects.  Also, each month going forward certain contracts on
existing oil and gas hedges in place expire and allow the Company to take
further advantage of the high oil and gas spot prices which are at a premium to
the prices the Company currently receives for a portion of the volumes which are
being hedged.  Current hedges represent approximately 40% of pre-Hurricane Rita
average daily production levels and will be down to approximately 25% of
forecasted daily production by mid-year 2006 and less than 15% of forecasted
daily production by year-end 2006.  All hedges will have expired by May 2007.
However, as a result of the partition the Company will be required to take a
non-recurring, non-cash one time charge of approximately $1.4 million to the
Profit and Loss Account for the year ending 31 December 2005 primarily
associated with goodwill that was recognized on the consolidated balance sheet
of the Company following the formation of Northstar Gulfsands LLC.

As a result of the partition, Gulfsands has retired all debt within the Company,
incurred significant cost savings, and has retained the use of the cash flow
that is being generated from its interests in 39 Gulf of Mexico producing fields
to fund further exploration and development in the Gulf of Mexico and elsewhere
within the Company.  Following this transaction, Gulfsands owns a direct working
interest of approximately 30.3 billion cubic feet of natural gas equivalents of
proved and probable reserves with a net present value of approximately $129
million per the 30 June 2005 reserve report prepared by Netherland Sewell &
Associates, Inc.  Gulfsands has a working interest in 64 offshore blocks
comprising approximately 216,000 gross acres offshore Texas and Louisiana.

Operational Update

Since the events of Hurricane Rita, Gulfsands' shut-in production has been
slowly coming back on-line toward a return to pre-Rita production levels, as
pipelines and onshore facilities are being repaired by pipeline operators.
Current production is approximately 40% of the pre-storm levels and continued
increases are expected over the coming months.  The Company anticipates being
back to pre-storm daily production levels during the second quarter of 2006.
Prior to Hurricane Rita, Gulfsands net working interest production was
approximately 3,000 barrels of oil equivalent per day, or approximately 6,000
barrels of oil equivalent per day to the former subsidiary company Northstar
Gulfsands LLC in which Gulfsands owned a 52.6% ownership interest prior to the
partition of that entity.

The reduced production from the Gulf of Mexico during the fourth quarter will
result in reduced turnover and operating profit for the second half of 2005 as
compared to the first half of the year.  This reduced operating profit combined
with the write-off of goodwill may result in a small retained loss for the 2005
calendar year before any potential USA income tax expense.  However, even though
production volumes have been down since Hurricane Rita, this event will have no
negative impact on the overall proven and probable reserves for the Company in
the Gulf of Mexico.

John Dorrier, CEO of Gulfsands Petroleum, said:

'Mezzanine debt finance played a critical initial role in the building of
Gulfsands' business in the Gulf of Mexico.  The Company however believes that it
is prudent to retire that debt and the attached warrants before pursuing an
expansion program of drilling and acquisition of additional interests in the
Gulf.  The funds for this restructuring were raised at the Company's IPO in
April and this transaction completes a fundamental objective of the IPO.
Additionally, even though it is taking longer than expected to return daily
production in the Gulf to pre-storm levels, the Company's reserves base is
unaffected and the exploration program will further benefit the Company's growth
in reserves and production.'



Enquiries:
Gulfsands Petroleum (Houston)                                001-713-626-9564
David DeCort, Chief Financial Officer

College Hill (London)                                        020-7457-2020
Ben Brewerton / Nick Elwes

Seymour Pierce (London)                                      020-7107-8000
Richard Redmayne
Jonathan Wright



Note to Editors
     
•    Gulf of Mexico, USA
     The Group owns interests in 64 offshore blocks comprising approximately 
     216,000 gross acres which includes 39 producing oil and gas fields offshore 
     Texas and Louisiana with proved and probable reserves of approximately 30.3 
     billion cubic feet of natural gas equivalents, consisting of 14.94 billion 
     cubic feet of natural gas and 2.56 million barrels of oil as of 30 June 
     2005 with a net present value of approximately $129 million.

•    Syria
     In Syria, Gulfsands owns a 50% working interest in Block 26 and is the 
     operator. The block covers 11,000 square kilometres and surrounds areas 
     which currently produce over 100,000 barrels of oil per day from existing 
     fields.  The Group commenced the acquisition of an extensive 2D seismic 
     programme during August 2005 and anticipates the drilling of the first well 
     during the first half of 2006. Gulfsands has identified 31 exploitation and 
     exploration prospects and leads with mean resources potential exceeding 1 
     billion barrels of recoverable oil.
     
•    Iraq
     Gulfsands signed a Memorandum of Understanding in January 2005 with the 
     Ministry of Oil in Iraq for the Misan Gas Project in Southern Iraq and is 
     currently negotiating the definitive contract for the project.  The project 
     will gather, process and transmit natural gas that is currently a waste 
     by-product of oil production in the region and will end the environmentally 
     damaging practice of gas flaring. Gulfsands has completed a feasibility 
     study and expects to conduct further technical work and commercial 
     discussions with the Iraq Oil Ministry.
     
•    Onshore USA
     Gulfsands operates onshore in the USA through its 80% owned subsidiary 
     company Darcy Energy LLC.  At the Emily Hawes field, initial gas production 
     commenced in the summer of 2005.  The first well in the Barb Mag oil field 
     has been drilled and wireline logged with some 38 feet of potential net pay 
     and production tested at 1.5 million cubic feet of natural gas and 36 
     barrels of condensate per day. Production from this well should commence 
     during the first quarter of 2006. Darcy Energy has a 34.375% and 37.5% 
     working interest in these fields respectively.


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