Tunisia Farm-in Update

RNS Number : 0839M

Gulfsands Petroleum PLC

18 May 2010

 



Immediate Release

18 May 2010

GULFSANDS PETROLEUM PLC

For a full copy of the release which includes diagrams please go to http://www.gulfsands.com/s/NewsReleases.asp

Gulfsands signs agreements to acquire interest in blocks in Tunisia and Southern Italy

London, 18^th May, 2010:  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., is pleased to announce that, further to the announcement on 22 March 2010, the Company has signed the farm-in agreement to acquire working interest positions in an exploration permit in Tunisia (Kerkouane Permit) and an adjacent exploration permit in Southern Italy (G.R15.PU, known as the Pantelleria Licence) from subsidiaries of AuDAX Resources Ltd ("AuDAX" and ASX:ADX) (the "Farm-in Agreement"). 

Kerkouane Permit - Offshore Tunisia

G.R15.PU ("Pantelleria Licence") - Offshore Italy

The Pantelleria Licence 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 4500 square km (see figure below).  The terms of the exploration and production within the Kerkouane Permit are governed by a Tunisian Production Sharing Contract ("PSC"), whist the Pantelleria Licence is governed under an Italian tax/royalty structure.

The permits contain multiple prospects and leads, the most significant of which is the Lambouka Prospect, a large horst block containing multiple reservoir targets and straddling the boundary between the permits. A 3D seismic survey has been acquired over the Lambouka Prospect, with acquisition completed on 1^st April and processing of the "fast-track cube" completed on 2^nd May. These data will be used to select the final drilling location for the Lambouka-1 exploration well which will be made following completion of a geotechnical site survey currently underway and receipt of government approval.

AuDAX has estimated the mean prospective resource for the Lambouka Prospect at 270 million barrels oil equivalent ("MMBOE") with the primary objectives for the well being the Miocene aged Birsa Formation and the Cretaceous aged Abiod Formation.

The expected spud date of the Lambouka-1 well is 18^th June 2010.  The drilling rig to be used is the "Atwood Southern Cross", as supplied by Atwood Oceanics Inc. The Lambouka Prospect lies in approximately 400m of water.

Gulfsands has earned the right to acquire a 20% working interest in both permits by paying 30% of the cost of the recent 3D seismic programme, and has the option to earn an additional 10% in both permits with payment of an additional 15% of the initial well cost, with this option required to be exercised prior to the spud of the first exploration well.  The gross cost of the seismic programme was approximately $5.2 million and the gross cost of the Lambouka exploration well is approximately $20 million.

The Farm-in Agreement provides that Gulfsands has or will initially acquire interests in the Kerkouane Permit and has an election, exercisable at no further cost, to acquire parallel interests in the Pantelleria Licence equivalent to the interest earned in the Kerkouane Permit.

Following completion of all earn-in obligations, the respective interests of the parties in the "Lambouka Prospect Area" being the limited area defined to be over the Lambouka prospect within both the Kerkouane Permit and the Pantellaria Licence, will be:

AuDAX 40% (operator)

Gulfsands 20% (with an option to acquire a further 10% from AuDAX)

Bombora Energy 10%

Carnavale Resources 20%

PharmAust 10%,

Following completion of Gulfsands' and Bombora's farm-in obligations and exercise of elections with respect to the Pantelleria Licence, the respective interests in the remainder of the Kerkouane Permit and the Pantelleria Licence (outside of the Lambouka Prospect Area) and the Kerkouane production sharing contract will be as follows:-

AuDAX 70% (operator)

Gulfsands 20% (with an option to acquire a further 10% from AuDAX)

Bombora Energy 10% (with an option to acquire a further 10% from AuDAX)

Chorbane Permit - Onshore Tunisia

Formal farm-in documentation for the acquisition of a 40% interest in the Chorbane permit, located onshore central Tunisia is being finalized and is expected to be signed shortly with the intention to drill a well on the Chorbane permit before the end of 2010.

Kerkouane & Pantelleria block map showing leads & prospects and the rectangular shaped Lambouka Prospect Area (approx. 150 sqkm). The insert map shows a depth structure map of Lambouka at Birsa oil reservoir level and the Lambouka area.

Ric Malcolm, Gulfsands CEO, said

"We are pleased to have completed the formal documentation for our farm-in to these offshore permits in Tunisia and Italy. We have been encouraged by our initial review of data acquired in the recent 3D seismic programme and look forward to the commencement of drilling operations on the Lambouka prospect in mid June."

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)	[phone]
Richard Malcolm, Chief Executive Officer Andrew Rose, Chief Financial Officer Kenneth Judge, Director: Corporate Development & Communications
Buchanan Communications Limited (London)	[phone]
Bobby Morse Ben Romney Chris McMahon
RBC Capital Markets (London)	[phone]
Josh Critchley Matthew Coakes Martin Eales

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. The Yousefieh oil field was discovered in November 2008 and commenced commercial production within 18 months of discovery. These fields are now producing at an average combined gross production rate of approximately 18,000 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 licence expires in August 2010 and is extendable for a further two years.  Gulfsands' working interest 2P reserves in Syria at 31 December 2009 were 46.0 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 37 leases offshore Texas and Louisiana which include 24 producing oil and gas fields with proved and probable working interest reserves at 31 December 2009 of 4.6 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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