30th Jan 2006 07:02
Gulfsands Petroleum PLC30 January 2006 30 January 2006 Gulfsands Petroleum PLC("Gulfsands" or "the Group") Gulfsands Announces Reserves Report for Tigris Structure on Block 26, Syria 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 announce that an independent reserves study has been completed byRyder Scott Company, L.P. on the Tigris structure in Block 26, Syria. Highlights As the operator and having a 50% working interest in Block 26, Syria, Gulfsandsengaged Ryder Scott Company, L.P. (Ryder Scott), an independent petroleumengineering firm, to conduct a reserves study based on the results of a welldrilled on the Tigris structure in 1994 and 3D seismic data over the structure.Ryder Scott developed two cases for this evaluation, an oil case and a gas case,as there is not sufficient data available at this time to determine the expectedhydrocarbon fluid contained within the Tigris structure. This reserves studyas of 1 January 2006 classified recoverable Probable and Possible Reserves andProspective Resource as follows: • For primarily a natural gas accumulation, Ryder Scott has classified442 BCFG as Probable Reserves, 442 BCFG as Possible Reserves, and a further 3447BCFG as a Prospective Resource. In summary total reserves potential amongProbable, Possible and Prospective Resource is 4330 BCFG (722 MMBOE). • For primarily an oil accumulation, Ryder Scott has classified 104million barrels of oil and 64 BCFG as Possible Reserves and a further 408 MMBOand 245 BCFG as a Prospective Resource. In summary total reserves potentialamong Possible and Prospective Resource is 512 MMBO and 308 BCFG (combined 563MMBOE). The study identified nine potentially productive zones within Palaeozoic agereservoirs in the existing well bore. Gulfsands has signed a Letter of Intent with a drilling contractor to drill awell on the Tigris structure. Gulfsands plans to commence drilling this well inAugust 2006. Block 26 Reserves Subsequent to increasing Gulfsands' working interest to 50% and becoming theoperator of Block 26, the Group conducted a detailed review of the six wellspreviously drilled to test Palaeozoic reservoirs within the Block. From thiswork, Gulfsands concluded that three of the wells encountered potentiallycommercial hydrocarbon accumulations, based on drilling and independent wirelinelog evaluation. The largest of these probable accumulations, the Tigrisstructure, is found beneath the Souedieh Field, the largest oil field in Syriawith estimated reserves of some 2 billion barrels of oil recoverable(approximately 1.3 billion barrels of oil produced to date). Gulfsands'Production Sharing Contract in Block 26 includes oil and gas rights toPalaeozoic age reservoirs beneath all of the existing fields within Block 26,such as the Tigris structure, and oil and gas rights to all depths in areasoutside of the existing producing fields. Gulfsands engaged Ryder Scott to prepare an independent reserves study of theTigris structure to quantify and classify reserves conforming to the definitionapproved by the Society of Petroleum Engineers and the World Petroleum Congress.The data used for the study includes wireline logs from a well drilled to thePalaeozoic in the Tigris structure in 1994, and a 3D seismic survey availableover the Souedieh Field. Ryder Scott developed two cases for this evaluation,an oil case and a gas case, as there is not sufficient data available at thistime to determine the expected hydrocarbon fluid contained within the Tigrisstructure. Reserves and resource figures in this announcement are stated inBCFG (billions of cubic feet of natural gas), MMBO (millions of barrels of oil)or MMBOE (millions of barrels of oil equivalent, where six thousand cubic feetof natural gas is equivalent to one barrel of oil). The Tigris structure is of a significant size, potentially as large as some 75square kilometres, and only one well bore currently exists on the structure. Itis difficult to assess the full reserve potential within Proved, Probable andPossible Reserves at this time. However, based on the data that are currentlyavailable, the Ryder Scott report concludes that there are nine potentiallyproductive zones contained within Palaeozoic age reservoirs found in theexisting well bore on the Tigris structure. The report classifies 883 BCFG asProbable and Possible Reserves if the Tigris structure is primarily a naturalgas accumulation. The report classifies 104 MMBO and 64 BCFG as PossibleReserves in these zones if the Tigris structure is primarily an oilaccumulation. The report further classifies an additional 3447 BCFG as an unrisked ProspectiveResource within the gas case or 408 MMBO and 245 BCFG as an unrisked ProspectiveResource in the oil case. The Prospective Resource was based on potentialresources below the base of the hydrocarbon bearing zones encountered in theexisting well bore, as a definitive water contact is not identified with theexisting data. In summary, the natural gas case equates to total reserves potential amongProbable, Possible and Prospective Resource as 4330 BCFG (722 MMBOE), while theoil case equates to 512 MMBO and 308 BCFG (combined 563 MMBOE). Gulfsands' 50%working interest in Block 26 and the Tigris reserves are subject to the fiscalterms of this Production Sharing Contract. Following this initial review, RyderScott will undertake a further review of the field development plan and costs,to quantify the economic value of the Probable and Possible Reserves andProspective Resource. John Dorrier, CEO of Gulfsands Petroleum, said: "This independent study confirms our conclusion that Block 26 contains probablepay in Palaeozoic reservoirs and significantly increases the Company's overallreserves. The report further demonstrates the lower risk associated withfinding large oil and gas reserves in Block 26 and increases the total Blockpotential significantly." Enquiries:Gulfsands Petroleum (Houston) 001-713-626-9564David DeCort, Chief Financial Officer College Hill (London) 020-7457-2020Ben Brewerton / Nick Elwes Seymour Pierce (London) 020-7107-8000Richard RedmayneJonathan Wright Note to Editors • Gulf of Mexico, USA The Group owns interests in 64 offshore blocks comprising approximately 216,000gross acres which includes 39 producing oil and gas fields offshore Texas andLouisiana with proved and probable recoverable reserves of approximately 30.3billion cubic feet of natural gas equivalents (BCFGE), consisting of 14.94 BCFGand 2.56 MMBO as of 30 June 2005 with a net present value of approximately $129million. Additionally, there is a further 3.4 BCFGE of possible recoverablereserves with a net present value of approximately $14 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 currentlyproduce over 100,000 barrels of oil per day from existing fields. In January2006 the Group completed the acquisition of 1,155 kilometers of 2D seismic andanticipates drilling two wells during 2006. The first well, known as SouediehNorth is scheduled to be drilled in May of 2006 which has the potential tocontain in excess of 100 MMBO. The second well known as Tigris is scheduled tobe drilled in August of 2006 and has the potential to contain in excess of 500MMBOE. Gulfsands has identified 31 total exploitation and exploration prospectswithin Block 26 with mean resources potential exceeding 1 billion barrels ofrecoverable oil. An independent reserves report was issued in January 2006 on the Tigrisstructure. The reserves were classified as either oil or gas bearing until suchtime as the Company drills and tests the Tigris structure. The reserve reportconcluded that there are 442 BCFG of probable recoverable reserves in the Tigrisstructure. Additionally, the report classified the possible reserves as eithernatural gas or oil. The gas case reflected an additional 442 BCFG in possiblerecoverable reserves and an additional 3447 BCFG as prospective resource. Theoil case reflects 104 MMBO and 64 BCFG in possible recoverable reserves and afurther 408 MMBO and 245 BCFG as prospective resource. In summary, the naturalgas case equates to total recoverable reserves potential among probablereserves, possible reserves and prospective resource as 4330 BCFG (722 MMBOE),while the oil case equates to 512 MMBO and 308 BCFG (combined 563 MMBOE). • Iraq Gulfsands signed a Memorandum of Understanding in January 2005 with the Ministryof Oil in Iraq for the Misan Gas Project in Southern Iraq and is currentlynegotiating the definitive contract for the project. The project will gather,process and transmit natural gas that is currently a waste by-product of oilproduction in the region and will end the environmentally damaging practice ofgas flaring. Gulfsands has completed a feasibility study and expects to conductfurther technical work and commercial discussions with the Iraq Oil Ministry. • Onshore USA Gulfsands operates onshore in the USA through its 80% owned subsidiary companyDarcy Energy LLC. At the Emily Hawes field, initial gas production commenced inthe summer of 2005. The first well in the Barb Mag oil field has been drilledand wireline logged with some 38 feet of potential net pay and production testedat 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 fieldsrespectively. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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