Drilling Update in Syria
(Thomson Reuters ONE) - Immediate Release 21 January 2010 GULFSANDS PETROLEUM PLCOPERATIONS UPDATE:Khurbet East-14 Delineation Well Flows Oil to Surface Indicating a Deeper FieldOil-Down-To ("ODT") DepthKhurbet East-13 Well Commences ProductionZaman-1 Exploration Well SpuddedLondon, 21st January 2010: Gulfsands Petroleum plc ("Gulfsands", the "Group" orthe "Company" - AIM: GPX), the oil and gas production, exploration anddevelopment company with activities in Syria, Iraq, and the U.S.A., is pleasedto provide the following update on the Company's operations at Block 26, Syria,where Gulfsands holds a 50% interest and acts as operator.Khurbet East-14 Delineation Well Intersects Oil Column and Flows Oil to SurfaceThe Khurbet East ("KHE")-14 delineation well, located approximately 1 kilometrenorth of delineation well KHE-12 and approximately 4.9 kilometres south of theKHE-1 discovery well, was drilled to a total depth of 2045 metres measured depth("MD") and 1626 metres true vertical depth below mean sea level ("TVD SS") withthe primary objective being to intersect the oil-water contact in the KhurbetEast field.The well encountered the top of the Cretaceous Massive Formation at a measureddepth ("MD") of 1988 metres (1571 metres TVD SS) and the preliminaryinterpretation of drilling data and wireline logs identified a gross oil columnat the top of the Massive Formation of 14 metres, with a net oil pay of 6 metresand average porosity within the pay zone of 22%.An open-hole drill-stem test was conducted over the interval 1982-1998 metres MD(1564-1580 metres TVD SS). The KHE-14 well flowed oil of 27 degrees API at anaverage rate of 613 barrels of oil per day ("bopd") for a 7 hour period on a 2"choke using nitrogen lift. Negligible quantities of formation water wereproduced during this flow period.Although a definitive oil-water contact was not observed on wireline logs ordrilling data, the wireline logs indicates that oil was produced during thistest from a depth of 1998 metres MD (1580 metres TVD SS), 9 metres deeper thanthe previous deepest oil flow observed in the field in well KHE 13.A new field ODT has accordingly been interpreted at 1580 metres TVD SS.These test results from KHE-14 and in particular the deeper ODT are expected tohave positive implications for reserves assessments which are currently beingundertaken on the Khurbet East field and which will be the subject of a separateannouncement at the beginning of the Second Quarter 2010.Khurbet East-13 Well Commences ProductionWell KHE-13, which was drilled and completed at the end of last year, has beentied back to the Khurbet East Early Production Facility, located approximately3.5 kilometres north-east of the KHE-13 surface location. The well is currentlyproducing at approximately 310 bopd under natural flow and with negligibleamounts of formation water. The production performance exhibited by well KHE-13is in line with expectations and consistent with its location within the field;well productivity is not as strong as that demonstrated by the high performanceproduction wells located near the crest of the field, but is superior to thatobserved from wells drilled in the southern flank. Well KHE-13 will be acandidate for production enhancement later this year via installation ofpermanent artificial lift equipment.Zaman-1 Exploration Well SpuddedZaman-1, the first well in the 2010 exploration drilling programme, was spuddedon Friday 15(th) January. The Zaman prospect is located approximately 4.5kilometres to the south of the Khurbet East Field as currently delineated andtargets the same Cretaceous Massive formation under production at the KhurbetEast field. Gross unrisked speculative reserves for this prospect are estimatedto be in the order of 23 to 35 million barrels of oil. Drilling operations onthe Zaman-1 well are anticipated to take approximately 45 days to complete.Ric Malcolm, Gulfsands CEO, said"The positive and significant results from KHE-14 delineation well in additionto the start of oil production from KHE-13 both represent very significantmilestones in the continuing development of the Khurbet East Field from both aproduction and potential reserves perspective. With the spudding of the Zaman-1exploration well, the Company now commences an active and potentially excitingexploration drilling programme of four wells during 2010."This release has been approved by Richard Malcolm, Chief Executive of GulfsandsPetroleum Plc who has a Bachelor of Science degree in Geology with 30 years ofexperience in petroleum exploration and management. Mr. Malcolm has consented tothe inclusion of the technical information in this release in the form andcontext in which it appears.For more information please contact: Gulfsands Petroleum (London) +44 (0)20 7434 6060 Richard Malcolm, Chief Executive Officer Kenneth Judge, Director of Corporate Development & +44 (0)7733 001 002 Communications Buchanan Communications Limited (London) +44 (0)20 7466 5000 Bobby Morse Ben Romney RBC Capital Markets (London) +44 (0)20 7653 4000 Josh Critchley Matthew Coakes Brett JacobsABOUT GULFSANDS:Gulfsands is listed on the AIM market of the London Stock Exchange.SyriaGulfsands owns a 50% working interest and is operator of Block 26 in North EastSyria. The Khurbet East oil field was discovered in June 2007 and commencedcommercial production within 13 months of the discovery. This field is producingat an average gross production rate of approximately 17,300 barrels of oil perday through an early production facility. Block 26 covers approximately 8,250square kilometres and encompasses existing fields which currently produce over100,000 barrels of oil per day, and are operated mainly by the Syrian PetroleumCompany. The current exploration license expires in August 2010 and isextendable for a further two years. Gulfsands' working interest 2P reserves inSyria at 31 December 2008 were 35.2 mmbbls.IraqGulfsands signed a Memorandum of Understanding in January 2005 with the Ministryof Oil in Iraq for the Maysan Gas Project in Southern Iraq, following completionof a feasibility study on the project, and is negotiating details of adefinitive contract for this regionally important development. The project willgather, process and transmit natural gas that is currently a waste by-product ofoil production and as a result of the present practice of gas flaring,contributes to significant environmental damage in the region. The Company isactively engaged in discussions with respect to financing and potential equitypartners. Gulfsands has no reserves in Iraq.Gulf of Mexico, USAThe Company owns interests in 44 blocks comprising approximately 138,000 grossacres offshore Texas and Louisiana, which include 30 producing oil and gasfields with proved and probable working interest reserves at 31 December 2008 of5.1 mmboe.Certain statements included herein constitute "forward-looking statements"within the meaning of applicable securities legislation. These forward-lookingstatements are based on certain assumptions made by Gulfsands and as such arenot a guarantee of future performance. Actual results could differ materiallyfrom those expressed or implied in such forward-looking statements due tofactors such as general economic and market conditions, increased costs ofproduction or a decline in oil and gas prices. Gulfsands is under no obligationto update or revise any forward-looking statements, whether as a result of newinformation, future events or otherwise, except as required by applicable laws.More information can be found on the Company's website www.gulfsands.com[HUG#1375425]
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