Gulf Of Mexico Update
Gulfsands Petroleum PLC
13 June 2006
13 June 2006
Gulfsands Petroleum PLC
('Gulfsands' or 'the Company')
Improved Production in the Gulf of Mexico
Oil Hedges to Expire
Two Successful Development Wells in Gulf of Mexico
Upcoming Gulf of Mexico Activity
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 production in the Gulf of Mexico has returned to
levels achieved prior to the hurricanes of 2005, and that natural gas has been
discovered in two new development wells in the West Delta area.
Gulf of Mexico Production Update
Gulfsands' oil and gas production in the Gulf of Mexico continues to increase
and has reached pre-hurricane levels of approximately 2,850 working interest
barrels of oil equivalent per day (boepd). The improvement in daily production
results from recommencement of oil production from the Vermillion 332 and 315
oil fields after repair of a lateral pipeline in the area that was damaged by
Hurricane Rita. Further increase comes from completion and connection of two
exploration wells in the Eugene Island area drilled in 2005. Combined new and
restored incremental production from the Vermillion and Eugene Island area
totals some 1,270 boepd. Although daily production is back to pre-storm levels
there remains shut-in production that the Company expects to have on stream in
the coming months to further increase daily production in the Gulf of Mexico.
Oil and Gas Hedges
All hedges on Gulfsands' oil production will expire at the end of June 2006 with
some hedges on natural gas production remaining in place through May 2007. The
natural gas hedges represent approximately 12% of overall oil and gas production
on an oil equivalent basis, when the oil hedges expire at the end of June and
approximately 5% by year-end 2006.
West Delta 64 Development Wells
Gulfsands has successfully participated in the drilling of two development wells
in West Delta 64 following two exploration discoveries in West Delta 64 in 2005.
The Company expects all 4 wells to commence production by September 2006. The
Company's working interest in the West Delta 64 project is 6.575%.
Other Gulf of Mexico Activity
The next significant operation in the Gulf of Mexico is a recompletion of a well
in East Cameron 66 which is currently producing approximately 0.100 MMCFGD net
to Gulfsands. The Company owns a 48% working interest in this well and a
successful recompletion of this well would result in a significant increase to
current gas production. This recompletion is scheduled for August of this year.
Additionally, the Company anticipates drilling two new exploration wells in the
Eugene Island 58 area during the fourth quarter of 2006 in which the Company has
a 25.64% working interest.
Gulfsands' CEO, John Dorrier, said:
'We are pleased to have production back at levels of last summer before the
disruptions caused by hurricanes Katrina and Rita. The higher production levels
combined with the expiration of the oil hedge position will have a positive
impact on the performance of the Company in 2006. '
Enquiries:
Gulfsands Petroleum (Houston) 001-713-626-9564
David DeCort, Chief Financial Officer
College Hill (London) 020-7457-2020
Nick Elwes
Paddy Blewer
Teather & Greenwood (London) 020-7426-9000
James Maxwell (Corporate Finance)
Tanya Clarke (Specialist Sales)
NB: This release has been approved by the Company's geological staff who include
Jason Oden, Gulfsands Exploration Manager who has a Bachelor of Science degree
in Geophysics with 22 years of experience in petroleum exploration and
management and is registered as a Professional Geophysicist, for the purpose of
the Guidance Note for Mining, Oil and Gas Companies issued by the London Stock
Exchange in respect of AIM companies, which outline standards of disclosure for
mineral projects.
Note to Editors
• Gulf of Mexico, USA
The Company 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 recoverable reserves of 32.4 BCFGE,
consisting of 19.8 BCFG and 2.1 MMBO as of 1 January 2006 with a net present
value of $183 million. Additionally, there is a further 2.8 BCFGE of possible
recoverable reserves with a net present value of $15.8 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. In January
2006 the Company completed the acquisition of 1,155 kilometers of 2D seismic and
anticipates drilling two wells during 2006. The first well, known as Souedieh
North, commenced drilling in late April 2006 and was temporarily suspended in
June for further analysis. The second well known as Tigris is scheduled to spud
in August of 2006 and has the potential to contain in excess of 500 MMBOE.
Gulfsands has identified 31 total exploitation and exploration prospects within
Block 26 with mean resources potential exceeding 1 billion barrels of
recoverable oil.
An independent reserves report was issued in January 2006 on the Tigris
structure. The reserves were classified as either oil or gas bearing until such
time as the Company drills and tests the Tigris structure. The reserve report
concluded that there are 442 BCFG of probable recoverable reserves in the Tigris
structure. Additionally, the report classified the possible reserves as either
natural gas or oil. The gas case reflected an additional 442 BCFG in possible
recoverable reserves and an additional 3447 BCFG as prospective resource. The
oil case reflects 104 MMBO and 64 BCFG in possible recoverable reserves and a
further 408 MMBO and 245 BCFG as prospective resource. In summary, the natural
gas case equates to total recoverable reserves potential among probable
reserves, 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 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 83% owned subsidiary company
Darcy Energy LLC. As of 1 January 2006, Darcy Energy owned interests in two oil
and gas fields onshore Texas, USA (Emily Hawes and Barb Mag) with proved and
probable recoverable reserves of 1.6 BCFGE, consisting of 1.2 BCFG and 58,000
barrels of oil with a net present value of $9.5 million. Additionally, there is
a further 2.2 BCFGE of possible recoverable reserves with a net present value of
$7.9 million.
This information is provided by RNS
The company news service from the London Stock Exchange
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