Reserves Update
Immediate Release 30 April 2009
Gulfsands Petroleum plc
Block 26 Reserves Update
London, 30th April 2009: 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,
and the U.S.A., is pleased to announce the results of the reserves
updates for the Khurbet East and Yousefieh Fields in Syria Block 26.
An independent estimate of Khurbet East Field Reserves as of 31st
December 2008 has been completed by RPS Energy Group Plc (RPS). The
RPS estimate was based on data acquired up to 14th April, 2009 which
includes data acquired in the KHE-8 well but not from the successful
flow test of that well. In addition, an independent estimate of
Yousefieh Field Reserves as of 31st December 2008 has been completed
by Fugro Robertson Limited (FRL). RPS and FRL based their estimate
of reserves on the resource definitions jointly set out by the
Society of Petroleum Engineers (SPE), the World Petroleum Congress
(WPC), the American Association of Petroleum Geologists (AAPG) and
the Society of Petroleum Evaluation Engineers (SPEE) in April 2007 in
a document entitled "Petroleum Resources Management System" (PRMS).
As of 31st December 2008 and in comparison to 31st December 2007,
Proved (1P) Gross Reserves have increased 82%, from 19.4 million
barrels of oil (mmbbls) to 35.4 mmbbls. Proved plus Probable (2P)
Gross Reserves have increased 20%, from 58.7 mmbbls to 70.4 mmbbls.
Block 26 Reserves
* Proved (1P) Gross Reserves for Block 26 have increased
from 19.4 mmbbls to 35.4 mmbbls, an increase of approximately 82%.
Gulfsands' corresponding 50% Working Interest 1P Reserves increased
from 9.7 mmbbls to 17.7 mmbbls.
* Proved plus Probable (2P) Gross Reserves for Block 26 have
increased from 58.7 mmbbls to 70.4 mmbbls, an increase of 20%.
Gulfsands' corresponding 50% working interest 2P Reserves increased
from 29.4 mmbbls to 35.2 mmbbls.
* Proved (1P) Entitlement Reserves net to Gulfsands have
increased from 5.0 mmbbls to 8.1 mmbbls, an increase of
approximately 64%.
* Proved plus Probable (2P) Entitlement Reserves net to
Gulfsands have increased from 11.3 mmbbls to 14.3 mmbbls, an
increase of approximately 27%.
* Proved plus Probable plus Possible (3P) Entitlement
Reserves net to Gulfsands have decreased from 22.4 mmbbls to 21.9
mmbbls, a decrease of approximately 2%.
* The Reserves in Block 26 include contributions from the
Khurbet East Field as well as the adjacent Yousefieh Field. Working
interest reserves are those estimated to be produced within the
life of the Production Sharing Contract, as extended. Estimation of
Net Entitlement Reserves (Reserves after royalties, taxes and
government share) was completed by Gulfsands, and is based on the
Gross Reserve estimates provided by RPS and FRL as well as internal
estimates for future oil price, development costs, operating costs
and other metrics. Key assumptions include a Brent crude price of
$45 per barrel in 2009 rising to $70 per barrel after 2012. It is
assumed that the oil supplied from Block 26 trades at an average
$11 per barrel discount to Brent. As there is a single cost
recovery pool for oil production in Block 26, Net Entitlement
Reserves are consolidated rather than split out on a field by field
basis.
Khurbet East Field Reserves
The reserve estimates for the Khurbet East Field take into account
that the gross production in the Khurbet East Field to 31st December
2008 was approximately 1.4 million barrels of oil (mmbbls). A summary
of the reserves is given in the table below.
+-------------------------------------------------------------------+
| Reserves | Proved | Proved plus | Proved plus Probable |
| (mmbbls) | | Probable | plus Possible |
|------------------+--------+-------------+-------------------------|
| Gross | 34.2 | 59.2 | 99.7 |
|------------------+--------+-------------+-------------------------|
| Working Interest | 17.1 | 29.6 | 49.9 |
+-------------------------------------------------------------------+
In comparison to 31st December 2007,
* Proved (1P) Gross Reserves for the Khurbet East Field have
increased from 19.4 mmbbls to 34.2 mmbbls, an increase of
approximately 76%. Gulfsands' corresponding 50% Working Interest
1P Reserves increased from 9.7 mmbbls to 17.1 mmbbls.
* Proved plus Probable (2P) Gross Reserves for the Khurbet
East Field have increased from 58.7 mmbbls to 59.2 mmbbls, an
increase of 1%. Gulfsands' corresponding 50% Working Interest 2P
Reserves increased from 29.4 mmbbls to 29.6 mmbbls.
* Production to date is in excess of 2.6 mmbbls with only
trace amounts of water.
* Production of the Khurbet East 2P Reserves is now
anticipated to occur much more rapidly than was previously
predicted. The current estimate predicts that approximately 62% of
the 2P Reserves will be recovered by year end 2015 versus the
previous estimate of approximately 34%.
* As a result of the improved field performance, the
estimate for the Khurbet East Field recovery factor has increased
in the 2P case from 28% to 35%.
* The increase in recovery factor more than offsets the
impact of a reduction in 2P STOOIP from 232 mmbbl to 181 mmbbl as a
consequence of the inconclusive results of the northern (KHE-7)
delineation well. Oil volumes observed in this well from wire-line
logs and core during drilling were excluded from the STOOIP
calculation for the Khurbet East Field on account of the assessed
poor reservoir quality. Well KHE-7 was not tested during drilling
and is now planned to be flow tested during 2009 to assess whether
the encountered oil volumes are capable of being produced.
Yousefieh Field Reserves
A summary of reserves is given in the table below.
+-------------------------------------------------------------------+
| Reserves | Proved | Proved plus | Proved plus Probable |
| (mmbbls) | | Probable | plus Possible |
|------------------+--------+-------------+-------------------------|
| Gross | 1.2 | 11.3 | 16.7 |
|------------------+--------+-------------+-------------------------|
| Working Interest | 0.6 | 5.7 | 8.4 |
+-------------------------------------------------------------------+
The Yousefieh Field was discovered in November 2008 with the
Yousefieh-1 discovery well which flowed at rates of up to 1460
barrels of oil per day. A single appraisal well, Yousefieh-2, was
drilled in February 2009 and while an oil column was encountered in
this well, oil flow to surface was not established. The well will now
be re-tested during 2009 and potentially subjected to acid
stimulation and other assisted production techniques in use in
producing fields within Block 26.
Reserves assessments for the Yousefieh Field have therefore been
based on estimates of recoverable oil in the vicinity of the
Yousefieh-1 discovery well only. STOOIP and recovery factor in the 2P
case are estimated as 75 mmbbls and 15% respectively. The Company is
proceeding with plans to bring the Yousefieh Field into production
during 2009.
Ric Malcolm, Gulfsands CEO, said
"We are very pleased with the overall increase in the Proved (1P) and
Proved plus Probable (2P) Reserves in Block 26. The production
performance of the Khurbet East Field has meaningfully exceeded our
pre-development expectations and we are looking forward to completing
the expansion of the capacity of the Early Production Facility to
take advantage of this increased performance. "
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.
Glossary of Terms
Proved Reserves - Those quantities of petroleum, which, by analysis
of geoscience and engineering data, can be estimated with reasonable
certainty to be commercially recoverable from a given date forward,
from known reservoirs, and under defined economic conditions,
operating methods and government regulations (1P Reserves). If
deterministic methods are used, the term reasonable certainty is
intended to express a high degree of confidence that the quantities
will be recovered. If probabilistic methods are used, there should be
at least a 90% probability that the quantities actually recovered
will equal or exceed the 1P estimate.
Probable Reserves - Those additional Reserves which analysis of
geoscience and engineering data indicate are less likely to be
recovered than Proved Reserves but more certain to be recovered than
Possible Reserves. It is equally likely that actual remaining
quantities recovered will be greater than or less than the sum of the
estimated Proved plus
Probable Reserves (2P). In this context, when probabilistic methods
are used, there should be at least a 50% probability that the actual
quantities recovered will equal or exceed the 2P estimate.
Possible Reserves - Those additional reserves which analysis of
geoscience and engineering data suggest are less likely to be
recoverable than Probable Reserves. The total quantities ultimately
recovered from the project have a low probability to exceed the sum
of Proved plus Probable plus Possible (3P) Reserves, which is
equivalent to the high estimate scenario. In this context, when
probabilistic methods are used, there should be at least a 10%
probability that the actual quantities recovered will equal or exceed
the 3P estimate.
Gross Reserves - Total petroleum reserves without consideration of
royalties, taxes or government share but with consideration of the
life of the production contract.
Working Interest Reserves - Gross Reserves proportionate to the
participants Working (or "paying") Interest.
Entitlement Reserves - Reserves after deduction of royalties, taxes
and government share.
STOOIP - Stock tank original oil in place. The initial volume of oil
contained within a reservoir.
For more information please contact:
Gulfsands Petroleum (London) +44 (0)20 7434 6060
Ric 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 4804
Sarah Wharry
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. This field is currently producing approximately 11,000
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 license expires in August 2010 and is extendable for a
further two years. Gulfsands' working interest 2P reserves in Syria
at 31 December 2008 were 35.2 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 44 blocks comprising approximately
138,000 gross acres offshore Texas and Louisiana, which include 30
producing oil and gas fields with proved and probable working
interest reserves at 31 December 2008 of 5.1 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
---END OF MESSAGE---
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solely responsible for the content of this announcement.
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