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Gulfsands Petroleum plc Operations Update.

Summary: 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 provide the following update on operations in Block 26, Syria.

Gulfsands Petroleum plc Operations UpdateGulfsands 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 provide the following update on operations in Block 26, Syria.

Yousefieh--1 Discovery Well Testing

The Company recently undertook a cased-hole production test of the Yousefieh-1 discovery well. The objective of this test was to obtain reservoir and production information additional to that obtained from the open-hole drill-stem test (DST) carried out in November 2008.A 13.5 metre interval at the top of the reservoir was perforated and flow tested at an average rate of approximately 1460 barrels of oil per day ("bopd") on a 48/64" choke over a four hour test period, and 570 bopd on 32/64" choke over a twelve hour test period. These flow rates were achieved with substantially lower reservoir pressure drawdown than during the previous open-hole DST, indicating better than expected reservoir performance. As a result of an ineffective cement bond behind casing, vertical isolation was poor, and it is believed that the whole 63 metre net oil pay interval was contributing to flow. This assessment is supported by the presence of a small amount of water (up to 5% by volume) being produced during the flow tests. Remedial cementation of the production liner is planned to isolate the water producing zone prior to the commencement of production from the well.

Yousefieh-2 Appraisal Well

The Yousefieh-2 appraisal well, located approximately 1.8 km east of the Yousefieh-1 well, targeting the eastern limit of the same but thinner Cretaceous reservoir encountered in Yousefieh-1, has been successfully drilled to a total depth of 2070 metres. Based on preliminary wireline log interpretation, the well encountered a gross reservoir section of approximately 85 metres (approximately 57 metres net) with an estimated gross oil column of approximately 36 metres (approximately 16 metres net) with an average porosity of approximately 16%. These results are consistent with the pre-drill expectations for the well. An open hole drill-stem test (DST) was conducted which recovered trace quantities of oil in water with intermittent flow to surface. It is thought this test potentially may have been contaminated by brine flows from a non-reservoir interval. A liner will now be set over the reservoir interval which is planned be subject to a cased-hole production test at a later date using a work-over rig.

Khurbet East Field Production

The Khurbet East Field is producing at an average daily rate of approximately 10,500 barrels of oil per day from 5 wells (2 vertical and 3 horizontal) with cumulative production of approximately 2 million barrels. Only trace quantities of water have been produced to date. The Field oil production rate has been reduced from previously reported levels as part of a reservoir management strategy to extend the period of water-free production. The Khurbet East Early Production Facility expansion project is ongoing. The project was projected to be completed during the first quarter of 2009, but following slippage in the delivery of the three-stage separator unit, the Company now anticipates that the facility expansion project will be completed prior to the end of the first half of 2009. Three new production wells will be drilled on the Khurbet East Field following KHE-8 in order to make provision for the increased production capacity of up to 18,000 barrels per day.

3D Seismic Data Acquisition

Acquisition of the 640 square kilometre 3D seismic survey to be acquired in the area around Khurbet East and Yousefieh is proceeding well with approximately 30% of the survey completed to date. The survey is intended to compliment and expand the area previously surveyed by 3D seismic, assist in the delineation of already identified leads and to pursue stratigraphic traps similar to Yousefieh.

Khurbet East 8 Delineation Well

The next well in the drilling campaign is the Khurbet East-8 (KHE-8) delineation well in the Khurbet East Field area. The KHE-8 well will commence drilling operations following completion of drilling operations on the Yousefieh-2 well.KHE-8 is located on the southern flank of the Khurbet East Field and is designed to provide reservoir and structural information in addition to identifying the oil-water contact, with the potential to be used later as a water disposal well. Approximately 45 days will be required in order to complete operations on the KHE-8 well.

Khurbet East Reserves Reporting

The updated independent reserves report for the Khurbet East Field, which has been anticipated for completion prior to the end of the first quarter 2009, is now expected to be completed early in the second quarter 2009 in order to incorporate information gathered from the drilling of the KHE-8 well.Ric Malcolm, Chief Executive said "The results from the Yousefieh-2 appraisal well are encouraging for commerciality of the field. Given that the Yousefieh-1 discovery well is just 3 kilometres from the intended location of the Khurbert East Full Field Development, we will be considering what adjustments should be made to our previously planned sizing of the Full Field Facilities for which tendering for construction and supply is shortly to commence."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. 2009 Al Bawaba (www.albawaba.com)

2009 Al Bawaba (Albawaba.com)

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Publication:Albawaba.com
Date:Feb 25, 2009
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