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Tue 5 Feb 2008 05:21 PM

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Syrian government approves Khurbet East Field development

Gulfsands Petroleum to commence operations immediately.

Gulfsands Petroleum has received approval from the Syrian Ministry of Oil and Mineral Resources and the Syrian Petroleum Company (SPC) for commercial development of the Khurbet East Field. Development of the cretaceous massive reservoir within the field will commence immediately.

The first reserves report from independent consultants RPS Energy for the reservoir in the Khurbet East Field which estimates gross life-of-field proved and probable reserves as 66 million barrels of oil. Gross life-of-field proved, probable and possible reserves are reported as 143 million barrels of oil.

"We can confirm a substantial reserves estimate for the Khurbet East Field at this early stage of field appraisal following the excellent results obtained in the first three wells in the field," said John Dorrier, Gulfsands CEO.

The Khurbet East Oil Field was discovered in the second quarter of 2007 with the KHE-1 well. Two appraisal wells have since been drilled in the field. KHE-3 well flowed oil to the surface on its drill-stem test at an average stabilized rate of 3420 barrels of oil per day (bopd).

Gulfsands intend to commence field development immediately and establish early production from the shallow massive reservoir as soon as an early production facility (EPF) can be installed at the site, prior to any further appraisal of the Triassic discoveries within the Khurbet East Field.

The company expects that an EPF capable of producing some 10,000 bopd can be operational by the fourth quarter of 2008 and will be followed by the full field development (FFD) facility installation in 2009. Engineering and construction of the EPF is scheduled to commence this quarter with drilling of the first development well expected to commence shortly.

Initial modelling of the reservoir shows that horizontal wells should provide the most efficient production method in the field. Utilizing horizontal wells, Gulfsands expects that the FFD facility will be designed to produce some 30,000-40,000 bopd.

The availability of substantial infrastructure in close proximity to the Khurbet East Field has brought down the estimated costs for the EPF, which includes the drilling of three wells and construction of facilities. Total costs are not expected to exceed US$10 million, or a net $5 million to Gulfsands. The company anticipates that the FFD costs, including future development wells within the reservoir, can be met from the substantial cash flows expected by early production from the field.

"We are very pleased to have received rapid approval for commercial development of the Khurbet East Field from the Syrian Government," said Dorrier. "With the active cooperation and support of the Oil Ministry and SPC, we can proceed immediately with development activities and seek to achieve early production from the field by the fourth quarter of 2008," he added.

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