Gulfsands provided an update on its operations in Syria.
Twaiba 1 Exploration Well
The Twaiba 1 exploration well, located approximately 7 kilometers to the north of the Khurbet East Field, has been drilled to a total depth of 2016 meters measured depth ("MD") (2016 meters true vertical depth). This well was drilled as a sole risk operation by Gulfsands (Gulfsands 100% working interest).
Preliminary interpretation of drilling data and wire-line logs has identified two net pay intervals within the regionally productive Cretaceous aged reservoir section, the "Shiranish" and "Massive" Formations:
The results of the testing program will be the subject of a further news release. It is estimated that the net cost to Gulfsands of drilling and testing the Twaiba-1 well will be approximately US $1.0 million after cost recovery.
Following completion of the testing program the well will be suspended as a potential future production well. After completion of operations, the rig will be moved to the Abu Ghazal 1 location. Further operations at Twaiba, including any appraisal drilling, will be considered once the testing and other results have been fully analyzed.
Zahraa 1 Exploration Well
The Zahraa 1 exploration well has been drilled to a total depth of 2450 meters MD (2445 meters true vertical depth). This well was drilled as a sole risk operation by Gulfsands (Gulfsands 100% working interest).
The Zahraa 1 well encountered the top of the Shiranish Formation, the shallowest potentially productive reservoir for the Zahraa prospect, at a depth of 1802 m MD or approximately 121 meters higher than the pre-drill prognosis, and the base of the Cretaceous aged section was encountered at 2394 meters MD, or approximately 105 meters higher than the pre-drill prognosis. Due to very poor hole conditions it was not possible to obtain a suite of wire-line logs over the reservoir objective intervals in order to fully evaluate the drilled section. However, only minor oil and gas shows were observed whilst drilling through the Cretaceous aged section.
The Zahraa 1 well has therefore been suspended, and the data obtained from the well will be fully analyzed prior to any further drilling on the Zahraa structure. It is estimated that the net cost to Gulfsands of drilling operations on the Zahraa 1 well will be approximately US $1.3 million after cost recovery.
The rig has now moved to the KHE-101 location on the Khurbet East oil field.
3D Seismic Acquisition Program Completed
The 2010 3D seismic acquisition program has been completed with the acquisition of approximately 1060 square kilometers of 3D seismic data. The data acquired have been shipped for the processing in Cairo and a preliminary, or "fast-track", volume is expected to be available for interpretation during the first quarter with the final volume scheduled for delivery during the second quarter.
Khurbet East and Yousefieh Oil Production
As of December 31, 2010, aggregate daily oil production from the Khurbet East and Yousefieh Fields was approximately 20,800 barrels of oil per day ("bopd") representing an approximate 21% increase over the daily oil production rate achieved as of 31st December 2009. Total aggregate oil production from the Khurbet East and Yousefieh oil fields has now exceeded 12.6 million barrels of oil.
Ric Malcolm, Gulfsands CEO, said, "The results from the Twaiba exploration well are very encouraging, as the net pay identified on wire-line logs is in excess of that assumed in our own pre-drill "high case" estimates of speculative reserves of 9 million barrels. The forthcoming production test should provide additional valuable information required to understand the potential commercial significance of the hydrocarbons encountered in this sole risked well. The drilling results at Zahraa are disappointing, but the data will be reviewed to determine if there is any remaining potential on the Zahraa structure. The performance of the two producing fields, Khurbet East and Yousefieh, remains exceptional and we continue to identify opportunities to maximize the value of these assets."
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