Gulfsands Petroleum: Gas Discovery in Gulf of Mexico

LONDON, Jun 13, 2005 (Dow Jones Commodities News via Comtex)

Gulfsands Petroleum PLC, an oil and gas exploration, development and production company with activities in the USA, Syria and Iraq, announced Monday a gas-well discovery within Northstar Gulfsands LLC, a subsidiary company owned 52.6% by Gulfsands.

The discovery well tested natural gas at a rate of 5.2 million cubic feet of gas per day on a limited choke size. The potential gross reserves for this discovery are approximately 8-10bn cubic feet of natural gas. Production from this discovery should commence within the next 60-90 days.

Chief Executive John Dorrier, said:

"These exploration and re-development programs are providing reserve replacement and growth for Gulfsands' Gulf of Mexico operation at very reasonable cost. While 2003 and 2004 were years in which Northstar Gulfsands made significant acquisitions of reserves, in 2005 we expect to grow mainly through field redevelopment and exploration."

Northstar Gulfsands has participated in two exploration wells in the Gulf of Mexico so far in 2005. The first well was unsuccessful; however the second well, on Eugene Island Block 83, discovered natural gas in Upper Miocene-aged sandstone reservoirs below 13,000 feet of depth. It is currently being completed for production. The wells was drilled by TODCO's jackup, THE 250. Northstar Gulfsands owns a 10% working interest in both the exploration wells.

The unsuccessful well cost approximately $390,000 net to Northstar Gulfsands while the estimated cost for the discovery well on Eugene Island Block 83 including drilling, completion and hook-up is estimated at a total cost of $765,000 net to Northstar Gulfsands.

Northstar Gulfsands commenced drilling a new exploration well in West Delta Block 64 in the Gulf of Mexico in late May and anticipates this well to be completed by the end of June. Northstar Gulfsands has further committed to drill three additional exploration wells in 2005, is reviewing numerous other opportunities for exploration drilling and expects to drill a total of approximately 8 exploration wells in the Gulf of Mexico during 2005.

Since the beginning of 2005, Northstar Gulfsands has participated in 10 recompletions and workovers on wells within existing producing fields in the Gulf of Mexico which has resulted in approximately 3.2bn cubic feet of natural gas equivalent reserve additions net to Northstar Gulfsands (determined by internal engineers) at a cost of approximately $0.50 per million cubic feet of natural gas.

Since the beginning of 2005 net working interest production for Northstar Gulfsands has been at an average daily volume of between 5,000 - 6,000 barrels of oil equivalent per day. (C) 2005 FWN Financial News. All Rights Reserved

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