Letters of Intent on Two Drilling Rigs
Gulfsands executed two Letters of Intent (LOI) with MB Drilling Overseas Limited. These LOIs are for two separate rigs: MB Rig 21 capable of drilling the shallow Cretaceous wells and MB Rig 3 for deeper drilling to the Paleozoic. The LOI for the shallow drilling rig is for one well plus a second well option, while the second LOI for the deep rig will involve the sharing of the rig with another company operating in Syria. This rig is planned to be contracted for a one-year period with an option to extend for 2 additional one-year periods so that the Company will be capable of drilling a series of Paleozoic wells during 2006 and 2007. Negotiations on definitive rig contracts are now underway and Gulfsands expects these to be signed shortly.
Two Prospects Selected for Drilling
Gulfsands and its partner within Block 26, Emerald Energy Plc, have selected the first two prospects for drilling within Block 26.
The first prospect to be drilled is known as Souedieh North and is located in the northeast region of Block 26. This vertical well will be drilled to an approximate total depth of 7,216 feet with the primary objective being Cretaceous aged reservoirs similar to those producing in the adjacent Souedieh and Karachok oil fields. This prospect has the potential to contain in excess of 100 million barrels of recoverable oil (Gulfsands' internal estimate of potential). We expect that the spud date for this well will occur on or about the first of May 2006.
The second prospect, known as Tigris, will also be located in the northeast region of the Block. This vertical well will be drilled to an approximate total depth of 14,760 feet with the primary objectives being a series of Carboniferous and Devonian sandstone reservoirs. The Tigris structure is directly underlying the Souedieh oil field (the largest known oil field in Syria), where oil is produced from the shallower Cretaceous reservoirs. Wireline log evaluation of an existing well on the structure drilled some years ago has identified pay zones within the objective reservoirs, and the Tigris-1 well is designed to evaluate these reservoirs and appraise this potential hydrocarbon accumulation. This prospect has the potential to contain in excess of 500 million barrels of recoverable oil equivalent (Gulfsands' internal estimate of potential). The well is expected to spud in mid-to-late August 2006 after the rig completes an existing long-term drilling contract in Syria with another company.
Gulfsands holds a 50% working interest in each of these prospects.
John Dorrier, CEO of Gulfsands Petroleum, said:
"This announcement underlines our commitment to an aggressive drilling program on Block 26 in Syria where we plan to drill 4 wells by August 2007. The drilling program in 2006 will be underway shortly with these rigs, and the prospects for significant reserves additions are very good. We are particularly excited about the Tigris Prospect beneath Souedieh Field and have undertaken further study of the existing well and 3D seismic data to more accurately assess the reserves potential associated with this structure.
"These two wells have the combined potential to contain in excess of 600 million barrels of recoverable oil equivalent."
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