Gulfsands: NPV of Worldwide Proved and Probable Reserves is $426 Million


Syria - Block 26
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Gulfsands Petroleum plc, which has activities in the U.S., Syria, and Iraq, said that Ryder Scott Co., L.P. has completed an economic evaluation of the probable and possible reserves (unrisked) on the Tigris structure in Block 26, Syria as of July 1, 2006. The net present value discounted at 10% of the probable reserves as of July 1, 2006, on the Tigris structure in Block 26, Syria is estimated at $233 million net to Gulfsands’ 50% working interest.

Gulfsands’ U.S. proved and probable reserves as of Jan. 1, 2006, were prepared earlier in the year by Netherland, Sewell & Associates Inc. for the Gulf of Mexico and by Collarini Associates for the Gulf Coast onshore. Those reserve reports combined determined that the company’s U.S. proved and probable reserves had a net present value of $193 million, resulting in overall worldwide proved and probable reserves for the company at $426 million.

Block 26, Syria Reserves

Ryder Scott completed a detailed economic valuation of the probable and possible reserves on the Tigris structure in Block 26, Syria as of July 1, 2006, as a follow up to the previous Ryder Scott report that was a reserves volume evaluation only. Additionally, Gulfsands completed an internal study resulting in a detailed economic valuation of the Prospective Resource volumes in the Tigris structure.

On Jan. 30, 2006, Ryder Scott issued a reserves report on the Tigris structure in which there were two cases considered: an oil case and a gas case. Two cases were considered because there were insufficient data available at that time to determine with certainty the hydrocarbon fluid contained within the Tigris structure. This reserves study classified recoverable Probable and Possible Reserves and Prospective Resource as follows:

--For primarily a natural gas accumulation, Ryder Scott classified 442 BCFG as probable reserves, 442 BCFG as possible reserves, and a further 3447 BCFG as a prospective resource. In summary total estimated reserves potential among probable, possible, and prospective resource is 4330 BCFG (722 MMBOE).

--For primarily an oil accumulation, Ryder Scott classified 104 million barrels of oil and 64 BCFG as possible reserves and a further 408 MMBO and 245 BCFG as a prospective resource. In summary total estimated reserves potential among possible and prospective resource is 512 MMBO and 308 BCFG (combined 563 MMBOE).

Based upon this gross reserve volumes study, Ryder Scott completed an economic evaluation as of July 1, 2006, that indicates the probable reserves net to Gulfsands after applying the fiscal terms of the production sharing contract are 102 BCFG with a net present value discounted at 10% of $233 million. For primarily a natural gas accumulation, an additional 75 BCFG of possible reserves net to Gulfsands were estimated to have a 10% discounted net present value of $261 million. Furthermore, the company completed its own economic evaluation on the prospective gas resource and has estimated that prospective gas resource net to Gulfsands is 577 BCFG with an estimated net present value discounted at 10% of approximately $1.06 billion. In summary total gas reserves potential net to Gulfsands among probable and possible reserves for the natural gas case is 177 BCFG (30 MMBOE) with a net present value of $494 million and when combined with the prospective gas resource it totals 754 BCFG (126 MMBOE) with a net present value of approximately $1.55 billion.

For primarily an oil accumulation, Ryder Scott determined the possible reserves net to Gulfsands after applying the terms of the production sharing contract are 19.4 million barrels of oil having a 10% discounted net present value of $452 million. Furthermore, the company completed its own economic evaluation on the prospective oil resource and has estimated that prospective oil resource net to Gulfsands is 50.9 MMBO with a net present value of approximately $1.51 billion. In summary, total oil reserves potential net to Gulfsands among possible and prospective oil resource for the oil case is 70.3 MMBO with a net present value of approximately $1.96 billion.

Natural gas pricing used in the evaluation was based upon a June 2006 monthly average price utilizing the natural gas pricing formula within the Block 26 Production Sharing Agreement. Oil pricing was based upon the average price for Syrian light crude oil for the month of June 2006. Natural gas prices were fixed at $7.24 per million cubic feet while oil prices were fixed at $66.69 per barrel for the life of the project.

Gulfsands currently plans to commence drilling the Tigris confirmation well in late August or early September of 2006. Additionally, the company plans to drill a further two wells by August of 2007 on Block 26 utilizing the drilling rig for the Tigris well and another drilling rig which the company is seeking to secure by year-end. Gulfsands is currently reviewing the recently acquired 2D seismic data which will be used to aid in the selection of the further drilling locations in Block 26.

”The company has been developing the Block 26 prospect inventory during the past year since it became operator of the block,” said John Dorrier, Gulfsands’ CEO. “This work has resulted in a number of high-quality prospects that will be drilled in a multi-well program during the next 12-15 months, starting with the Tigris well. The Ryder Scott report gives us considerable optimism for the value that could accrue to the Company as a result of the Syrian drilling campaign.”

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