"Gulfsands has made significant progress in what has been a very active and successful 2005 and 2006 to-date. Despite the impact on production last year, in what can only be described as an extreme hurricane season, it is particularly pleasing to note that the company produced strong operational and financial results.
"Our Syrian operations have been particularly active and whilst the recent hostilities in the Middle East were a concern, this did not hinder our operations in any way and work on Block 26 has continued. We are also delighted to have increased our ownership of the Block to 50%, becoming operator in 2005. Over 1,000 km of 2D seismic was acquired primarily in 2005 and two contracts for the drilling of three wells on the block were signed. Whilst the results of the Souedieh North Well were disappointing, where we did not recover movable oil after initially encountering good shows, the geological and operational data that we have gained will certainly stand us in good stead for the drilling of the Tigris-1 well in September. Furthermore, the Company is in discussions for contracting another drilling rig for drilling two further wells during the first half of 2007. After the work that we have carried out in this region it is also particularly gratifying that Ryder Scott has recently completed a reserves valuation whereby they indicated the NPV of Gulfsands net probable reserves in Block 26 at $233 million.
"Considerable progress has also been made in the Gulf of Mexico and the restructuring of Northstar Gulfsands LLC has now been completed leaving Gulfsands with direct ownership of approximately 52.6% of those properties previously owned by Northstar Gulfsands LLC. The Company participated in seven wells, five of which were successful discoveries, with two further development wells drilled in West Delta 64 since May 2005. It is anticipated that we will have four wells commencing production by September. After the difficulties of the fourth quarter of last year our production is now back to pre- hurricane disruption levels. As at 1 January 2006 the NPV of the Group's proved and probable reserves increased to $183 million, primarily resulting from the four successful exploration wells and numerous re-completions that have been carried out.
"Work is continuing in Iraq on the Misan Gas Project and we are delighted to have increased our ownership to 100%. Discussions have progressed recently with the Iraqi Oil Ministry with a view to Gulfsands gaining a definitive contract by early 2007.
"The Board believes that the outlook for the Company remains strong and our current activities in the Gulf of Mexico, Syria and Iraq provide significant potential for further development and expansion, creating further value for Gulfsands and its shareholders. Whilst we remain cautious in the onset of the current hurricane season, the Board remains confident that with the continuing high oil prices and with the expiration of our hedges in June that Gulfsands can look forward to another exciting year ahead."
Gulfsands also noted that at the Annual General Meeting all the resolutions outlined in the notice of the meeting dated 9 June 2006 were duly passed.
Most Popular Articles